How long will the "core shortage tide" continue? The 340 billion semiconductor giant will raise prices again

Out of stocks and price increases, the popularity of global chips has become more and more intense.

The 340 billion semiconductor giant’s price increase plan has further aggravated the anxiety of the global automotive industry. According to media reports, Infineon, the global leader in power semiconductors, is preparing a new round of product price increases, which may reach 12%, which is expected to be implemented in mid-June.

In addition, a number of large foundries in Taiwan, China have also decided to raise chip foundry prices again in the third quarter, with a maximum increase of 30%, which is much higher than the 15% previously expected by the market.

Even with crazy price increases, they can't get the goods, which is becoming the status quo of the global chip industry. Among them, the auto industry is the most injured. Global automakers are forced to suspend production due to a lack of cores, and auto production capacity suffers. On June 16, data disclosed by the China Association of Automobile Manufacturers showed that in early June, 11 key enterprises produced 434,000 vehicles, a year-on-year decrease of 36.6%.

Industry insiders generally predict that the high probability of this round of semiconductor boom cycle will last until 2022, or even 2023.

340 billion semiconductor giants are brewing price increases

Under the background of global chip shortages, price increases are inevitably ushered in.

According to Jiwei.com, the global power semiconductor leader Infineon is preparing for a new round of product price increases. Power semiconductors such as MOSFET (Gold Oxide Half Field Effect Transistor) will increase by 12%, which is expected to be implemented in mid-June.

Infineon is the world's largest company in power semiconductor shipments. It mainly provides semiconductors for automotive and industrial power devices, chip cards and security applications. Its revenue in fiscal year 2020 exceeds 8.57 billion euros. The current total market value is 44.3 billion euros ( Approximately RMB 343.6 billion).

In addition, global leading power semiconductor manufacturers such as ST Group and ON Semiconductor have also issued price increase notices. Among them, ST announced that the full range of products will begin to increase prices on June 1. The prices of some ON Semiconductor products will be increased. It will be increased from July 10 this year...

Under a round of price hikes, the power semiconductor sector of A shares has become a rare strong sector in the sharp decline on June 16. Jucan Optoelectronics has a daily limit, and Perry shares soared by more than 17%. Xinjie Energy, Ganzhao Optoelectronics , China Microelectronics and other stocks also rose sharply.

The price hikes initiated by the international semiconductor giants have spread to China, and some domestic power semiconductor manufacturers have also issued price increases.

Anshi Semiconductor, a subsidiary of Wingtech Technology, announced that it will increase product prices on June 7; Silan Micro said that due to the impact of rising prices of raw materials and packaging, it has decided to increase the prices of LED lighting driver products from June 1; Taiwan-based shares said that in view of cost and other factors, the company's power semiconductor devices do not rule out the possibility of price increases.

The raging wave of price increases has aggravated the anxiety of the global semiconductor industry. At present, the market's hoarding of power semiconductor products such as diodes, transistors, low, medium and high voltage MOSFETs, and IGBTs is very high. The delivery time of some imported power semiconductors is as long as 52 weeks, and the delivery time for domestic products is as long as 3 months.

In fact, the pricing of power semiconductors depends to a certain extent on upstream chip foundries. According to industry insiders, the pricing strategy of power semiconductors is generally to follow upstream wafer fabs. The price increase of wafer fabs is bound to drive downstream customers to increase prices.

Chip foundry is also increasing prices wildly, up to 30%

Since the beginning of 2021, the global "core shortage" has intensified, so that the entire industry is very anxious. Major manufacturers are racking their brains to stock up chips, causing orders from global foundries to explode. The industrial giants have raised the foundry prices many times, and the trend of price increases is likely to continue. According to media reports, many large foundries in Taiwan have decided to raise their foundry quotations again in the third quarter of 2021, up to a maximum of 30%, which is far higher than the 15% previously expected by the market.

Among them, the chip foundry capacity of UMC and Power Semiconductor Manufacturing Co., Ltd. is the most sought after by customers. Therefore, the price of the factory has also risen the most. TSMC and World Advanced will also make specific adjustments according to market conditions. The above-mentioned four major wafer foundries prospered on the basis of the peak season in the third quarter, and the revenue is expected to reach a new high.

Huang Chongren, chairman of Power Semiconductor Manufacturing Co., said that the current prospects for chip foundry quotations are still very optimistic, and the tight production capacity may continue until the end of 2022. Power Semiconductor Manufacturing plans to increase the quotations to a fair and reasonable level.

In fact, since the first quarter of this year, Power Semiconductor Manufacturing has increased its foundry prices, and it is expected to make another upward adjustment in the next few quarters.

According to the Electronic Times report, Power Semiconductor Manufacturing Company is negotiating with several major customers who are willing to pay advance payment for chip production capacity in the next 3 years. The huge advance payment will provide funds for the expansion project of Power Semiconductor Manufacturing’s 12-inch fab. .

According to the Taiwan Media Economic Daily, as Europe and the United States gradually get out of the epidemic, the demand for semiconductors continues to rise. In addition, the increase in foundry quotations is higher than expected. The four major fabs in Taiwan are in the traditional peak season in the third quarter. , There is a high probability that operating performance will "explode."

Under the shortage of chips and price increases, the global auto industry is the most hurt

Even the crazy price hikes can't get the goods, which is becoming the status quo of the chip industry.

The most fierce price increase and grabbing of goods this time are power semiconductors, which are the core devices for power conversion, and their main uses include inverter and frequency conversion. Among them, the automotive industry has the largest demand for power semiconductors. Power semiconductors are mainly used in automotive power control systems, lighting systems, fuel injection, and chassis safety.

Electric vehicles have a stronger demand for power semiconductors, and the lack of a core chip may cause the entire vehicle to be unable to produce. According to McKinsey's statistics, the semiconductor cost of pure electric vehicles is US$704, which is double the US$350 of traditional cars. The cost of power devices is as high as US$387, accounting for 55%. It is the second largest core component after batteries. .

However, since 2021, the supply of power semiconductors has been far from meeting the needs of the automotive industry, resulting in a large number of automakers being forced to suspend production due to shortages. Recently, the global automotive industry has even fallen into a "stop production tide." Ford, Suzuki, Volkswagen, Toyota, Honda and other automakers have successively announced plans to suspend factory production lines.

According to a report from BusinessKorea, Hyundai Motor of South Korea closed its Asan plant in South Korea and its car production lines in Alabama, USA on June 16. This is the fourth time Hyundai Motor has closed its factories due to chip shortages.

Domestic automobile production is also inevitably affected. China Automobile Association sales data show that in May 2021, the automobile market produced 2.04 million and 2.128 million vehicles respectively, down 8.7% and 5.5% month-on-month, and down 6.8% and 3.1% year-on-year.

In this regard, Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said that the biggest problem with the decline in sales in May was chips. I believe that the data in June will not be too optimistic. The shortage of chips still has a great impact on sales in the second quarter.

In early June, domestic automobile production still faced major difficulties. According to the data reported by 11 key automobile companies in the industry, the China Association of Automobile Manufacturers showed that in early June 2021, 11 key companies had completed the production of 434,000 vehicles, a year-on-year decrease of 36.6%. Among them, passenger car production dropped by 37.9% year-on-year; commercial vehicle production dropped by 30.2% year-on-year.

The output of automobiles is limited and is being transmitted to the consumer side. It is reported that almost all current popular models need to queue up to pick up cars. The delivery cycle of new cars is as short as 3-4 weeks, and the long one may have to wait more than 3 months.

In addition to automobiles, the mobile phone market is also affected by the lack of cores. On June 16, the China Academy of Information and Communications Technology issued a report stating that in May 2021, the total domestic mobile phone market shipments were 22.968 million units, a year-on-year decrease of 32%, and a year-on-year decline for two consecutive months. In this regard, the Institute of Information and Communications Technology believes that the main influencing factors are: the upstream mobile phone chip supply is tight; the domestic mobile phone market demand is released early in the first quarter.

When will this round of "core shortage" last?

Crisis and opportunities often accompany each other. Under the global chip shortage and price hikes, it may be a rare window of opportunity for the domestic semiconductor industry chain. The performance of the entire domestic semiconductor industry will usher in performance beyond expectations, and the trend of domestic substitution is also expected. accelerate.

The key point is, how long can this round of the global conductor industry boom cycle last?

Guojin Securities believes that according to downstream research and feedback, from the perspective of orders in hand, delivery cycle, and revenue confirmation cycle, the semiconductor industry's prosperity will continue to increase by 2022. Under high economic conditions, due to factors such as product structure improvement and price increases, the semiconductor sector's full-year profit forecast is expected to rise.

Zhang Xiaorong, Dean of Deepin Technology Research Institute, said that the main reason for this round of shortages in the semiconductor industry is insufficient production capacity. The phenomenon of insufficient production capacity is expected to continue for more than a year, and the industry's prosperity will continue to fluctuate.

In the face of this round of long-lasting semiconductor boom cycles, more and more domestic semiconductor manufacturers are planning to expand their production. Previously, China Resources Micro announced that it intends to jointly invest in the construction of a 12-inch power semiconductor wafer production line project with the National Large Fund Phase II and Chongqing Xiyong Microelectronics Industrial Park. The project plans to invest 7.55 billion yuan. After completion, it is expected to form a monthly output of 30,000 wafers12 Inch high-end power semiconductor wafer production capacity.

In 2020, China will increase its investment in wafer fabs, and its semiconductor equipment sales will reach US$18.72 billion, surpassing Taiwan, China for the first time, and ranking first in the global market. At present, there are hundreds of billions of project investment plans for 8-inch wafers and 12-inch wafers in Mainland China, of which as many as 40 12-inch wafer manufacturing lines have been put into production, are under construction, and are under planning. According to the calculation of Industrial Electronics, the capital expenditure of domestic fabs will more than double in the next three years, and the penetration rate of superimposed domestic equipment is expected to increase from the current less than 10% to more than 20%. There is huge room for domestic equipment replacement.

Source: Brokerage China