Since the Fed’s strong interest rate hike, end consumer demand has frozen sharply. IC designers are caught between the two elephants of brand factories and wafer foundries, and their profit margins are obviously under pressure. The initial depreciation pressure will be greater than the price pressure. At that time, it is expected to “exchange price for volume”, and IC designers can also breathe a sigh of relief if they are willing to make concessions in terms of price.
According to the industry, brand customers generally began to adjust their orders in the second and third quarters, especially in the third quarter, the strength of inventory adjustment was quite significant. However, since the chip production process is regarding one quarter, the level of their own inventory continued to rise in the third quarter. Inventory pressure is also increasing day by day.
At the same time, since the orders of wafer foundries in the third quarter did not change significantly, even if there is a decline in the utilization rate in the fourth quarter, the magnitude can be controlled. In addition, the end of the 20th National Congress of China and the arrival of festivals such as Double 11 and Christmas at the end of the year , the upstream is expected to have a little pulling power, so the fab is still reluctant to make concessions on price.
However, the industry believes that at the beginning of next year, the production capacity of the wafer fab may be idle due to the unwillingness of customers to increase the production capacity. In addition, following the price of the newly added machines has been increased, the depreciation pressure is self-evident. Will make concessions on price.
The industry admits that at this stage, in addition to TSMC (2330-TW)(TSM-US) insist on raising prices next year, including UMC (2303-TW)(UMC-US) or the local second- and third-tier players in China have begun to express the attitude of “as long as there is quantity, the price is easy to negotiate”.
In addition, IC designers also believe that in addition to wafer fabs, packaging and testing plants will also start to cut prices next year. At that time, when costs slow down, the pressure of price reduction can be further transmitted to suppliers. At that time, the cost structure will have the opportunity to return to before the epidemic, symbolizing The epidemic bonus of the past two years has officially withdrawn.
