The semiconductor market is not good. Wei Zhejia, president of TSMC, said in France last week that he would publicly warn that the overall semiconductor industry might fall into recession in 2023. It is understood that this quarter of the supply chain assessment may be the fourth worst quarter in recent years. IC design factories are tightening their belts. Some manufacturers cut their film production all the way to the first quarter of next year. It is rare to freeze personnel and suspend recruitment of new blood.
Talent is the most important foundation of the IC design industry. Previously, when faced with the large-scale poaching of mainland enterprises, Taiwan factories spared no effort to find people. Now, some small and medium-sized IC design industries rarely freeze personnel, highlighting the harsh semiconductor boom. The industry can only try to reduce spending to retain cash, and shrink food and clothing to survive the boom and winter.
Since R&D is the root of the IC design industry, in recent years, the IC design industry has successively made structural salary adjustments or substantial annual salary adjustments to retain talents. Previously, most of the industry maintained the normal recruitment as much as possible, but the situation began to change in the second half of the third quarter.
Recently, more than one medium-sized IC design factory has made no secret that it is basically in the state of "no compensation in case of shortage". Although it will not admit to the outside world, unless it is an area that is difficult to find people in normal recruitment, suitable candidates suddenly appear, such as very scarce R&D personnel, and this should account for a small proportion of the overall staff.
The unnamed IC designer said frankly that due to the poor sales in the terminal market, customer orders decreased, leading to a gradual increase in the inventory level. He negotiated with wafer foundries to reduce the number of films from the second quarter, while some IC design factories began to cut orders from the third quarter.
Considering that the chip production cycle is at least more than three months, it will take at least one quarter, or even two quarters, from reducing production to decreasing output.
Some IC designers mentioned that the list of IC products that cannot be digested in the short term should be cut first, otherwise the products that cannot be sold will continue to be produced, and the overall inventory will continue to increase. In addition to reducing the orders of other wafer foundries, even the orders that would have been kept in TSMC had to be cut down to see if they could be put back in the future.
In this wave of IC inventory adjustment, Drive IC Factory is one of the hardest hit areas. Relevant Taiwan factories pointed out that the number of films will continue to decrease in the fourth quarter, and it is expected to decrease again in the first quarter of next year. This means that the IC output will continue to decline quarter by quarter until the second quarter of next year, but the industry is not sure how much the overall inventory level will decline, because no one is sure about the sales situation.
Some micro controller (MCU) manufacturers also said that the next step is to correct all the way until the inventory level drops to a certain extent, so that the film quantity may rise again.
Some power management IC factories also disclosed that some customer orders have moved back one quarter to next year, and it is estimated that the inventory may have to be digested until the second quarter of next year before returning to the normal level. Therefore, at this stage, the number of films will not be as much as the original plan, but it is impossible to correct it to zero. If there is no film, the injury will be reduced as much as possible.
High inventory, semiconductor de chemical may be extended to the first half of 2023
The demand for electronic terminal products is sluggish, and the supply chain from semiconductor to system end is faced with the problem of high inventory level, so the process of de industrialization may continue to the first half of next year; TSMC even warned that the greatest impact of inventory adjustment will be in the first half of next year, and the IC design industry will be under pressure to reduce inventory, which will jointly affect the IC sealing test demand in the later stage.
Looking forward to the market situation of the electronic technology industry next year, Hong Chunhui, a senior industry consultant and director of the Industrial Information Institute (MIC) of the Asset Policy Commission, pointed out that at present, demand has not warmed up, and inventory problems of varying degrees have spread from the downstream to the upstream of the supply chain. The pace of decontamination is slow, and it is likely to continue until the first half of next year.
In terms of the number of days, MIC analysis shows that in the second quarter of this year, compared with the same period of last year, the number of days in stock of various businesses increased by 15.5% to 25.1% on average, of which the number of days in stock of semiconductor companies increased by 100.1 days the most, followed by 98.3 days of electronic component companies.
Allianz‘s trust desk team said that inventory adjustment began in the third quarter, especially in the case of personal computers and laptops. It is estimated that inventory adjustment will end in the first half of next year.
Yang Kexin, an industrial analyst at MIC, pointed out that the negative factors of the external environment had not been removed, the consumer market was not buying well, the ability to pull goods was weak, and the momentum of customer stock was slowing down. From terminals, system plants to semiconductor chip production and marketing supply chain operators, all faced the problem of high inventory levels, and inventory reduction would affect the performance of the semiconductor market next year.
In the semiconductor field, MIC analyzed that the production and sales of semiconductor chips are limited by the long contract mechanism, and repeated and excessive orders are often delayed in delivery, which is unfavorable to the adjustment of semiconductor supply chain. The inventory adjustment is expected to continue until the first half of next year.
Wei Zhejia, president of TSMC, a leading wafer foundry company, pointed out that factors such as inventory adjustment in the semiconductor industry affected TSMC‘s overall growth rate from the fourth quarter to the first half of next year. He expected the high point of inventory in the semiconductor supply chain to peak in the third quarter of this year, and began to decline in the fourth quarter. It is estimated that it will not return to a healthy level until the first half of next year, and the greatest impact of inventory adjustment factors will be in the first half of next year.
Lianfa Branch, a large chip design factory, estimated that the customer inventory adjustment might last for two to three quarters; Wafer foundry world advanced recently said that customers continued to adjust inventory in the fourth quarter, which could not be ruled out until the first half of next year.
Observing IC design, memory, IC sealing and testing terminals and distributors, Yang Kexin analyzed that at present, the semiconductor industry‘s inventory is adjusted, the IC design and memory industry is faced with the problem of falling demand and oversupply, and IC designers are faced with the pressure of inventory reduction, which will affect the IC sealing and testing demand in the later stage, and will be detrimental to the overall operation next year; IC distributors also saw a significant increase in inventory turnover days.
In terms of products, the demand for panel driver chips, consumer power management chips (PMICs), general-purpose and consumer microcontrollers (MCU) was weak, and the inventory level of related businesses continued to rise.
Among them, Guoju, a large manufacturer of passive components, said that in the fourth quarter, due to the reduction of working days during China‘s long holiday in October and the Christmas holiday in Europe and the United States in December, and the longer than expected adjustment period for the inventory of standard products, it prudently responded to the performance and operating outlook.
The American foreign legal person pointed out that the weak demand in the terminal market and the record high supply chain inventory level were the main reasons for the decline of the passive component market. The terminal channel continued to de inventory, and it was estimated that the adjustment would take six months.
In memory, MIC pointed out that both the consumer end market and server customers are faced with varying degrees of inventory adjustment, and the short-term demand of the memory industry is highly uncertain.
However, the industry is not completely pessimistic. Tong Zixian, chairman of Hoasus, said recently that the market needs a little time to digest the inventory of related products, and he believes that the digestion can be completed in about two quarters.
Li Peiying, general manager of the South Asia Branch of the memory factory, analyzed that some customers‘ de stocking was developing positively, and there was an opportunity for demand to recover. Although the price might continue to fall in the fourth quarter, the decline would converge.
By observing the price trend, MIC pointed out that the chip industry is facing the problem of excessive inventory turnover days, and is currently facing a severe challenge of inventory reduction. If the terminal market situation has not improved, it is hard to avoid the situation of simultaneous price and volume decline; Among them, the supply and demand ratio of dynamic random access memory (DRAM) may continue to expand in the second half of the year, and the price cannot be prevented from falling rapidly under the condition that the demand for memory is sluggish but the manufacturing process of major factories is transferred and the capacity is still issued as planned.
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