TAIPEI, Taiwan – (COMMERCIAL LINE) – According to TrendForce, the consumer electronics market will bear the brunt of the weakening home economy, the pandemic in China, international tensions and rising inflation in 1H22. Along with the traditional off-season, demand for relevant applications such as PCs, laptops, TVs and smartphones has cooled significantly and downstream customers have subsequently scaled back their shipping targets for the year, while demand for cars, Internet of Things, communications and server products remain good. At the same time, the supply chain will create higher stocks overall to mitigate the risk of material shortages due to transport impediments induced by the spread of the pandemic and the ongoing war between Russia and Ukraine.
Due to the extended lead times of semiconductor equipment and the new limited capacity in 1Q22, the overall capacity utilization rate of the foundry remains at full load, in particular, component mismatch problems continue for parts produced in nodes mature (1Xnm ~ 180nm). Looking forward to the second quarter, although growth in global wafer production capacity remains limited due to weak demand for end products, continuing international tensions and forced lockdowns and China’s oversight due to the recent spread of the pandemic, there is an opportunity for the supply chain to obtain a more adequate supply of wafers that were previously squeezed by production capacity.
The overall supply of key server materials improved slightly in 1Q22. Also, due to the increase in orders from ultra-large data centers, the overall supply cycle of NetCom chips such as LAN ICs / chips remains up to about 40 weeks, but the demand gap can be bridged by setting up rush order fees, mitigating the actual impact. As the above situation eases, additional orders for the production of ODM motherboards are moving rapidly, pushing the continued stock of FPGA and PMIC materials. NetCom chips are also overcrowded and the market in general has reached a “rich get richer” mentality. The material shortage in second-tier ODMs still stifles motherboard production for a limited number of customers, but does not affect the overall server market offering. With improvements in material supply, server shipments will increase significantly in 2Q22, with an estimated 15.8% QoQ growth to 3.6 million units.
Affected by sluggish seasonal demand, the Russian-Ukrainian war and rising inflation, market demand cooled. Therefore, material delivery problems in the supply chain have decreased compared to 2H21. While there is still a shortage of some components, most of these shortcomings are concentrated in mid / low-end smartphone products. The lead time for low-end 4G and 5G SoCs is around 30-40 weeks, which is limited by production capacity planning. Since last year, the demand from the mid / low-end mobile telephony market has not been met. Followed by A + G sensors with a delivery time of around 32 ~ 36 weeks and OLED DDIC and Touch IC with a delivery time of 20 ~ 22 weeks. The production volume of smartphones in 2Q22 will be affected by the interaction of the aforementioned factors with an expected production volume of 323 million units, or only 6% QoQ, lower than the performance of previous years.
Also impacted by weakening end market demand, discounting client SSDs that are no longer oversupplied, Type-C ICs, WiFi and PMICs currently all boast long lead times, with Type-C ICs the longest at 20 ~ 25 weeks. However, compared to TrendForce’s assessment earlier this year, the delivery cycle hasn’t lengthened, so delivery times for these three product types are expected to improve by the end of 2Q22. As the supply chain backlog continues to improve, shipments of notebook computers (including Chromebooks) are projected to reach approximately 55.1 million units in 2Q22, down 0.7% quarterly.
5. MLCC passive components
From the perspective of other key components, taking the MLCC as an example, the demand for major consumer electronics such as cell phones, laptops, tablets and TVs decreased significantly in 1Q22, resulting in MLCC inventory levels with specification of products. high consumer products held by original suppliers and channel agents and this situation could continue into 2Q22. At present, inventory momentum for automotive and industrial MLCCs has steadily increased, while consumer-spec products have yet to escape the oversupply model. In 2Q22, the MLCC market has the opportunity to alleviate its component mismatch problems by gradually increasing manufacturing capacity and automotive and server ICs supplied by semiconductor IDM companies, driving inventory momentum at equipment OEMs. automotive power, server, fast charging and energy storage / charging. Automotive and Industrial MLCCs have the opportunity to become major growth drivers in 2Q22 with Murata, TDK, Taiyu and Yageo as the main beneficiaries. Consumer specification products, which account for the majority of MLCC production from suppliers in Taiwan, South Korea and China, could face continued weakness in market demand in 2Q22 due to slowing mobile phone demand and laptops and the continual adjustment of inventory by branded and ODM companies.
Pending 2Q22, servers excluded, the demand for end products related to the consumer category remains weak. Components originally oversupplied will face stricter price testing due to the supply / demand imbalance. In terms of materials in severe shortage, more production will be shifted to products with high demand through the deployment of in-house production capacity. TrendForce believes that from changes in PC market conditions, which can be seen in rapid changes in demand, buying behavior has rapidly shifted from the previous overordering strategy to actively cutting orders, causing supply chains to counter seasonal trends. of previous years. Due to the recent accelerated uptake of Omicron in China and based on the country’s dynamic zero-COVID policy, abrupt and mandatory blocking and control measures may cause local manufacturers to face multiple and complex supply chain problems, which will go to the detriment of market performance.
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TrendForce is a global provider of the latest technology industry developments, insights and analysis. Having served businesses for over a decade, the company has built a strong subscriber base of 500,000 subscribers. TrendForce has established itself as an organization that offers in-depth and accurate analysis of the technology sector across five major research departments: semiconductor research, display research, optoelectronics research, green energy research, and ICT applications research. Founded in Taipei, Taiwan in 2000, TrendForce has extended its presence in China since 2004 with offices in Shenzhen and Beijing.