2021年10月26日

Over $400 billion market! Your cell phone, car, etc are all connected to it

Since the second half of last year, the global manufacturing industry chain has been caught in a continuous “chip shortage tide”, and from the beginning of the automotive industry has spread to other industries. Since March, as the major mobile phone manufacturers have entered a relatively concentrated new product release period, mobile phone manufacturers are also facing the problem of chip shortage.

Recently, Xiaomi and other mobile phone manufacturers have voiced that the supply of mobile phone chips is in short supply, and some shortages affect the normal development of business. The head of another handset maker told reporters that its new model, which is powered by Qualcomm Snapdragon 888 chip, was sold out soon after it was launched earlier this month.

Realme mobile phone vice president Xu Qi introduced that they will significantly advance the planning of the future chip stocking time. Meanwhile, in another new model to be released at the end of the month, they use another chip supplier, MediaTek’s Breguet 1200 chip.

In addition to mobile phones, many products, from cars to small home appliances, are facing chip shortages. It is understood that chip production is divided into design, manufacturing, sealing and testing and other links. And this round of chip shortage, the main “card” in the manufacturing foundry link capacity is limited.

Gu Wenjun, Chief Analyst of CIM Research, said in January this year, many countries and auto manufacturers took measures to coordinate their auto chip production capacity, cutting off some of the chip production capacity in the mobile communications sector and transferring it to cars, which indirectly led to the shortage of production capacity.

The head of one of China’s leading chip companies said demand for power semiconductors, smart sensors and chips used in some mobile phones is falling short of supply.

Li Hong, chief operating officer of China Resources Microelectronics, said: ‘Our fabs and testing facilities are full, and the lead time for some products is really extended, like two to four weeks.’

Tension between supply and demand has led to price rises in all links of the industrial chain, from raw materials to terminal products. Recently, Japan Shin-Etsu, a leading semiconductor materials company, announced a 10-20% price increase for its silicon products, the first since 2017.

 

The difficulties faced by domestic manufacturers actually reflect the situation of the global industrial chain from the side. What is causing the massive chip shortage around the world? What are the new trends in the chip industry?

The chip shortage is due to changes in demand in the first place. The World Semiconductor Trade Organization reported that the global semiconductor market totaled $440 billion in sales last year, up 6.8% from 2019. It expects growth to accelerate further this year to $488bn, an increase of 10.9%.

Before the outbreak, the growth trend of global semiconductor sales had slowed, and some institutions had expected that sales might decline in 2020. In this case, the major players are not aggressively expanding capacity, but the epidemic has changed the market landscape in unexpected ways. Demand for everything from telecommuting to home entertainment to data centers is soaring, and demand for semiconductor chips is rising in almost every category.

There are many chip companies in the world, but only Intel and other very few companies can independently complete the design, manufacturing and testing of all the processes. Most chip design companies complete production through OEM. The foundry of chips is a highly concentrated market, with five companies collectively accounting for 90% of the global market share, and the most advanced manufacturing processes are in the hands of only a small number of companies.

 

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