In the first half of this year, due to the impact of the Russian-Ukrainian war, China’s closure of the city, and rising inflation, the operation of IC design companies was generally not as good as expected at the beginning of the year. With the cooling demand, the inventory level rose rapidly, and the market was also highly concerned regarding the upcoming announcements The amount of inventory and inventory turnover days in the second quarter of 2019 will guide the operation in the second half of the year.
The industry said frankly that since the fab utilization rate in the first quarter remained high, no industry dared to arbitrarily reduce the production volume under the circumstance of “no enemy and I will not move”. Therefore, following the terminal demand slowed down in the second quarter, the first quarter investment Chip ICs can only be converted into inventory because no customers are willing to buy the goods, resulting in full inventory of upstream manufacturers.
Especially since 2020, IC designers have adopted a strategy of raising inventory since last year because they were afraid that there would be no chips to sell. As a result, the inventory level in the first quarter of this year has once once more rewritten a record high, and the number of turnover days exceeded 100 days. As the inventory pressure continued to heat up in the second quarter, it naturally gave up the right to speak on the price and returned to the buyer’s market.
The industry admits that at this stage, it is not only its own inventory, but the inventory level of the client, channel and consumer terminals is also high. It is estimated that it will be digested to the normal water level for at least 1-2 quarters, which means that the inventory will be prioritized throughout the second half of this year. Both shipments and prices have dropped, and operations in the second half of the year will decline compared to the first half of the year.
As for when it will be digested, the industry believes that the global economic environment is still the main focus of observation, especially at this stage, inflation has not peaked, and the consumer side is buying gas, and the short-term recovery will not be easy. Begin to look forward to the advance stocking tide of next year’s Spring Festival.
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