Domestic chip orders surge, supply exceeds demand, manufacturers announce price increases

Since yesterday, the topic #Domestic chip orders surge# has caused heated discussions on Weibo, and even became a hot search, with a reading volume of over 160 million.

According to a report by CCTV Finance on the evening of April 22, domestic electromechanical manufacturers were worried that long-term reliance on overseas chips would lead to the risk of supply interruptions in the future, so they began to try using domestic chips, resulting in a surge in orders for domestic chips and a situation where supply exceeded demand.

Recently, domestic microcontroller chip manufacturers Lingdong Microelectronics and Rockchip announced that they would raise the prices of their chip products to varying degrees starting from April 1. At the same time, manufacturers such as Renajie Semiconductor, Minsilicon Microelectronics, and Huimang Microelectronics also issued product price increase notices.

Intel CEO Pat Gelsinger recently said that the global chip supply shortage may continue for another two years. Gelsinger said that the supply constraints will continue until more production capacity comes online to meet chip demand.

In fact, since the second half of 2020, the global chip production capacity shortage has continued to ferment, and the automotive, consumer electronics, Internet of Things and other markets have experienced chip shortages to varying degrees.

On the one hand, the global currency was over-issued in 2020, and a large amount of money flowed into the market, triggering structural inflation. Commodities such as copper and silicon, which are raw materials for chips, saw a sharp increase in price. The price of silicon, the most important raw material for chips, fell to 60,000 yuan per ton in the first half of 2020, and rose to 100,000 yuan per ton in March 2021.

On the other hand, during the epidemic, countries have adopted measures such as remote work and online teaching, which has led to an increase in sales demand for products such as laptops, tablets, webcams, mice, and routers.

In the second quarter of 2020, global notebook computer shipments increased by 73.49% year-on-year. Global tablet computer shipments reached 188.3 million units in 2020. The expansion of the consumer electronics market has driven up the prices of chips, graphics cards, etc.

Not only that, the popularity of small household appliances in 2020 also stimulated the demand for chips. It is reported that orders for small household appliance microcontroller chips have been full since the beginning of this year, and the demand in the entire market has exploded by nearly 10 times. As of now, the current orders received have exceeded 300 million.

However, due to the shortage of packaging resources and the sharp increase in costs, many companies' production capacity cannot keep up for the time being, so they have to give up some orders. At present, the entire market is in a state of supply exceeding demand. Industry insiders said that under the current situation of the shortage of microcontroller chips in the market, the local microcontroller chip industry chain is expected to accelerate market expansion and increase product shipments to meet market demand.

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