Summary of recent component market trends: Polarization is still evident, with AI and car cores being popular

In the middle of 2023, due to the slow recovery in demand, the time for the industry chain to destock can be determined to be longer than previously expected. The demand for general-purpose materials relies on the boost of traditional peak seasons, and there are still many high priced models of automotive materials. Under the flat market tone, the market for GPU graphics cards is eye-catching, and AI applications have been highly anticipated to drive a large demand for chips.

Various IC materials: still see polarization in general vehicle use

For the past six months, the industrial chain has been basically in the stage of de inventory. Under the dual effects of continuous improvement in original factory supply and constant need for boosting demand, the market for general IC materials has continued to move towards normalization. The delivery time of main raw materials, including ST, TI, AD, etc., has generally fallen and the supply is sufficient. Infineon, Onsemi, NXP and other original manufacturers have a large share in the automotive market, and many materials still have sufficient demand.

The most mainstream general-purpose MCU in the market can be seen through the cloud market query tool "Chuangxin Index" under IC Trading Network. Key MCU models such as TMS320, STM32F103, and STM32F429 have all experienced varying degrees of price decline within six months. The price trend of high-performance MCUs such as STM32H743 and STM32H750 has also been downward within six months. With lower demand, improved original factory supply, and increasingly mature domestic substitution, mainstream MCU will no longer have the previous situation of shortage and price increase, and the market will operate as usual.

In terms of analog chips, TI announced to follow up on the prices of domestic chips and engage in more intense competition. But behind TI's massive market share grab, it is actually analog chips that have already fallen in price for a long time due to lower demand. For example, the non automotive chips of the TI brand TPS series have entered a price decline cycle since a year ago. The inevitability of TI chip price reduction stems from its large-scale expansion in recent years, especially its insistence on 12 inch production capacity, which will significantly improve material supply capacity, leading to a "price war" situation for general analog materials. Not only TI, but also ADI, the second largest simulated factory, has significantly expanded production in the United States, Ireland, and other places. As new production capacity is gradually released, the usual simulation materials should not experience a shortage trend again.

At present, limited supply and high priced materials are still concentrated in the automotive field. Models such as MPC5554MVR132, O3853QDCARQ1, VNH5019ATR-E, etc., have high demand due to approaching production halt or irreplaceability, and are now in high price fluctuations in four digits. Recently, the popularity of Botong's automotive network chip BCM89811B1AWMLG has surged, and the price has also increased, which has the potential to become a new internet celebrity.

Recent heat trend of BCM89811B1AWMLG

Source: Chuangxin Index

Chuangxin Index is a professional Big data analysis platform under IC Trading Network, which can reflect the price, inventory change and market demand during the period. It is a necessary cloud real-time component purchase tool for purchase managers. Its data system corresponds to the supply and demand data of international general components, making it suitable for procurement managers to import international procurement management processes. Its data system will extend to technical solutions and module requirements, supporting component selection and design innovation. Customers and friends can go to https://icpi.ic.net.cn/ Log in to the member account to check the model you want to know.

Memory: In the process of bottoming out, it is expected to enter a new cycle in the second half of the year

In the early stage, storage manufacturers spontaneously saved their revenue. Original factories, including Micron, Samsung, and others, announced that they would no longer accept lower prices and began to reduce production. However, due to the lack of significant improvement in demand, this measure by the original factory can only ensure that product prices will not continue to decline and cannot actually drive up memory prices.

With the traditional peak season approaching, although the current average price of storage is close to production costs, there are still doubts about demand, and the market downturn is almost certain. At this critical point in the cycle transition, the original factory once again ignited the idea of raising prices. According to industry news, the three major DRAM manufacturers intend to increase the contract price by 7% -8%, and Samsung has also been contemplating a price increase for NAND flash memory wafers. These measures reflect the general eagerness of storage manufacturers to improve revenue, especially Meiguang, which has a weaker share and profit level than the two Korean factories, and will further reduce production by 30%. As the supply from the original factory further narrows, the time for memory price flipping will also be approaching.

Based on market cycles in recent years, it can be inferred that the growth rate of memory sales peaked in the third quarter of 2021, and in 2022, the growth rate turned negative and a cycle of price reduction and inventory reduction was initiated. According to data from the World Semiconductor Trade Statistics Association (WSTS), the revenue growth rate of the storage industry usually ranges from peak to bottom in 1-2 years. Therefore, it is inferred that the current downward cycle is about to bottom out, and the expected time point will be in the third or fourth quarter of this year. As for whether memory prices can rise again in the future, demand remains to be seen.

It is also worth mentioning that HBM memory, which is compatible with AI, is experiencing a counter trend of growth. It is reported that after the beginning of 2023, the HBM orders of Samsung and SK Hynix will increase rapidly, and the prices of HBM3 products will increase five times. The reason for this is that the high bandwidth feature of HBM can enable AI servers to achieve high levels of data throughput. With the continuous development of the AI industry, the demand for chips such as HBM storage and GPU will continue to rise, which will to some extent save the overall sluggish demand situation.

Foundry model and HPC chip: different tone between AI and mobile phone

Due to sluggish demand for consumer electronics, TSMC's production capacity utilization rate dropped to 75% in the first quarter of this year, with the most significant declines in various processes being 6/7 nanometers and 4/5 nanometers, due to processor customers such as MediaTek and AMD cutting orders. In the second quarter, the peak turn and the demand for AI erupted. Nvidia GPU increased its projection, greatly boosting the capacity utilization of TSMC's advanced manufacturing process, in which the 5nm capacity increased from 50% to 70%, and the 7nm capacity increased from 3-4% to about 50%.

The increase in AI demand made Nvidia's high-end GPUs extremely popular. Especially after some products are restricted from being exported to China, the phenomenon of price increases is even more serious. Based on market information, the A800, which was originally priced around 74000 yuan per piece, has now risen to over 85000 yuan, while the high-end version has risen to around 100000 yuan. The price of the A800 single card has increased to 100000 yuan, while the 8-card A800 module has increased from 900000 yuan at the end of April to over 1 million yuan, and the delivery time has also been significantly extended.

In addition to GPUs, various types of HPC (high-speed computing) chips such as CPUs and FPGAs are also widely used in the field of AI servers. Referring to the hot search list of the Chuangxin Index in recent weeks, the attention of many FPGAs has increased, including 5CEFA9F23I7N in the Altera Cyclone V series, XC7K325T-2FFG900I in the Xilinx Kinex-7 series, and XC6SLX75-3CSG484I in the Xilinx Spartan-6 series.

Recent trends in popularity of three FPGA models

Source: Chuangxin Index

Another chip that occupies an important proportion in advanced manufacturing processes is the SoC used in mobile phones. "618" has greatly contributed to the downturn of mobile phone sales, prompting Qualcomm and MediaTek to reduce the number of films and product prices in the wafer foundry. The conservative tone of expectations for purchasing goods in the mobile phone market in the second half of the year is also basically confirmed. Industry estimates indicate that MediaTek and Qualcomm will not be able to resume normal wafer production levels until 2024.

In general, the surging demand in the AI market will bring additional momentum to the foundry, but the low demand for mobile phone SoC means that the destocking cycle of the industrial chain is still continuing. IDC, a research organization, expects that the global Foundry model market will decline slightly by 6.5% this year. The official recovery of the Foundry model industry may not be realized until the new cycle starts next year.

Conclusion: Looking forward to a prosperous season in the second half of the year

Compared to the first half of the year, the second half of the year belongs to the traditional peak season, with multiple hotspots such as Apple's new products, the opening season, and Double Eleven. The cumulative demand created by these hotspots will obviously be higher than the first half of the year. And the inventory situation of the industrial chain in the second half of the year will definitely be better than in the first half, which is also more conducive to the supply chain. Therefore, it can be expected that the performance of major IC companies in the second half of the year will also be better than in the first half.