Q2 more than 30 semiconductor companies collectively raise prices and reverse the competition between the two major hardware industry chains

The warning of shortage and price rise is still hovering over the semiconductor industry, and the development situation of small and medium-sized enterprises in the industrial chain is particularly grim in the near future. Also with a hint of tension is the AR/VR industry chain, which has picked up again in the past two years, and the three giants in its supply chain can't help it due to the imminent release of Apple-related new products.

Interestingly, the camera module industry chain, which has always been fiercely competitive, shows the opposite situation. Due to individual manufacturers' own reasons, the price war in the middle and high-end markets has obviously come to an end.

Q2 more than 30 semiconductor companies send "price adjustment letter"

According to incomplete statistics, more than 30 semiconductor companies have issued price adjustment letters since the second quarter of 2021. Since April, wafer foundry prices of companies such as UMC, SMIC and LSMC have increased by about 10% to 30%. Although TSMC claims that there has been no price increase, it has cancelled the sales discount for two consecutive years, which is also tantamount to a "disguised price increase".

This situation also brings greater cost pressure to IC manufacturers, Xin Jie Neng, Ruixin Micro, Jingfeng Mingyuan, Xilong Semiconductor, Ai for Electronics and other semiconductor manufacturers have issued price adjustment notification letters, among which Jingfeng Mingyuan, Xin Jieneng and other companies have carried out multiple rounds of price increases in Q2 this year.

According to the content of the price adjustment letter issued by various enterprises, it can be found that the average price adjustment rate of the current industry is between 10% and 20%. Individual enterprises, such as Fuhong Chuangxin, its memory device IC has increased by 30%, making it one of the products with a larger price adjustment. In addition, the prices of power chips and signal chain chips have increased by 10% and 20%, respectively, while the microcontroller MCU adopts a dynamic quotation mechanism, and the adjustment plan will be implemented from May 6, 2021.

Although the rising tide of IC out-of-stock prices continues, it is not caused by the market explosion.

"IC products are mainly used in mobile phones, servers, PC, automobiles and other areas," said an electronics industry analyst. "in terms of market increment, there is no explosive growth in any market."

"the continued shortage and price increase of IC products is mainly due to the fact that Q3 Huawei pulled goods last year, as well as a large amount of stock and inventory carried out by Q4 Xiaomi / OPPO/ vivo and other mobile phones and other manufacturers, which caused a serious shortage of capacity in wafer factories and packaging and testing plants, causing market panic." The above-mentioned person said.

At the same time, some agents and distributors took the opportunity to hoard and fry goods, signing large packages of production capacity in advance, aggravating the phenomenon of capacity shortage.

A person in charge of small and medium-sized enterprises said, "generally speaking, the price increase of IC manufacturers is only 20% and 30%, but the prices of products sold by agents have increased exponentially. At present, the sales prices of conventional MCU products have increased by 7-8 times, and even some low-end MCU products have increased by 20-30 times."

"due to the soaring prices of IC products and the rise of other materials to varying degrees, production costs continue to rise, but our small and medium-sized enterprises have relatively weak bargaining power, customers are not happy to raise prices, and we are in a state of loss if we do not adjust prices, so that we dare not take orders now."

"in the case of stopping taking orders, staff wages and factory rents have to be paid continuously. If the rising tide of shortage prices of raw materials such as IC continues, our small factories can only close down. It is estimated that some small factories will be closed by August. At the same time, the wave of closure of small manufacturers of our downstream terminals will eventually spread to the entire industrial chain, small and medium-sized IC manufacturers that do not have access to wafers will also be affected, and a large number of IC enterprises may be closed in the second half of the year. " The above-mentioned manufacturers said.

While small factories are still struggling to survive, big ones have begun to fight openly and secretly in emerging markets.

The three Heroes of the Fruit chain staged a card war.

As the launch of Apple's new VR products is getting closer and closer, after the first quarter of this year, three representative manufacturers in Apple's supply chain, including Lixun Precision, Gale shares and Lance Technology, have said that wearable devices such as the AR/VR will be an important product direction for the company in the future.

In the above three enterprises, Gale shares has a very prominent advantage over the other two.

At present, the company has integrated optical components, optical modules, display modules, machine assembly four links, in the middle and high-end market share of 80%. According to it, several of the company's VR products are currently selling well and have been out of stock; in addition, our single mainstream customer will grow by 50% next year.

Even if Gore shares occupy more than half of the current market, it does not affect Lixun's idea of cutting into the market.

The company not only has the layout of spare parts and the whole machine, but also began to negotiate with relevant market customers. Lixun Precision said that although we lag behind the market in AR/VR product layout and business promotion, we will start from the second-tier market and, as always, we will strive to catch up.

There is Lixun Precision in front and Lance Technology in the back.

Also recently, when talking about the whole machine assembly business, Lance Technology said that the company's current product and investment layout already covers most of the modules usually involved in the whole machine assembly, and has a great advantage in the whole machine assembly. It is understood that Lance Technology Xiangtan factory has begun to assemble smartphones for customers in the first quarter of this year.

Industry insiders pointed out that the weight of wearable AR/VR products has always been a deficiency, in order to solve this problem, the terminal must pursue miniaturization of the parts and the whole machine, so the requirements for factory automation and production line will be higher and higher.

To sum up, the layout of the three companies in the field of wearable devices seems to be an integrated route from parts to machine assembly. This reminds the author of three acquisitions within the fruit chain in the past two years.

First, in July 2020, Lixun Precision spent 3.3 billion yuan to acquire Jiangsu Weichuang and Kunshan Weixin; in August of the same year, Lance Technology bought two factories of Kecheng Technology in Taizhou for a high price of 9.9 billion yuan; and then in January this year, Lixun Precision spent another 6 billion yuan to control Rijigan computer.

With the gradual completion of the acquisition and delivery, the two companies also have the qualifications to compete with other companies in the field of contract manufacturing and assembly.

In the face of the frequent actions of competitors, on the other hand, Gore shares are not to be outdone. Gale shares said that at present, mainstream manufacturers believe that VR is more entertainment-oriented and social-oriented in the future, while AR is more productivity-oriented and is very likely to replace mobile phones and become the next computing platform. Therefore, the company has done a lot of layout in optical module and display module.

Some manufacturers pointed out: "at present, no matter the parts or the whole machine, Gore is undoubtedly the best in the industry." However, with the addition of competitors such as Lixun Precision and Lance Technology, which are competitive in all aspects, Gore's position in this field may not be affected in the short term, but in the long run, the first to be hit is the profit margin of the product. "

Different from the beginning of AR/VR, the development of mobile camera module industry has a long history, the competition has developed to a white-hot stage, and the smoke of price war is everywhere. However, there have been some changes in the middle and high end of the market since last year.

Improvement of competitive environment in middle and high-end camera market

Not long ago, Tianfeng International analyst Guo Mingyi mentioned in a report that if Shunyu Optics, the leader of mobile camera module (CCM), focused on the more demanding Android market, the return on investment would be much higher than Apple's lens business. However, at a time when the competition for smartphone parts is becoming more and more fierce, why did Shunyu Optics go against the wind?

According to people familiar with the matter, because one of the main competitors has suspended low-price competition since 2019, under this change, the gross profit margin of mobile camera module products of Shunyu Optics and Qiu Titanium Technology, which are also in the front-line camp, has increased significantly in 2020.

He continued: "as competitors have experienced a major financial crisis, they have changed their past style in the past two years and pulled quotations back to normal levels in the industry, greatly relieving pressure on other suppliers. Also let Shunyu Optics, Qiu Titanium Technology as the representative of the two main competitors, have the opportunity to improve the gross profit margin. "

Based on the fact that the aforementioned enterprise is one of the main suppliers of many terminal brands at home and abroad, has established a deep cooperative relationship with customers for a long time, and has the leading production capacity scale and technology in the industry, so even if it adjusts the product price, the terminal brand can not easily give up the supplier, thus driving up the overall product profits of the same echelon enterprises.

What needs to be pointed out is that such advantages obviously exist only between a few enterprises. Looking at the industry as a whole, the poor competitive environment formed by the long-term price war still cannot be improved.

When the terminal market competition develops to the middle and later stage, it has to put further pressure on the supplier price in order to give priority to protect its own profits. Industry insiders pointed out: "in the past five years, the competitive environment of the whole mobile camera module industry has become worse and worse, and the profit margin is also very low in both low-end and middle-to-high-end markets."

On the one hand, the number and production capacity of module factories have expanded too fast over the years, and the situation of oversupply has become more and more obvious; on the other hand, the key point of the upgrading of image effects in the past two years does not lie in modules, and the space for manufacturers to bargain with technology has been compressed. As a result, as long as a few of them bargain, the remaining suppliers will not be able to participate even if they do not want to participate.

Looking back over the past two years, many companies specializing in CCM have been expanding new business, making other products or other areas, such as security surveillance, vehicles, drones, homes and so on. The size of these markets is not comparable to that of the mobile phone market, but it is still profitable in the short term. Although it cannot support the performance of first-tier large companies, this alone can make many small and medium-sized enterprises live a better life.