Source: Huaqiang Microelectronics Author: June

    Introduction: In the past year, the global chip shortage has plagued a large number of industries. Automobile manufacturers and other manufacturers are working hard to obtain enough semiconductors. Some supply constraints still exist, but now many chip manufacturers are worried about the opposite problem: excessive chip inventory.

    On October 18, Susquehanna Financial Group reported that the semiconductor delivery date in September was shortened by 4 days, the largest drop in many years, indicating that the industrial supply crisis was easing.

    According to a study by Susquehanna Financial Group, the average lead time from order to delivery in September was 26.3 weeks. In contrast, August was nearly 27 weeks. In addition, the delivery period has been shortened for the fifth consecutive month.

    According to a study by Susquehanna Financial Group, the average lead time from order to delivery in September was 26.3 weeks. In contrast, August was nearly 27 weeks. In addition, the delivery period has been shortened for the fifth consecutive month.

    As mentioned above, the slowdown of sales in some markets, such as personal computers, has made the demand of Intel Corporation and advanced micro device companies lower than expected. Earlier this month, AMD‘s sales in the third quarter were more than $1 billion less than expected, while Intel was preparing for layoffs to cope with the economic downturn.

    It is reported that on October 6, AMD CEO Lisa Su said that the personal computer (PC) market would weaken significantly in the third quarter of 2022. The overall economic situation led to a lower demand for PC than expected, which led to a significant adjustment in the inventory of the entire PC supply chain.

    Crucially, according to the data released by the Census Bureau of the U.S. Department of S Affairs on October 14, the retail sales of electronic and electrical appliances stores in the United States in September 2022 decreased by 8.6% annually (0.8% monthly) to $7.444 billion, the lowest level since January this year, and showed a year-on-year decline for the seventh consecutive month.

    The Bureau of Labor Statistics (BLS) of the United States Department of Labor released on October 7 that the employment of semiconductor and related electronic components in the United States in September 2022 decreased by 100 to 388300 compared with 388400 in August (the highest since March 2009), the first reduction since 9 months.

    In general, the demand for electronic terminal products is sluggish, and the supply chain from semiconductor to system end is facing the problem of high inventory level. According to the media in Taiwan, China Province, the problem is estimated to continue until 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 Institute of Industrial Information of the National Information and Policy Commission (MIC), pointed out that the demand has not warmed up at present, and inventory problems of varying degrees have spread from the downstream to the upstream of the supply chain, with a slow pace of decontamination, which may last 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 the inventory adjustment began in the third quarter, especially in the case of personal computers and laptops. It is estimated that the 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 foundry manufacturer, 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. 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.

    On the side, the semiconductor index of the Philadelphia Stock Exchange is an important benchmark for chip stocks, which has fallen by 44% this year. In addition, the tension between China and M has also clouded the prospects of the chip industry. The BD government this month offered new chip control measures to China to restrict the export of American enterprises to China.

    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.

    In any case, Sam Fiorani, Vice President of AFS Global Automotive Forecast, pointed out that although chip supply continued to improve, the end point of the shortage of automotive chips continued to be postponed. Automobile manufacturers expected that the shortage of chips would enter the third year and had begun to revise the 2023 production plan.