Two days of ice and fire in the chip industry!
Two days of ice and fire in the chip industry! Photoresist Coating – Cheersonic
Compared with the sound of firecrackers and gongs and drums all over the place last year, today’s semiconductor industry is undergoing a “two layers of ice and fire”. One is the hot summer of expansion, short supply, and increased capital expenditures, while the other is the cold winter of price cuts, falling stock prices, and lack of financing. Why are there two extreme situations in the semiconductor industry, and how do chip giants in different situations view the future?
Memory chips enter a down cycle
At present, it is a recognized fact in the industry that memory chips have entered a downward cycle. TSMC directly pointed out in the latest financial report that the memory market has been cold.
There are two main reasons for this:
On the one hand, it is naturally the cyclical nature of the storage industry. Memory chips have the attributes of commodities, and the mismatch between supply and demand leads to cyclical price fluctuations. From the historical price trend of memory chips, its cyclical fluctuation characteristics are obvious. When a new application has a greater demand for memory chips, downstream manufacturers tend to actively expand production; while when the economy is down, manufacturers in the industry clear inventory by reducing prices.
On the other hand, the consumer electronics market is cold. After 20 years of dominating the semiconductor market, mobile phones and computers are no longer the biggest growth engines of the semiconductor industry. People’s demand for consumer electronics has gradually decreased, which further affects the price of memory chips. However, as server-related demand continues to grow, so Compared with NAND, which is more used in mobile phones, mainly used in server DRAM, the price drop will not be so fast.
Analog chips have high risk-taking ability
Analog chips are also facing downward price pressure this year, but contrary to memory manufacturers, the big analog manufacturers are optimistic about future expectations.
The one who sells tools is the eternal winner
As the saying goes, “Push for gold before the rich sell the shovel”, no matter whether the downstream can scoop gold or not, the upstream tool provider must be the eternal winner.
This has a certain relationship with the division of labor and cooperation in society. In the semiconductor industry chain, upstream and downstream enterprises are inherently closely related. The raw materials or spare parts of upstream enterprises are indispensable tools for downstream enterprises, which leads to whether downstream enterprises are profitable. A full bowl, or a loss of everything, will not affect the upstream tool provider to become a winner. Bringing it into the semiconductor industry, the “shovel sellers” behind it are naturally equipment providers and tool manufacturers such as EDA/IP.
The foundry giant is Hengqiang
In 2022, driven by the structural shortage of chips and IDM’s increase in outsourcing orders, the foundry giants are not afraid of the semiconductor down cycle, and the expansion layout is still vigorous. “The big ones are ever bigger, the stronger ones are ever stronger”. For the foundry giants with technological leadership and strong pricing power, in the face of the uncertain market situation in the future, expanding production can not only further increase chip output and scale, but also enhance their own competitiveness and leading edge.
Summarize
At present, the dual pattern of the chip industry has become an established fact. Enterprises in different environments should take corresponding preventive measures. Even in the hot summer when supply exceeds demand and increases capital expenditure, they must always be vigilant. After all, the semiconductor industry is a typical cyclical industry, and I don’t know when the next down cycle will come.
However, we also have to admit that semiconductors are an industry with a bright future as visible demand is returning. For enterprises, how to cultivate their internal strength in order to break through in every cycle is the correct way to operate.
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