The current semiconductor market is in a phase of product oversupply, and the market is being hit with price reductions for all types of chips. Utmel has released data on the chip categories whose prices are falling in the second half of 2022 and their subsequent demand and price trends.

Driver chip prices reduced by 20% in the third quarter

Drive chips, which became the main target of bargaining by panel makers because of their high prices and huge profits last year, have steadily declined since the beginning of this year, falling by 10 to 15 percent in the second quarter. Reach more than 20%. With the current weakening demand for panels, drive chips are also forced to reduce costs across the board.

Xie Qinyi said, South Korea and mainland China drive chip factory can only follow the price reduction, but despite the pressure on the panel factory, China Taiwan's drive chip factory, including United Wing, Chiken Optoelectronics, Duntai Electronics, Tianyu Technology, Siltronic and Ryding Technology will continue to lead the global drive chip market.

Consumer-grade MLCC prices should fall to 30%

Passive device raw material prices have soared due to the Ukraine issue. However, due to the impact of China's epidemic prevention and control on industrial demand, downstream inventory clearance sales are not as expected, especially the standard products are most affected. Standard MLCC and resistor inventories of distributors and manufacturers will be cleared and restored to normal levels amidst low demand. However, de-stocking will take longer than expected due to factors such as China's epidemic control and supply chain closures, and may not end until late in the third quarter. 

Recent research from TrendForce shows that consumer-regulated MLCC costs have fallen by an average of 5% to 10% from Q1 2021 to Q1 2022. Price reductions of 3% to 5% in the second quarter of this year alone are now encouraging consumers to boost their desire to pull, with some lower-tier consumer regulated MLCC prices even reaching material costs.

Looking at previous MLCC supply and demand cycles, supply and demand turning points often occur after a sustained increase in price and volume or a decrease in price and volume. For example, a previous supply and volume inflection point occurred in the second half of 2020 to 2021, when prices and volumes rose simultaneously, resulting in two consecutive quarters of flush declines thereafter. The report shows that MLCC offer pressure will not abate in the second half of 2022, with prices expected to fall further, by an average of 3-6%.

The opposite is also true, as customer chips are scarce, industry regulation niche MLCC prices help to revive the momentum of shipments, stabilizing the 1% to 2% decline. However, the current annual MLCC offer rate remains stable.

Analog chip price spike will end

Analog chip giant TI told several of its customer manufacturers that the wave of analog chip pricing led by PMICs could end and even face downward pressure due to declining chip capacity in the third quarter.

The analog chip market was hot last year, especially for general-purpose analog chips, and power management chips had the largest share and severe supply shortages, making them the hottest category in the semiconductor industry.

But with the rapid release of new production capacity and the suspension of downstream demand, this year the analog chip price hike wave will end, even the industry's hottest power management chips previously could not continue the boom, indicating that the overall market situation is deteriorating sharply. Market reports say that several analog chip suppliers have recently changed their attitude and are now willing to bargain on pricing.

It is reported that some TI chip prices have fallen by up to 80% in the last two months. From a market perspective, some of TI's power management chips in the spot market did experience price fluctuations. For example, the model TPS61021 general-purpose consumer power management chip, its price has fallen from a high of $ 45 last year to the current price of about $ 3.

"The chip is past its peak of scarcity, and the turning point in the analog chip market may have come sooner than expected." According to Utmel, "The past problems of difficulty in finding suitable chips will not happen again, and the initial supply of chips is growing significantly."

Emergency de-stocking, MCU distributors compete for customers through price wars

News broke in April that chip distributors were lowering prices on consumer MCUs to reduce excess inventory. It is worth noting that the drop in consumer MCU prices was initiated by chip distributors, not manufacturers.

This is because chip distributors stocked up on consumer MCUs when prices were rising, and they have recently taken action to start lowering prices on consumer MCUs due to the uncertainty of this year's demand outlook. For example, in response to aggressive pricing strategies by competitors, MCU supplier Holtek notified its distribution partners of appropriate price adjustments.

GPUs: Prices Steadily Falling

As virtual currency prices fluctuate and today's demand for the GPUs needed to mine cryptocurrencies decreases, graphics card prices have eased. 84 million PC GPUs were shipped worldwide in the second quarter of this year. that's 12.7 percent less than the previous quarter and 32 percent less than a year ago, which led to a 31 percent drop in Nvidia's stock price and an approximate 37 percent drop in AMD's stock price.

According to Susquehanna analyst Christopher Rowland, the average selling price of GPUs has fallen about 41 percent from about 77 percent above the manufacturer's suggested retail price.

NAND Flash Prices Could Reverse

In February, two memory plants in Japan experienced capacity problems due to contamination of flash memory raw materials from Witten Electronics and memory major Armored Man. Immediately after the contamination news broke, Witten sent emails to customers informing them of the price increase, and Micron also said that NAND contract prices rose 17-18% in mid-February, with spot increases of more than 25%. However, uncertainty in the overall environment has also increased since the second quarter, and the industry has turned conservative on the outlook for NAND Flash in the second half of the year. NAND Flash may face pressure in the third quarter, but good business opportunities may still emerge in the second half of the year after uncertainty is removed.

NOR Flash Market Divergence 

NOR Flash prices have been rising since the second half of 2020 due to increased demand, foundry capacity shortages and the release of new NOR capacity, and their prices have risen for six consecutive quarters this year, the longest increase in history, though they are also set to diverge this quarter.

Low-capacity NORs are affected by consumer electronics demand and an uncertain environment, leading to higher customer inventory levels. NOR Flash prices will fall 10% to 15% in the third quarter of 2022 as suppliers in mainland China expand production and offer more competitive pricing.

Driven by industry applications such as servers, automobiles, and 5G base stations, demand for high-capacity 256M, 512M, 1Gb, and 2Gb NOR Flash continues to rise, and prices may remain relatively stable.

DRAM: price decline continued until the end of the year

Due to the increasing output of Korean factories and their willingness to let prices increase, consumer DRAM prices have expanded in the third quarter, from the originally estimated 8-13% decline to 13-18%, and are expected to dip again in the fourth quarter.

According to reports, the current mainstream DDR3 and DDR4 products are now down 20%-30% from the beginning of the year.

At this stage of the storage market overcapacity, oversupply is becoming more and more serious, but storage manufacturers are still weighing between maintaining profits and seizing the market, before the supply and demand reversal may only be forced to reduce prices to accelerate turnover.