The price increase of power chips and MCUs reflects costs or market recovery?

The price increase of power chips and MCUs reflects costs or market recovery?

With the continuous advancement of technology and the gradual maturation of the market, the market demand for power semiconductors and microcontroller units (MCUs) is expected to continue to grow.

Recently, there has been a new round of price increases for power semiconductors and microcontroller units (MCUs), which has attracted widespread attention in the market. There are different interpretations and predictions for this price increase, with some believing it may be a signal of market rebound, while others think it is only a temporary phenomenon caused by increased costs.

Firstly, we need to understand the important position of power semiconductors and microcontroller units in the electronic industry chain. Power semiconductors are mainly used for energy conversion and control, while microcontroller units are the core components of intelligent devices, both playing a pivotal role in electronic products. Therefore, their price changes often have a profound impact on the entire electronic industry chain.

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From the perspective of market supply and demand, the price increase of power semiconductors and microcontroller units may be related to the current market environment. As the global economy gradually recovers, the demand for electronic products continues to grow. At the same time, due to the impact of the pandemic on the global supply chain, production in some areas has been restricted to some extent, leading to relatively tight market supply. In this situation, suppliers may raise prices to balance the supply and demand relationship.

Recently, there has been frequent news of MCU price increases. According to the Industrial and Commercial Times, Taiwan's MCU manufacturer Winbond recently notified its agents to raise the prices of OTP MCUs (blank MCUs that cannot be reprogrammed) from now on. Winbond's inventory turnover in the first half of 2023 has taken effect, and the revenue trend in the second half of the year has recovered to a year-on-year increase. Financial data shows that the company's revenue for the whole of 2023 reached 1.058 billion New Taiwan dollars, a year-on-year increase of 12.63%. The management pointed out that the current market visibility is limited, and the demand for consumer electronics is concentrated on specific items, which has not fully recovered. The company has combined lithium battery charging management with MCUs, bringing growth momentum to the company. The development results are gradually taking effect. As the MCU prices stabilize and rebound, there is a chance for the revenue in 2024 to increase quarter by quarter. In addition, the spot price of GigaDevice's 32-bit MCUs on the mainland also showed a slight rebound at the beginning of January. The company recently stated that the biggest challenge for its MCU business in 2023 was the destocking of industrial customers, which had a significant impact on overall revenue. In 2024, it is expected that the inventory of industrial customers will be basically destocked and start to order normally. In the consumer market, there was a moderate rebound from the second half of 2023 to Q4, and the company actively seized the opportunity to expand revenue. It is currently expected that the MCU business in 2024 will be better than in 2023. In addition, Winning Microelectronics and Sino Micro also stated that they have seen a warming trend in the MCU market. Winning Microelectronics' revenue in the fourth quarter of 2023 was 400 million yuan, mainly due to the recovery of demand in the home appliance market, and the company's home appliance MCU orders increased. However, the visibility of demand in the first quarter of 2024 is still relatively low. Sino Micro stated that the company's MCU products began to show structural shortages at the end of Q3 2023, mainly in the fields of consumer electronics and brushless motor control chips. For this price increase, industry insiders believe that due to the accumulation of inventory, many MCU factories almost sold at a loss to clear inventory, actively destocking. The price of general-purpose MCUs has previously reached a new low, and in the first quarter of this year, the price quotes for some products began to rise, and some products have appeared in urgent orders for super batches (HOT RUN), and the market situation is expected to gradually return to normal. In general, the market has begun to see individual manufacturers decide their pricing strategies based on their inventory status and customer demand. Although the price increase is not universal, it is still a positive trend.

The domestic power semiconductor market has also set off a wave of price increases, with many manufacturers raising product prices. This trend is mainly influenced by the rise in raw material and labor costs, prompting manufacturers to re-examine market dynamics and make corresponding adjustments. Although the wave of price increases has attracted considerable attention in the market, some industry insiders believe that this is not enough to fully reflect the recovery of the industry.

On January 9, Shenzhen Shenwei Semiconductor Co., Ltd. issued a notice stating that the past three years have been a challenging period for the entire semiconductor industry. The sluggish market demand has led to vicious competition, with product prices continuously falling and quality accidents occurring frequently due to industry infighting. Due to the continuous increase in overall raw material costs and the increase in comprehensive operating costs, Shenwei Company is also facing the practical problem of continuous financial deficits. After internal discussion within the company, it was decided to raise the prices of new orders received from January 9, 2024, on the basis of the original prices by the following margins: the price increase for the SOD-123/SOD-323/SOD-523 packaging series is 10~20%; the price increase for the SOT-23 packaging series is 15~25%; the price increase for the SOT23-3L/SOT23-5L/SOT23-6L packaging series is 15~25%; the price increase for the SOT-323/SOT-353/SOT-363/SOT-563 packaging series is 10~20%.On January 14, 2024, Jiejie Microelectric also issued a "Price Adjustment Letter", deciding to adjust the price of the Trench MOS product line starting from January 15, 2024. The price increase is the company's previous efforts to continuously improve product quality and enrich product models, and has been continuously increasing investment in advanced equipment and process research and development. However, under long-term losses, the original price has been difficult to meet normal supply needs. Therefore, the company has to adopt a price adjustment strategy to balance costs and revenues. The price adjustment letter also mentioned that orders placed before the adjustment date can continue to be executed at the original unit price and quantity, and it is necessary to communicate and confirm with Jiejie Microelectric's business personnel in a timely manner before placing new orders. Due to some challenges and cost pressures faced by the company in the production and operation process, as well as intensified market competition, Jiejie Microelectric was forced to increase the price of the Trench MOS product line by 5%-10%. In the past period of time, due to fierce competition, the power semiconductor industry has experienced a price war, resulting in a severe compression of the profitability of the entire industry. As inventory is gradually reduced and market demand gradually recovers, price increases have become an inevitable market response. However, the impact of the price increase on mainland manufacturers and Taiwanese manufacturers is different. Mainland manufacturers are mainly concentrated in the mid- and low-end product lines, while Taiwanese manufacturers have long turned to the high-end market. Therefore, the impact of the price increase on Taiwanese manufacturers is relatively small. In terms of market demand, although the demand for consumer electronics has rebounded, the overall market demand remains sluggish. Looking ahead, Taiwanese power component manufacturers will continue to focus on increasing the proportion of applications in the automotive and industrial control fields. They will achieve this goal through strategies such as launching new products, increasing revenue share, and expanding the European and American markets. *Statement: This article is created by the original author. The content of the article is his personal opinion. We reprint it only for sharing and discussion, and do not represent our approval or agreement. If you have any objections, please contact the backstage.