On the evening of November 30, a price increase letter from Renesas Electronics went viral in the circle of friends, once again drawing the heartstrings of people in the semiconductor industry.
Picture: Renesas Electronics' letter to customers
Source: Baji Semiconductor
The price increase letter said that due to the increase in the cost of raw materials and packaging substrates, Renesas Electronics intends to increase the prices of some analog and power products. Renesas Electronics explained that the recent increase in inventory costs and the risk of product transportation have forced the company to increase prices to ensure that these products can continue to be put into production.
In addition, customer orders shipped before January 1, 2021 will be received at the current price. After January 1 next year, all existing orders and new orders will be processed at the new price.
Continuous supply and demand imbalance between analog and power ICs
A price increase letter from Renesas Electronics confirms that this stock-out wave is extremely likely to spread to next year. In fact, due to the tight 8-inch wafer capacity and the squeeze capacity of higher-margin chips, the tight supply of analog chips has been going on for some time.
Take the power chip as an example. The power management chip mainly includes PD, AC/DC, synchronous rectification, lithium battery protection chip and boost chip. According to market practice, the peak season for power management chips is generally from March to April and September to December, and May to August is the off-season.
The end of the year now coincides with the peak season for power chips. From the perspective of demand, mainstream applications such as 5G mobile phones, TWS headsets, medical instruments, and smart cars have an increasing demand for power management ICs. The application areas are expanding, and the amount is also increasing exponentially. Taking 5G mobile phones as an example, industry insiders pointed out that a 4G mobile phone has only one PMIC, but a 5G mobile phone requires three, and the demand is doubling.
However, the growth rate of the production capacity of related manufacturers has not kept up with the increase in demand, and the production of power ICs is mostly based on 8-inch wafer manufacturing technology. Since the second half of the year, the 8-inch wafer production capacity has been reported to be insufficient. The situation of strong demand and weak supply has greatly aggravated the systematic imbalance of power management chips.
It is worth noting that, according to digitimes, the global 8-inch foundry capacity continues to be tight, and it is expected that the shortage will continue until the second half of next year. Except for TSMC, which mainly receives major customers, and Samsung Electronics, which mainly produces its own products, other wafer manufacturers have increased their 8-inch foundry prices, which will increase by at least 20% in 2021, and urgent orders may even increase by 40%.
There is news in the industry that some manufacturers intend to transfer some analog chips originally produced with 8-inch wafers to 12-inch wafer production, and the fabs also intend to expand their production capacity, but the specific results have yet to be tested next year.
The supply of the main MCU business is concerned
Public information shows that Renesas Electronics is a well-known global semiconductor supplier. Since 2010, Renesas and NEC merged to form Renesas Electronics. Its products include microcontrollers, SoC solutions and a wide range of analog and power devices. According to data from Huatai Securities , Renesas Electronics is the largest supplier in China's MCU market in 2019, accounting for 17% of the overall market.
Renesas Electronics’ analog and power supply products are booming, and the availability of its main MCU products has also attracted widespread attention.
China MCU market share in 2019
Source: Huatai Securities
The availability of MCUs is also not optimistic. At the beginning of November, the three major unions CAD, CFDT and CGT of the major MCU manufacturer ST launched strikes at their respective factories. In the atmosphere of market concerns about the impact of strikes on production capacity, ST's MCU prices skyrocketed. The delivery period of NXP's MCU, which is the second largest supplier in the Chinese market, has also been delayed to more than 18 weeks. Most of the products of international MCU manufacturers have been delayed across the board, and there is even news that new orders will not be accepted.
The Renesas plant is also overloaded, and the delivery time has not yet eased. The MCU product delivery time in late November has basically been more than 16 weeks. Therefore, although Renesas Electronics has not issued an official notification letter indicating that MCU prices have increased, industry insiders said that in the spot market, Renesas Electronics MCU products are actively quoting.
Industry insiders also reminded that the market share of domestic MCU products is currently not high. In the context of continuous shortage of stocks and price increases in foreign markets, powerful domestic MCU manufacturers usher in new development opportunities this year. Chipsea Technology stated that "the recent shipment volume has increased significantly compared to the previous year"; National Technology stated that "the shipment target for the beginning of the year has been completed ahead of schedule"; the market situation of Chipswan Microelectronics is similar, and the relevant person in charge told Chipmaster "This year The rate of increase will significantly exceed that of previous years."
Regarding the shortage of MCU supply from Renesas Electronics, a number of domestic MCU manufacturers told Xinshiye that the application market of Renesas MCUs is mainly distributed in the fields of home appliances, smart meters, industrial and automotive. Thanks to the mature R&D design and market service experience accumulated by domestic MCU manufacturers for many years, it is not difficult to realize Renesas' MCU replacement in scenarios such as home appliances, smart meters, and industries. The original factories such as National Technology, Chipsea Technology, and Chipwon Microelectronics all have related products.
In the automotive field, Xinwang Microelectronics, which can provide automotive-grade MCUs, admitted to Xinshiye that due to the long certification cycle and high barriers of safety and reliability in the automotive market, there are very few domestic companies focusing on automotive MCU research and development. In a short period of time, it is possible for domestic companies to replace a small number of Renesas automotive MCUs, and it is still very difficult to replace a large number of them.
As for the price adjustment of MCU products, most domestic MCU companies are more cautious. Although a small number of companies issued price adjustment notices at the beginning of the month on the grounds of "raw material price increase", three MCU companies that have been established for more than ten years clearly stated to Core Master that "there is currently no price increase plan." There are also many manufacturers who are holding a wait-and-see attitude. An MCU enterprise market person said bluntly: "We also want to know if other MCU manufacturers will increase their prices." (Transfer from Master Chip)
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