DIGITIMES Asia: Analog IC inventory returns to normal levels
Monday, May 13, 2024
TAIPEI, May 6, 2024 /PRNewswire/ -- Inventory adjustments for analog chips across all device applications have been completed, and shipments to specific customers and product lines have resumed their upward trajectory, according to sources at analog IC suppliers.
According to the news report from the technology-focused media DIGITIMES Asia,Texas Instruments (TI) pointed out that in addition to inventory levels in the consumer market returning to normal, supply chain inventory destocking in application markets, such as automotive and industrial control, has entered the final stage.
Taiwanese IC design houses believe that despite overall demand for analog ICs remaining sluggish, inventory levels have generally returned to normal. Shipments are expected to return to their normal cycle, experiencing more significant growth in the traditional peak season in the second half of 2024.
As the leading manufacturer in the analog IC market, TI's market observations and related statements have always been seen as important indicators by industry players. Many players whose product lines do not directly compete with TI will still consider its observations when drawing up their next strategy.
Subsequent demand depends on multiple factors
TI's comments on inventory destocking for automotive and industrial control applications coming to an end are more positive compared with the highly pessimistic statements from the previous quarter. However, relevant Taiwanese players stated that the actual pace of demand recovery still depends on each application and customer situation.
It was also pointed out that the end of inventory adjustments does not mean subsequent demand will be strong. Still, TI anticipates that shipments this year will grow compared with last year.
Taiwanese Power Management IC (PMIC) makers said that whether actual demand would increase this year would depend on the traditional peak season in the second half of 2024. It would also depend on customers' willingness to introduce new high-standard products.
If the momentum of new product introductions is insufficient, achieving significant growth this year will be difficult. However, based on the current market conditions, the growth momentum of high-end consumer electronics products may outperform that of entry-level and midrange products. Shipment momentum for new high-end products with higher unit prices may further expand this year.
Sources familiar with PMIC players said that Taiwanese companies of all sizes are focusing on shipment stability this year and are not expecting to see significant growth. In 2024, they will concentrate on expanding high-end technologies and new businesses, which they hope will bring forth the next wave of growth.
Demand for price reductions
It is worth noting that during its financial report meeting, TI stated that current chip prices have returned to the pre-pandemic price reduction pattern. Prices will continue to fall by a low single-digit percentage.
Taiwanese PMIC manufacturers observed strong demand for price reductions by customers as early as last year. Customers not only requested that price reductions return to pre-pandemic levels, but actively asked that actual prices also return to pre-pandemic levels.
However, PMIC players admitted that unlike TI, which can reduce costs and increase wiggle room through the IDM model, IC design houses find it hard to meet customers' demands to lower prices because wafer foundry costs remain higher than before the pandemic.
In terms of the price competition pressure brought on by TI, most Taiwanese PMIC makers point out that TI is focusing on the automotive and industrial control markets these days, and they rarely run into TI in the consumer market. Most of the companies competing with TI on price now are Chinese manufacturers. The impact on Taiwanese manufacturers has been limited.
Even so, due to the relatively weak demand in the automotive and industrial control markets, coupled with the impacts from outside factors such as decoupling from the US and China and diversifying supply chains, the competition for market share is no longer purely driven by price. As such, TI's price-cutting strategy seems to be showing signs of slowing.
Major Taiwanese PMIC players include Global Mixed-Mode Technology, Anpec Electronics, Leadtrend Technology, uPI Semiconductor, and M3 Technology. Taiwanese companies with PMIC businesses include MediaTek and Fitipower Integrated Technology.
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SOURCE DIGITIMES ASIA
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