5G chip "order cutting" spread: the global consumer electronics demand is depressed, and the supply chain is trapped to be solved

    Faced with repeated epidemics, economic downturn and other pressures, upstream and downstream companies are watching the trend in the second half of the year and exploring more application scenarios and opportunities in the global market.

    Weak demand and frequent orders cutting in the industrial chain

    From the perspective of the most representative mobile phone industry chain, the global demand for smart phones is weak, and major institutions and leading manufacturers have lowered their expectations. According to the group intelligence consulting data, it is estimated that the overall demand for smart phones in the world will be reduced from 1.35 billion to 1.3 billion in 2022, and the annual demand of China‘s major terminal brands will be significantly reduced.

     Guomingfu previously said on social media that China‘s major Android mobile phone brands have cut about 170million orders this year, accounting for 20% of the original 2022 shipment plan. If consumer confidence continues to decline, orders may further decrease in the coming months. The inventory level of skyworks and qorvo RF front-end chips has exceeded 6-9 months.

    According to the current data, the terminal market is not optimistic, and the sluggish demand has directly triggered a wave of order cutting. For 5g chips, guomingpei believes that the lead time of 5g chips is longer than that of ordinary parts, so it is difficult to improve the demand even in the first quarter of 2023 from the perspective of the two leading companies (Qualcomm and MediaTek).

    In response to the topic of chip order reduction, on May 23, gudawei, chief financial officer of MediaTek, said that the company had previously slightly reduced 5g mobile phone sales. However, MediaTek benefited from entering the global market and flagship field. The growth target of 5g chip shipments has not changed, and the annual revenue is expected to grow by 20%. Qualcomm did not respond. However, at the end of April, Qualcomm CEO anmeng released a positive signal at the financial report meeting. He said that at present, the demand in all end markets is still strong, and the demand for chips continues to exceed the supply.

    In the view of the two chip manufacturers, the demand for core chips is still growing. From the recent performance, Qualcomm has maintained a high growth. According to the financial report for the second quarter of fiscal year 2022 released by Qualcomm, the sales of mobile phone chips increased by 56% annually to US $6.33 billion; Qualcomm‘s revenue in the quarter was US $11.16 billion, a year-on-year increase of 41%; The net profit was USD 2.934 billion, a year-on-year increase of 67%.

    Besides the main chip of mobile phone, camera chip, panel and other devices are also affected. Xujingjing, senior analyst of semiconductor devices at Qunzhi consulting, told the 21st Century Business Herald reporter: "according to the latest data forecast of Qunzhi consulting in May, the global market demand for smart phone camera chip terminals is expected to be about 4.95 billion in 2022, down about 2.7% year on year, and down 3.4% compared with the forecast data at the beginning of the year."

    Trendforce Jibang consulting told reporters that affected by the epidemic and the adjustment of brand inventory, the shipment of laptop panels in April this year was 17.5 million, a decrease of 21.5% year-on-year. Meanwhile, in 2022, the shipment of laptop panels will be revised down to 240million pieces, with an annual decrease of 14.9%, and there is still the possibility of downward adjustment. The market trend must depend on the changes of the overall environment.

    Jibang consulting pointed out that, on the one hand, due to the slowdown of terminal demand, the brand is facing a sales recession in the first quarter, which makes the outlook for the second quarter more conservative, and the purchase volume for the panel end also drops sharply; On the other hand, the brand‘s panel inventory level remains high. It is reported that before the end of April, the brand‘s laptop panel inventory was about 8~12 weeks, which was 2~4 weeks higher than the normal level of 6~8 weeks. As a result, the brand had to place a large number of repair orders for the laptop panel for inventory adjustment.

    It is difficult for local devices to rebound in the short term

    On the whole, the supply and demand fluctuation of the current industrial chain has become more complex, the structural shortage will continue, the phenomenon of price reduction and price increase coexist, and enterprises also take more cautious and flexible measures for inventory control and supply chain management.

    On the demand side, the consumer electronics downturn has become a consensus. With regard to the decline in demand for mobile phones, Wuyiwen, a senior analyst at strategyanalytics, analyzed to the 21st Century Business Herald reporter: "in addition to the impact of the epidemic, the maturity and saturation of the market, the lengthening of the user exchange cycle, and the lack of disruptive innovation in the industry are the main problems perplexing the domestic smartphone market. The continued appreciation of the US dollar and the escalation of geographical conflicts have put pressure on manufacturers‘ costs and pushed up the retail prices of terminals."

    On the supply side, the production capacity of wafers, panels and so on is still expanding. An upstream equipment and material manufacturer told the 21st Century Business Herald that it will take time to expand the production of chips, and the overall supply of chips will remain tight in the next 2-3 years. It can also be seen that TSMC and other wafer manufacturers continue to raise prices.

    However, the supply-demand relationship of some upstream devices has been eased. Songyiwen, Minister of glory supply chain management department, told reporters earlier that the shortage of mobile phone main chip SOC has been eased, but some categories are still in short supply. For example, the supply of memory chips is tight, and chips such as display and camera chips will be more abundant. On the whole, those involving high-end products will be more nervous, especially those involving advanced processes, such as 4 nm and 5 nm. The more advanced the process, the more nervous it will be.

    At present, the supply of some driver IC chips, camera modules, mobile phone panels, etc. is sufficient, and prices continue to fall this year. For example, in terms of modules, xujingjing said that in 2022, affected by the oversupply of upstream camera chips, the average price of camera modules will decrease by about 10%.

    According to qunxi consulting data, the price of smart phone panels in may still maintained a downward trend. "The supply and demand of smart phone panels in various technology categories in the world is still loose. It is difficult to reverse the weak demand in the terminal market in the short term, and the brand is not very enthusiastic about stocking. On the supply side, faced with the difficulty in obtaining effective means to stimulate growth in the market scale, most panel factories adopt normal price reduction strategies."

    "The mobile phone terminal market continues to be sluggish, and it is difficult to make significant improvement in the short term. The panel price will show a downward trend in 2022. However, the panel price will not decline much because it is unable to stimulate demand through the low price strategy. In the second half of the year, it will maintain the normal quarterly decline strategy of more than 3%," wangxiaoya, a senior analyst of the mobile phone panel at group intelligence consulting, told reporters, "This year and even the first quarter of next year, the overall supply and demand of smart phone panels is still relatively loose, so it is difficult for prices to reverse in the short term."

    After the shortage and price increase of the drive IC in the previous two years, the supply and demand also began to recover. This year, the price is also declining. A manufacturer told reporters: "the drive IC has dropped by about 5%-10% since the end of last year, basically falling to the starting point of last year."

    Faced with numerous challenges, how do enterprises look for opportunities? Many people in the display industry chain pointed out to the reporter that, on the one hand, new application scenarios such as vehicle will be expanded; on the other hand, as the overseas market recovers, more investment will be made in the overseas market to seek more increment. For mobile phone manufacturers, wuyiwen said: "we expect the market to rebound in the second half of this year. In terms of price, we predict that the high-end market will achieve relatively higher growth. For domestic manufacturers, they will face the challenges of shrinking market scale and intensifying competition in 2022. We suggest that we should seek stability, make up for weaknesses and strive to make breakthroughs in the high-end market."