The impact of the establishment of electronic components and IC trading centers in Shenzhen on the semiconductor industry

Source: Huaqiang Mall

    The layout of the trading center proposed in the Opinions reflects the current vigorous development trend of China‘s industrial Internet.

    |Impact on semiconductor supply chain

    As we all know, due to the resonance of multiple factors such as demand, supply, inventory and price, the electronic industry represented by semiconductors presents certain cyclical development characteristics, and its final direct impact is reflected in supply chain problems such as supply and demand imbalance, price fluctuation, and shortage of some core goods, which forms unstable factors for the production and operation activities of electronic industry manufacturers.

    The lack of core in recent years is a concrete manifestation of the cyclical development of the electronic industry. Due to the superposition of multiple factors such as trade zhan and epidemic situation, the current supply chain is basically unsolvable in the short term, which is also the core key point that the Opinions hopes to solve. It hopes to ultimately optimize the overall supply chain of components and parts by "encouraging and guiding global well-known basic electronic components and chip companies and upstream and downstream enterprises (including brands, distributors or manufacturers) to rely on the center to carry out sales, procurement, brand display, software solution research and development, application design, after-sales service, personnel training, etc.". Overall, it will form a significant benefit for the original factory, some distributors and end customers.

    From the perspective of the original factory, due to the long links involved in the semiconductor supply chain, the mismatch between supply and demand of electronic components (that is, the mismatch between supply and demand) often occurs in the mass production stage of enterprises. This mismatch between supply and demand is mainly caused by market demand fluctuations, customer order changes and various emergencies (epidemic, trade friction, war, etc.), which ultimately leads to the failure of the original factory to deliver on time. For example, since 2020, affected by the outbreak of the epidemic, the uncertainty of market changes has increased, further exacerbating the supply and demand mismatch of the original factory in the mass production stage, and affecting the normal production and operation activities of the industrial chain.

    Therefore, the original factory‘s demand for supply chain reform is relatively urgent. The representative of the Xing event is the acceleration of the transformation from a large factory represented by Deyi to direct sales in recent years (for details, please refer to the "Direct Supply and Distribution Strategy of the Global Head Chip Original Factory" of Star Star Core). The establishment of Shenzhen Trade Center is conducive to improving procurement channels, improving procurement efficiency, achieving delivery management, etc., and is good for the long-term development of the original factory.

    From the perspective of distributors, the introduction of the Opinions has changed the "neglect" of the distribution industry in the past and introduced some supporting policies, which will be beneficial to the emerging industrial Internet platform, but will not have a direct impact on the original private component trade.

    At the same time, the Opinions will help Shenzhen Huaqiang North and other places turn non-standard transactions into standard transactions, drive the design, research and development, manufacturing and testing of electronic components to form a complete industrial chain, and promote Shenzhen to build a more complete distribution biological industrial chain around electronic components and integrated circuits.

    In addition, the Opinions are conducive to regulating the development of the entire distribution industry, transforming and optimizing the supply side of the industrial chain through the industrial Internet and big data, and accelerating the transformation and upgrading of the distribution industry. In the short term, some "disorderly speculation" small and medium-sized dealers will accelerate the elimination and further accelerate the merger and integration of the industry. In the long run, it is conducive to the transformation and optimization of the supply side of the industrial chain. Industrial Internet head platforms such as Huaqiang Electronic Network will gradually become the focus of capital attention. The Matthew effect of capital will lead to the rapid development of industrial Internet head enterprises.

    From the perspective of end customers, the traditional industrial structure and production and operation mode of components have been difficult to adapt to the needs of economic development in the new era, and "lack of core" is the specific manifestation. How to ensure a high-quality procurement chain, reduce the uncertainty of the procurement process, and provide efficient and flexible solutions have become its development pain points. The Opinions can provide better solutions for some terminal demand characteristics.

    To sum up, with the development of mobile internet and digitalization, traditional component dealers are facing more and more problems, and the effective integration of online and offline has become a trend. In addition, due to the epidemic and the disorderly speculation of dealers under the "chip shortage", which has seriously affected the healthy development of the market, the reform of the semiconductor supply chain industry is "expected".

    |Write at the end

    Shenzhen, represented by Huaqiangbei, has accumulated many years of experience in electronic components and integrated circuit trading. The establishment of a trading center and a new platform has unique advantages. The issuance of the Opinions will further promote the integration and cluster development of the supply chain of the upstream and downstream industries of Shenzhen components, and give full play to Shenzhen‘s radiation effect on the Gulf Region, China and even the world.