Due to the impact of global inflation on the end-consumption kinetic energy, the business situation in the second quarter took a sharp turn for the worse. Major brand factories have also suspended supplying goods since the end of the last quarter due to their full inventory. As a result, some IC design companies did not meet the standards in the second quarter. The industry expected that in the third quarter The effect of the sluggish peak season will be more significant, and it is still difficult to resume normal shipments in the fourth quarter.
The industry said that since the second half of 2020, the semiconductor industry has benefited from the rise of digital transformation, home office and other trends, and the industry has changed from a buyer’s market to a seller’s market, pushing up prices and increasing shipments. This situation will continue for at least one and a half years. Until the beginning of this year, shipments began to slow as some of the demand was met.
In particular, since the start of the Russian-Ukrainian war at the end of February, it has further pushed up global inflation, triggering chain effects such as accelerated interest rate hikes by the US Federal Reserve, impacting the willingness of private consumers to buy electronic devices, and the demand for electronic devices has also been greatly reduced. The supply chain pulls goods to avoid being full of high-priced inventory, and the market returns to a buyer’s market.
The industry expects that, after a 2-year growth cycle, under the changing global environment, inventory adjustment is a normal phenomenon. According to the inventory level of existing terminal devices and semi-finished products in transit, the adjustment stage will take at least 1-2 quarters. Equivalent to the peak season effect in the third quarter of this year, the reimbursement is determined, and the growth in the fourth quarter is also difficult.
Looking forward to the market outlook, the industry admits that due to the low visibility of customer orders at this stage, only some niche products and foreign-to-order products are still shipping as usual, but the price can only be “commonly difficult” due to customer requirements, and has begun to be lowered. The prices of some products, coupled with the still high cost of wafers, are expected to significantly reduce profits in the second half of the year, waiting for the end of the inventory adjustment cycle.