The semiconductor industry is now in the middle of the ice fire, as compared to the firecrackers and booms in 2021. On the one hand is the hot summers of expansion, short supply and higher capital spending, on the other hand, the cold winters of falling prices, falling stock prices, and non-financing. Why are two such extreme situations in the semiconductor industry, and how do chip giants in different situations view the future?
A Storage chip into the next row cycle
Currently, it is a well-established fact in the industry that the storage chip enters its next cycle, and the power builder directly points out in the latest financial statements that the storage market is cold. Memory prices have been falling rapidly since the second quarter of this year, with data showing that the average contract price of DRAM (dynamic random access to content) fell by 10.6 per cent in the second quarter of the year and by the United Arab Emirates for two years. Of course, more than memory, the price of flash is declining, and the average contract price of NAND (computer flash equipment) fell by 12 per cent in the third quarter of the Commonwealth Advisory Project.
For two main reasons:
On the one hand, the storage industry is naturally cyclical. Storage chips have the properties of large commodities, and the mismatch between supply and demand leads to cyclical price fluctuations. The cyclical features of the historical price trends of the stocks are evident. When new applications generate a high demand for storage chips, downstream manufacturers tend to actively expand their production, while within-industry manufacturers clear their stocks at reduced prices when industry conditions are down.
There is no doubt that, with two years of high enthusiasm, the storage industry has seen a downturn. After two years of home demand adjustments driven by the epidemic, the case of cold storage of chips was justified, and overstocks in the semiconductor supply chain took several quarters to rebalance to a more reasonable level, possibly to continue until the first half of 2023.
On the other hand, the consumer electronic market is cold. After 20 years of predominance of the semiconductor market, mobile phones and computers are no longer the largest growth engine in the semiconductor industry, and the demand for electronic consumption is decreasing, further affecting the price of the chips stored, but as server-related demand continues to grow, NANDs, which are more used on mobile phones, will fall less rapidly than DRAMs, which are mainly used on servers.
This can also be seen from the financial statements published by SK Hercules on July 27th that in the second quarter of 2022, the SK Hercules battalion rose by 56 per cent to 4.2 trillion won (US$ 3.2 billion) a year since 2018, largely as a result of strong server client demand and a strong dollar to offset the increase in material costs. According to SK Hercules, DRAM output increased by about 10 per cent in the second quarter and NAND-type flash stock by 6 per cent to 9 per cent in the season, and data centre chip demand is expected to grow steadily in the medium to long term.
Even though the quarterly harvest has been much more innovative, SK Hercules ‘ market projections for the second half of the year remain pessimistic due to the down-cycle of the storage area as a whole. SK Hercules predicts that the demand for memory chips will slow in the second half of this year. The number of PCs and smartphones that are built up in the second half of the year is expected to be lower than originally anticipated, while the demand for server memory to supply data centre clients is likely to slow down and primary customers must first digest their inventory.
In addition to SK Hercules, another large storage plant, American light technology, also provides pessimism warning. On 30 June, American Light Technology published the third quarter of fiscal year 2022 (as of 2 June 2022), with an annual increase of 16 per cent (11 per cent quarterly) to $8,642 million, with a growth rate above the market’s expected 2 per cent. American Light Technologies claims that the company’s revenue for the fourth quarter of fiscal year 2022 is expected to be around $7.2 billion, well below the analyst’s expected $9.44 billion.
According to the CEO of Light Technology, the weak demand for consumer market terminals, including PCs and smart phones, is clearly slowing global memory industry demand. Despite the strong demand for data centre terminals, light technology has seen a number of clients planning to reduce their memory and storage stocks.
On July 22, U.S. Light Technologies even suffered from Morgan Stanley’s downfall, and investment ratings dropped from “neutral power” to “minus”. Morgan Stanley states that a number of luminous and light technology clients have taken a more proactive approach to stockpile management, with some PC and server manufacturers reducing their procurement volume by 30 per cent this season.
There are indications that the memory chip has entered its next cycle.
B. Simulation chips with high risk carrying capacity
Not only is the chip stored, but the simulation chip is under pressure to fall this year, but, contrary to the storage plant, the large analog chip plants are optimistic about the future.
In a recent statement, the simulation chip giant Texas instrument indicated that the company would earn between $4.9 billion and $5.3 billion in the third quarter. By contrast, the average number of analysts is estimated at $4.94 billion. It stated that the profits per share would be as high as $251, which was more than expected. The Texas instrument management reportedly insisted that the company could still sell its production stock at some point in the future and stated that it still did not have sufficient stock.
In May, the Chief Executive Officer and Chairman of Yadno Semiconductor Technology Ltd. stated, “Despite increased geopolitical uncertainty and continued disruptions in the supply chain, we were able to move on to the second half of the year with increased capacity and continued reservation. I’m sorry.
This is highly relevant to the characteristics of the analog chip industry itself. Unlike a digital chip’s quest for numeracy and efficiency, the analogue chip places greater emphasis on reliability, stability and consistency, which are not subject to Moore’s Law, so that the product can remain more relevant for longer than market phase-out. In general, analogue chips have a long life cycle, usually more than S, or even 10 years, well above the 1 to 2 years of a digital chip, which means that the increase in stocks is not a dangerous signal for the rest of the chip business.
The King ‘ s Capital even believes that the prolonged sale and use of analog chip products can lead to lower costs due to the scale effect of the end of production, and that lower risk factors are also associated with lower downstream upgrades of IC (collectively, semiconductor component products).
Another important reason is that the market for electric cars has become a major driving force underpinning the growth of the analog chip industry. Car class applications are the fastest growing areas in the downstream applications of analog chips. With the trend towards electronic, intelligent and networking of cars, new energy vehicles have increased their power systems, such as charging, AC/DC, DC/DC, BMS and the need for sensors will also drive the development of analogue chip markets. In 2021, the size of the automobile simulation chip market was projected to be 174,677 billion dollars, a 31 per cent increase over the same period. Combined with the rapid start-up of new energy vehicles driving the rapid growth in demand for car chips, analogue chips account for 29 per cent of the car semiconductor.
In the case of Nshipur, the latest financial report shows that its collection and the Non-GAAP Māori rate outperformed market expectations. Analysts expect Nshipo to collect and Non-GAAP Maori to reach $33.2 billion and 57.6 per cent, respectively.
According to Executive Director Kurt Sifus, Nshipo is still doing well in the face of a clear reversal in the market, and customer demand in the car, industry and goods network terminal markets continues to outpace the progressive supply of Nzipo, even though he has made risk adjustments to long-term orders. According to Siphos, the commitment of customers in Nshiura ‘ s focused end-market to implement a new design for volume production is very strong, thus strengthening the confidence that Njipo investments match long-term market demand.
The strong back-up of new energy vehicles, combined with the industry characteristics of the simulation chip itself, naturally increases the risk resistance of analog chip manufacturers to a certain extent, not as pessimistic as those that store them.
“C” sells tools to an eternal winner.
As the saying goes, “Golden first sells shovels” and whether or not you can get gold downstream, the upstream tool provider is bound to be the eternal winner. This is linked to the social division of labour, where upstream and downstream enterprises are inherently closely connected in the semiconductor industrial chain, and where the raw materials or spare parts of upstream enterprises are essential tools for downstream enterprises, which does not affect the ability of upstream providers to be winners, whether they are full of income or loss. In addition to the semiconductor industry, the “solder” behind it is naturally a supplier of equipment and a tool manufacturer such as EDA/IP.
First, semiconductor equipment. The International Semiconductor Industry Association had predicted that the global total sales of semiconductor manufacturing equipment from original equipment manufacturers would reach a record $117.5 billion in 2022, an increase of 14.7 per cent over $102.5 billion in 2021, and an increase to $12.8 billion in 2023.
As an example of one of the world ‘ s most popular equipment manufacturers, ASML, which is the only one that can provide EUV-calculating machines, has made a significant net increase in the latest quarter due to record new orders. Even though ASML halved its annual growth rate, it projected that it would be reduced to 10 per cent, not because it could not sell the equipment, but because it was affected by the rapid delivery plan.
“Some customers point out that demand has slowed in specific consumer markets, but we still see strong demand for our platforms. A record number of aircraft are still planned to be delivered this year, but the expansion of supply chain restrictions has caused delays in the delivery of goods. I’m sorry.
Winnick also analysed two main reasons for the strong demand in support of ASML: the first was the acceleration of the epidemic-stimulating digital transition, which led to a rapid rise in demand for HPC (high-performance computer sets). This can also be verified from the build-up method, with the second-season HPC share rising further from 41 per cent in the first quarter to 43 per cent, and the reverse mobile phone business share falling to 38 per cent. Even with a slowdown in consumer electronic demand, the emergence of new and emerging technologies continues to generate orders for ASML.
Another reason is because of the long delivery time of the EUV exposure machine. Winnick points out that it takes a long time to make the ASML from the bottom to the delivery, and that, together with the weight of 180 tons, it takes three Boeing 747 to deliver, which is time-consuming and labour-intensive in general. This means that the semiconductor plant will not be able to match the development blueprint for advanced production in a time-frame if it is not placed earlier, plus the rare price of the UV-exposure machine currently in service at approximately $160 million.
In addition to the two above-mentioned reasons, the memory chip also began to approach the EUV. With DRAM entering below 10 nanotechnologies, EUVs are now essential, and Samsung, SK Hercules and Miracle DRAM manufacturers embrace EUV technologies. ASML estimates that by the end of 2022 it is planned to produce 55 UV-exposure machines, and by 2023 it is hoped to make more than 60.
And look at the EDA/IP two major design tools. As Moore’s law approaches its limits, a growing number of chip design firms need stronger and more efficient EDA tools to fully exploit the potential of the semiconductor process and achieve enhanced chip design performance. In a sense, the EDA can be more important than a shoulder-light machine.
In the face of the current semiconductor cycle down, the EDA/IP manufacturer is not panicking. According to the Director of Electronic Finance, all key operating indicators for the second quarter exceeded expectations, allowing companies to raise their annual financial estimates, with a projected third quarter recovery of $860 million – $880 million (median value of $870 million).
In addition, the second-quarter surrender of neo-scientific technology, driven by high-profile performance in all products and markets, has yielded excellent performances better than those projected in the financial statements. The President and Chief Executive Officer of Shinsing Science and Technology said: “The second financial season of Shinsengumi has done well and has exceeded our guiding objectives in all product groups and regions. Based on strong implementation and confidence in our operations during the first half of the year, we are significantly increasing the year-round target. Our financial momentum is built on three drivers: product mix, innovation and the need for semiconductor electronics. Despite macroeconomic volatility in an uncertain geopolitical environment, our clients continue to prioritize investments to achieve a new era of intelligence. I’m sorry.
In a sense, the semiconductor industry, which is already a little dusty, cannot be seen only from the financial returns of the semiconductor tool teams.
The Big Head of the Crystal Circle Generation is strong.
In 2022, driven by the structural shortage of chips and the increase in IDM’s excursor list, the Cyclops d’Observatoire d’Observatoire d’According Semiconductor cycle, the distribution remained high.
With the construction of seven new plants, which were launched last year as the leader of the Crystal Round Industries, five new plants will be built this year, including the expansion of the maturity of the Japanese Kubamoto 23 plant, the 20 nanoclinical 20 plant at Takekoshan, China, the 22 plant of Takayu, the 16 plant of Nanko Crystal Round and the 16 plant of Nanjing.
In recent years, the variety of mature-scale markets, simulation chips, power semiconductors, MPUs (single microcomputers), radio frequency chips, etc., have mostly been used in mature-scale production and have been particularly favoured by large chip plants. In the past, due to panel-driven thawing in consumer areas such as IC, the wiring released a signal of a relaxed production capacity, with large international chip mills flying over, Nshipur, Texas instruments and Miaochip.
The Union Press also revealed the heat of a mature process. In June, UBL received $24,826 million, a new high for nine months in a row, and in the second quarter it received $72,055 million to continue and to move beyond financial projections. Previously, in anticipation of a general trend of 5G mobile phone penetration, accelerated motor vehicle development and rapid proliferation of feeder-connected devices, the content of chips in terminal devices continued to increase, demand for special matured circuits was strong, and the number of crystal round deliveries is expected to increase by 4 to 5 per cent over the previous quarter, the average price of the crystal round in United States dollars by 3 to 4 per cent, the quarterly round will grow by 7 to 9 per cent over the previous quarter, while the actual base of the second quarter of the bulletin increased by 13.6 per cent to 720.55 billion yuan, exceeding the high performance outlook.
According to General Manager Wang Shik of the Union, the recent slowdown in the situation did not allow some of the customers to pull as long as they could, but the share was very small in terms of the overall weight of the increase. He further noted that the semiconductor industry, which had gone through a supercycle over the past two years, was now entering an inventory adjustment period, and that the current phase of cooling the demand for smartphones, personal computers and consumer electronics could lead to some short-term fluctuations, so that UNTAC capacity utilization in the current season would be reduced from a previously over 100 per cent overload to 100 per cent full capacity.
As demand for vehicles, industry, servers, etc. remains stable, the weakness of consumer electronics will be offset by other strong demand, so that the power grid will maintain a healthy capacity utilization rate. In addition, the world’s first-ever revenues of $5,495 billion in June, with increased capacity and output, combined with a better product mix, led to a two-month period of high innovation, a second-quarter recovery of $15.3 billion and a quarterly increase of 13.4 per cent, in line with financial expectations and continued high levels of innovation.
For the generation plants, such as the build-up, the connection, and the world’s advanced, a substantial expansion of the mature production process is more cost-effective than an advanced process, as most of the equipment required for the mature process has been depreciated. High-performance, low-efficiency, low-cost, and broad-based application advantages have brought the mature process to its “high-light moments”.
In short, “the big and the strong.” For surrogate giants with technological leadership and strong pricing capabilities, the expansion, in the face of uncertain future market dynamics, would not only further increase the production and size of chips, but also enhance their competitiveness and lead advantage.
At present, the dual pattern of ice fire in the chip industry is well established, and companies in different environments must be prepared to take appropriate precautions and remain vigilant even in the current hot summer of short supply and higher capital spending. After all, the semiconductor industry is a typical cyclical industry, and it is not known when the next next cycle will come. However, it must also be acknowledged that semiconductor is an industry with a bright future, as visible demand is being restored.
They’re taken from the Twitter public name, “The Eleven Financials.”
Author.
I don’t know.
Keep your eyes on the road.
