Recently the global electronics market news news is puzzling. On the one hand, many electronic components category chip (power IC, MCU) prices plummeted, inventory rose sharply; on the other hand, Intel, TSMC and other major manufacturers but said price increases.
According to reports, by global inflation, rising costs and other impacts, Intel (Intel) has informed customers that the second half of 2022 will be a variety of core servers and computer CPU processors and a wide range of products such as peripheral chips to increase prices. It is reported that different types of chips may vary, in some cases by more than 10%, or even more than 20%; TSMC (TSMC) party said at the end of June, has informed customers that the price increase from 2023 single-digit, will be most of the process of foundry prices rose about 6%.
Intel, TSMC this price increase is really no choice. It is reported that, due to the global chip makers high enthusiasm for expansion, semiconductor upstream equipment and materials supply gradually tight, which also brings a certain amount of upward pressure on the cost of manufacturers.
Equipment delivery period continues to extend the rapid rise in the cost of chip components
Equipment, due to the global demand for expansion, equipment has been facing a shortage, according to TrendForce Tiburon Consulting in late June, semiconductor equipment delivery time is facing extended to 18 ~ 30 months ranging from the predicament.
At present, the lack of equipment core lack of components is more serious, and some of the more scarce chip parts prices are rising. According to industry news in May this year, and related suppliers such as STMicroelectronics, Infineon, NXP, Renesas, etc. in the second quarter of this year, driven by the scarcity of goods to increase the price of the chip.
In addition, the equipment can not be delivered on time has also caused a series of chain reactions, such as some companies have to pay more sites, labor and other costs due to the climbing inventory of semi-finished products.
Semiconductor material price increase is obvious, silicon wafer response is more dramatic
Materials, reflected from the market side this year, semiconductor materials such as silicon wafers, photoresists, rare gases and other products across the board price increase trend is obvious. Among them, the silicon wafer price increase is larger, since this year, the letter of the chemical, win high, global crystal and other head manufacturers have announced price increases.
In March this year, Shin-Etsu Chemical announced on its official website that the sales price of all silicon products would be increased by 10% to 20% from April, and in May, Shin-Etsu Chemical announced again that the price of all shipped silicone products would be increased by 10%.
For its part, SUMCO plans to raise the prices of its long-term contracts with chipmakers by about 30% between 2022 and 2024, according to reports. SUMCO believes that the semiconductor silicon wafer increase will continue at least until 2024.
Global Crystal, Chairman Xu Xiulan revealed that the company's latest signed long term contract price is higher than 1 or 2 months ago, the long term contract price continues to rise, it is expected that next year and the year after will also be higher than this year, there is almost no spot quantity available in the next few years, the company signed long term contracts with customers some have exceeded 2028, to 2031.
In addition, recently, the leading semiconductor materials company Showa Denko K.K. (Showa Denko K.K.) said to the public that it will further increase prices, while cutting unprofitable product lines, in response to a series of challenges facing the semiconductor industry. It is reported that Showa Denko is a key chip material supplier for many semiconductor companies such as TSMC and Infineon, and its decision to announce price increases has brought attention to the state of supply and demand in the semiconductor materials market.
Behind the price increase is a dilemma at both ends
Public information shows that the Intel price increase had been forewarned. As early as an earnings meeting in April this year, Intel has warned that the weakening market demand, and in the subsequent activities reiterated the more pessimistic macroeconomic outlook. Along with hints that prices would rise.
For the current weakness of the global consumer electronics market, Intel CEO Pat Gelsinger said the company will "reposition products to higher prices. Chief Financial Officer Dave Zimmer said the company is "looking to target higher prices in certain areas. Industry interpretation of this Intel may focus on the advantages of chip areas to raise prices, rather than universal products.
TSMC, on the other hand, is more confident about the price increase. Its recently announced its 2022Q2 earnings report. Among them, TSMC's revenue grew by 36.6% to $18.16 billion (NT$534.14 billion), and it is worth noting that its gross margin level still increased by 9.1 percentage points to 59.1% compared to the same period of the previous year when costs were rising sharply at the moment. This may explain TSMC's price hike.
It is reported that TSMC is the leader in the field of foundry, Intel occupies the leading position in the processor field, the two have a very high market share, so they dare to raise prices in the current rapidly fluctuating market environment. For other manufacturers but no such bottom line, the current serious inflation, many chip inventory squeeze serious, such initiatives almost dare not consider.
Currently, the end of the industry chain reflects that the chip market upstream equipment and materials manufacturers have a greater say in the chip market, if the upstream supply is tight under the continued price increases, the profit space of downstream manufacturers will continue to be squeezed.
