Chip shortage spreads to the home appliance industry, "hoarding cores" more than half a year ahead of schedule

  The global chip shortage crisis is spreading from the automotive industry to consumer electronics and household appliances such as televisions and washing machines.

The factors leading to the shortage of chips are, on the one hand, insufficient capacity in upstream fabs, and on the other hand, because companies are still increasing semiconductor inventories significantly.

  According to the latest preliminary statistics released by Gartner, global semiconductor revenues will reach 466.2 billion U.S. dollars in 2020, an increase of 10.4% over 2019.

Andrew Norwood, vice president of research at Gartner, a market research organization, told a reporter from China Business News: Under the circumstances, memory, GPU and 5G chipsets lead the growth of semiconductors, while the automotive and industrial electronics markets have been affected by reduced or suspended expenditures caused by the epidemic."

  Specific to the home appliance industry, some home appliance chips have to be stocked up to six months or a year in advance, and the price of home appliance chips has also risen, which has become a boosting factor for the price increase of color TVs and air conditioners this year.

In this context, China's leading home appliance companies are speeding up the development of self-developed chips, but experts warn that investment should not be rushed.

  Some home appliances return to mechanical

  South Korea’s two major electronic component manufacturers, Samsung Electronics and LG Electronics, have both stated that manufacturing is delaying and the chip shortage is expected to continue until 2022.

  Some Korean TV manufacturers have stated that unless they pay higher prices, it will become increasingly difficult to obtain certain key components.

This has also led South Korean home appliance manufacturers to increase the prices of home appliances such as TV sets and pass on the cost of parts to consumers.

  The same supply shortage has also affected low-margin home appliances such as washing machines and toasters.

Credit Suisse Asia Semiconductor Research Director Randy Abrams (Randy Abrams) said: "The supply of microcontroller units (MCU) is tight, which may affect ordinary household appliances."

  Gan Jianguo, general manager of Philips Air Conditioning (China) Operations Headquarters, told China Business News that the chips on the air conditioner computer board have been in short supply since November last year, and the chip delivery cycle has been extended. Therefore, it is now necessary to stock up 180 days in advance, with the longest 360 It used to be up to 45~60 days in advance to stock up.

There are US and Japanese companies as well as domestic companies that supply chips, and domestic supply now accounts for 50%.

  The price of chips on air-conditioning computer boards has increased by 15% to 30% this year compared to last year, which has little effect on the price of air-conditioning terminals.

This year, the price of domestic household air conditioners has increased by 20% over the same period last year, mainly due to the price increase of bulk raw materials such as copper and plastics.

  "The impact of the shortage of chips on the refrigerator industry is mainly the control part of the PCB (printed circuit board)." Yao Youjun, president of Omar Refrigerator, told China Business News that there is currently a 20% shortage of PCB boards.

  Liming Yang, general manager of Zhongshan Lotto Electrical Appliances, an exporter of electric fans, told China Business News that they have ordered about 1.8 million fans this year, and chips are needed for nearly 60% of the orders.

Fortunately, 95% of the circuit board orders were placed to suppliers in September last year, and the price was locked, otherwise the price will now increase by more than 40% year-on-year.

  The circuit board suppliers said that if the new orders are not fulfilled in the coming year, they will not dare to accept the orders, and they strongly require Lotto to make the chip reservations for the orders for the coming year.

Liming Yang estimates that the tight supply of chips will continue for at least one year. His customers also know that the supply of chips is tight. In the coming year, they will consider switching to mechanical (manual) types of products to replace electronic ones, so as to avoid chip supply affecting delivery and bringing Rising costs.

  Industry Online analyst Ouyang Huai analyzed to a reporter from China Business News that small home appliances generally use 8-bit MCUs, and large home appliances generally use 32-bit MCUs. The price ranges from a few cents to a few yuan. Since last year, the price has generally increased by 15%~30%. However, due to the small base, the price impact is not significant.

  At present, the production capacity of major home appliance chip companies, including domestic and foreign MCU companies, has been affected to varying degrees.

Ouyang Huai said that powerful home appliance manufacturers are increasing their hoarding of chips, mainly Gree, Midea and Haier.

Semiconductor companies are also trying their best to keep the share of TOP complete machine companies, and other complete machine companies with a relatively small share are greatly affected.

It is understood that due to the lack of cores, some washing machine companies have switched from smart products to mechanical products in order to meet market demand.

  The logic behind the imbalance between supply and demand

  Since wafer manufacturers are more inclined to allocate capacity to high-margin products, the production of chips for low-margin appliances has been ranked last.

Cinda Securities research report shows that the production capacity of leading MCU manufacturers is tilting towards MCUs with higher prices and profit margins, resulting in a reduction in the production capacity of MCUs in areas such as home appliances.

Under the current situation that the shortage of automotive MCUs has not been relieved, the MCU shortages have spread rapidly, and the low-end MCU industry has entered a booming stage.

  "Due to the continued shortage of 8-inch wafer foundry capacity, MCUs are still in a state of serious imbalance between supply and demand." Gartner analyst Sheng Linghai told China Business News reporter.

A reporter from China Business News learned from the industry that both Elan Electronics and Holtek Semiconductor have announced that they will "suspend orders."

Holtek Semiconductor has suspended orders for delivery in 2022; for orders delivered in 2023, the company expects to open orders in May 2022 after the fab provides 2023 capacity.

  Chen Jianmin, chief engineer of the Zhongjia Testing and Certification Center (KGK), said in an interview with a reporter from China Business News that for a long time in the past, the supply of mainstream chips in the world has been oversupply.

This round of chip shortage is due to the fact that, in the context of the epidemic, chip companies in Europe, America and Japan have not made normal production increases; at the same time, home office has caused a blowout growth in the demand for 3C products such as computers and tablets and small home appliances.

In the post-epidemic era, the demand for automotive chips is also increasing sharply.

  Chen Jianmin predicts that global chip demand has risen sharply, chip production capacity has not kept up, and the epidemic in Europe and the United States is still there. Therefore, the shortage of chips will continue until 2022 and may not be basically relieved until the end of 2022.

In the second half of this year, with the vaccination in European and American countries, people return to work in the office. Although the demand for 3C products and small home appliances will fall, the demand for automotive chips will continue to rise.

  In addition, Holtek Semiconductor revealed that wafer fabs and packaging and testing plants have notified another wave of price increases in the near future, ranging from 15% to 30%.

Demands for applications such as automotive electronics, Internet of Things, and consumer electronics continue to increase, driving the steady growth of the MCU market.

Since March last year, MCU product quotations have continued to rise.

IC Insight, a world-renowned semiconductor market research agency, predicts that the global MCU market is expected to reach US$22.3 billion in 2021, a year-on-year increase of more than 7%.

  The chip shortage has also led the company to place orders with multiple chip manufacturers. This phenomenon is known as "double booking", which further aggravates the capacity load of the fab.

"In this case, large companies will be more likely to obtain production capacity, and small companies will be more passive." Sheng Linghai told a reporter from China Business News.

  At the same time, the global LCD panel industry is in the longest business cycle in history, with prices rising continuously for more than 10 months since June last year.

This year's "May 1st" domestic color TV prices will rise by 10% year-on-year, mainly due to the tight supply of panels, and lack of cores is only one of the factors.

  According to the survey data of Sigmaintell, the global demand for display chips (including Driver IC\Touch IC\Power\TCON) in 2020 is about 10.26 billion. The total demand for display chips is expected to be in 2021. Around 10.3 billion, basically the same year-on-year.

Among them, the global demand for driver IC chips is expected to be about 7.6 billion in 2021, a year-on-year increase of about 2.7%, and the growth rate is slightly lower than that in 2020.

  2021 will be a crucial year for the large-scale application of self-developed chips by leading home appliance companies in China.

Public data shows that the domestic home appliance industry chip market is about 50 billion yuan, and the localization rate is only 5%.

At present, most of the chips in China's home appliances are still mainly dependent on imports.

For example, more than 70% of MCU master chips for domestic air conditioners come from foreign brands such as Renesas Electronics, Infineon, TI (Texas Instruments), Toshiba, and NXP (NXP).

  This year, the import prices of chips, IGBTs, and IPM modules have risen and the delivery period has been extended. Accelerating localization is the general trend.

At the 2021 China Home Appliances and Consumer Electronics Expo (AWE) in March, Gree Electric, Midea Group, Hisense Video, Changhong Holdings, and Galanz all demonstrated the "core" power of China's home appliance industry.

  During the "14th Five-Year Plan" period, China's home appliance industry will transform from the original model of pursuing speed and extensive development to an innovation-driven model.

It will be the only way to promote the interconnection of smart home appliances through self-developed chips and create more value based on big data.

"But in the long run, in the future, the general semiconductor industry with a large demand for 40nm (nanometer) and above processes in the home appliance industry will have a long-term buyer's market. Investment behavior must not be rushed." Chen Jianmin reminded.

  Author: Wang Zhen ▪ money innocence