Why is the growth rate of driver IC the highest in the industry? Three reasons are indispensable

The global semiconductor industry is facing a vicious cycle of shortages and price increases. Among them, the price increase of driver chips is the highest among all products in the industry. Since the fourth quarter of last year, the profits of driver chip manufacturers have improved significantly, and the growth trend has not yet ended, which makes the outside world curious about why the price increase of driver chips is the highest in the industry.

According to Juheng.com, industry insiders analyzed that the wave of price increases for driver chips this time is mainly due to three reasons: industry inertia, cost increases and external environment. As the panel industry has gone from oversupply to undersupply, the growth momentum is strong, coupled with cost increases and external environment, the price increase is better than other chips, and the unreasonable prices in the past have gradually become reasonable.

Driver chips are customers of panel manufacturers, which are highly correlated with the panel industry. In the past few years, panel manufacturers in mainland China have risen rapidly with government subsidies and low prices, which has led to a supply of panels far exceeding market demand and a rapid decline in prices. Panel manufacturers have suffered losses year after year, and driver chips have also been affected. Industry insiders admit that prices have indeed been too low in the past few years.

However, with the tightening of government subsidies and the large-scale consolidation of the panel industry, the imbalance between supply and demand has begun to improve. At the same time, with the recent explosion of remote business opportunities, the demand for panels has surged, and the industry has ushered in the longest price increase cycle in history. The prices of mainstream sizes such as 32 inches, 43 inches, 50 inches, 55 inches and 65 inches have increased by multiples or more compared to last year's lows, and the prices of driver chips have also improved.

Furthermore, the production cost of driver chips includes wafer foundry and packaging and testing. Driver chips were originally considered by wafer foundries to be products that fill the production capacity gap during the off-season due to their low profits. Under the premise that wafer foundries are fully loaded with orders, if driver chip manufacturers want to obtain production capacity, they must increase prices and then pass them on to panel customers.

In addition, driver chip packaging and testing has also been affected by the past sluggish panel industry. Manufacturers are cautious about expanding production. In addition, high-end testing equipment is expensive, and the expansion of production is limited. With the surge in demand, the supply is obviously insufficient, which also drives up the price of driver chip testing.

The last reason is that the epidemic has pushed up the remote interaction mode, which is still difficult to change in the short term. The demand for panels will continue until the end of this year. In addition, the rising costs will give the driver chip prices more room for growth. Driver chip manufacturers are expected to start the second price increase in the near future, pushing this year's profits to be better than last year.