In-depth analysis of the price trend of the electronic components industry in 2021

Starting in August 2020, major IC manufacturers have issued notices or announced price increases, or announced an extension of the delivery period, and the market has evolved into a situation where stock goods are the king.

Wafer price increase

The foundry capacity is in short supply. TSMC, UMC, World Advanced, Power Semiconductor Manufacturing Co., Ltd. and other advanced and mature process capacities in the first half of this year have all been booked by customers. Except TSMC and Samsung Electronics, SMIC and other foundry companies All of them have raised their 8-inch foundry quotations, with a rise of at least 20% starting in 2021, and rush orders will even reach 40%. In addition, TSMC canceled the discount of approximately 3% for major customers on 12-inch wafers, which is tantamount to a disguised price increase.

IC packaging and testing prices

On November 20, 2020, the leading packaging and testing manufacturer ASE officially notified its customers that it will increase the packaging and testing prices by 5%~10% in the first quarter of this year to cope with rising costs such as rising IC substrate prices, and strong customer demand resulting in production capacity Demand exceeds supply.

Chip price increase

Renesas: On January 1, 2020, it is planned to increase the prices of some analog and power products. The notice also stated that customer orders shipped before January 1, 2021 will be received at the current price. After January 1 this year, all existing orders and new orders will be processed at the new price.

NXP: Affected by the new crown epidemic, NXP is facing the dual impact of severe product shortages and rising material costs, and has decided to increase product prices across the board. According to industry insiders, the increase of NXP’s products may start at 5%. At the same time, it is necessary to sign the “Overlord Clause”, requiring customers to sign a one-year NCNR (no cancellation or return) agreement.

ST: Affected by the new crown epidemic, the supply of ST raw materials is insufficient, and the demand is still strong. In order to meet the strong market demand, ST decided to increase the prices of all product lines starting from January 1, 2021. In the follow-up, the company’s production capacity will be allocated according to the customer’s order arrangement and the best demand visibility to maximize the efficiency of manufacturing operations.

Future price trends of electronic components

The above is a collection of some of the price increases in 2020. Out of stock and price increases almost run through the theme of last year. The price increase of electronic components is better than in previous years in terms of variety and price increase density. The imbalance between supply and demand is the core logic behind the price increase in the semiconductor industry.

First of all, from the supply side, the foundry has a high degree of automation and its production capacity is concentrated in the Asia-Pacific region. The impact of the epidemic on it is lower than other industrial chain links, but the overall capacity expansion is still lower than expected. There are three main reasons:

1. The inventory is reduced, and the main reduction is in overseas fabs or due to unexpected events such as strikes.

2. The incremental production capacity has slowed down, and the epidemic has delayed the expansion of the foundry.

3. Affected by the Sino-US trade war, TSMC, a major wafer processing plant, urgently reduced its two wafer production capacity F0&F1 series, and transferred production capacity to 5G-related applications with greater demand and better profit, resulting in a sharp reduction in production capacity.

On the demand side, analog circuits currently include radio frequency chips, fingerprint recognition chips, image chips, power management chips, etc., as well as power devices. Basically, 8-inch wafers are used, and the demand for 8-inch wafers is overwhelming.

In terms of incremental capacity, there are two main reasons:

1. The development of a 12-inch production line is a general trend in the industry. The 8-inch production line has become stable and saturated. The foundry will not rush to expand the 8-inch production line due to a temporary shortage of production capacity.

2. As upstream equipment is also being upgraded, some 8-inch line equipment is also facing the problem of insufficient supply. Even second-hand equipment is in a state of rush to purchase, and expansion will also be difficult.

At present, there are about 700 second-hand 8-inch wafer manufacturing equipment for sale in the market, but the demand for 8-inch wafer manufacturing equipment is at least 1,000 units. The shortage of equipment limits the short-term expansion progress of related manufacturers.

It is initially estimated that it will take at least 2-3 years to expand the factory. During this time, there is a real problem. If the market demand decreases to a stable level during the expansion of the factory, the expansion of the factory will become unnecessary. Therefore, the execution power of the capitalists will be very high. slow.

In addition, the new crown epidemic has not been completely controlled abroad, and is still increasing slightly. Reports show that cases of variant new crown infection have been found. Although a vaccine has been developed and can be effectively controlled in a short time, whether it is effective against the variant new crown, and Whether the mutated new crowns will increase suddenly is still unknown.

From the perspective of capitalists’ inability to expand factories in a short period of time and the instability of the new crown epidemic, it is expected that the shortage will continue, at least until next year, and price increases are inevitable. In addition, when buying goods, you must also pay attention to product quality and be careful. I bought a refurbished one. After all, the cake is so sweet that everyone wants a bite.

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