Inventory of the chip industry in 2022: through the cycle, resilient growth
2022/12/25 13:48:08 Source: Communication World Network Author: Zhu Wenfeng Editor: Changhe Comment: 5
At the end of another year, looking back at 2022, under the influence of slowing global economic growth and sluggish consumer demand, the semiconductor industry has turned from hot to cold, and chip companies are moving forward under pressure, optimizing product portfolios and adjusting production capacity layouts. Continue to promote chip technology innovation. The rational investment of capital in China’s chip market and the precise implementation of policies have promoted the industry to enter a stage of stable development.
For the semiconductor industry, 2022 is a turning year for strategic adjustments and ready-to-go. The industry maintains resilience and flexibility to cope with the dual market cycles, laying a growth foundation for long-term development.
Chip Industry: From Boom to Bitter “Winter”
In 2021, the development of the global semiconductor industry will be extremely prosperous, the chip market demand will surge, and the capital boom will surge. The semiconductor industry recorded eight consecutive quarters of growth through the first quarter of 2022, the longest streak ever recorded, but this record ended in the second quarter of 2022.
Like every previous round of cyclical transitions, after the boom, the semiconductor market began to experience coldness. In 2022, under the influence of slowing global economic growth and sluggish consumer demand, the development of the semiconductor industry will be sluggish and enter a downward cycle. According to Omdia data, the semiconductor market revenue in the second quarter of 2022 was US$158.1 billion, a decrease of 1.9% from the previous quarter, and semiconductor revenue in the third quarter was US$147 billion, a decrease of 7% compared to the second quarter. The two consecutive quarters of decline have also dealt a heavy blow to semiconductor companies. In the third quarter, Samsung Electronics’ profit fell by 31.39%; Intel’s net profit fell by 85%; Nvidia’s net profit fell by 72%; AMD’s net profit plummeted by 93%. Memory chips are the most obvious signal that the semiconductor industry has entered a down cycle. With the decline in sales and prices of DRAM and NAND products, SK Hynix’s third-quarter profit fell by 60% year-on-year, and Micron’s net profit fell by 45%.
At present, the semiconductor industry is experiencing a double cycle of market cyclical changes and growth momentum transformation. First, the demand for consumer terminals represented by PCs and smartphones has declined, corporate inventories have continued to rise, and the semiconductor industry, which is dominated by consumer electronics such as memory chips, MCUs, and display driver chips, has entered a down cycle. Second, the demand for chips in the fields of 5G, automobiles, data centers, and industry has risen, becoming a new growth driver for semiconductor development. New products and applications spawned by new technologies such as 5G, AR/VR, AI, and autonomous driving will further boost chips. market. SEMI expects the global semiconductor industry to build 84 large-scale chip manufacturing plants between 2021 and 2023, with segments including automotive and high-performance computing driving its spending growth.
Under the influence of the double cycle, the revenue of related companies has been cold, but the development of each business line has been uneven. For example, AMD’s revenue declined, but its data center, embedded and gaming divisions maintained strong growth; Intel’s third-quarter client computing business revenue fell 17% year-on-year, but self-driving company Mobileye’s revenue increased by 38% year-on-year. Another example is Qualcomm and Infineon’s diversified layout in the automotive and industrial control fields, offsetting the decline in the consumer electronics field and showing growth. Another example is NXP’s revenue in the third quarter increased by 20.4% year-on-year, net profit increased by 42.2%, its automotive business revenue increased by 24% year-on-year; industrial and Internet of Things business increased by 17% year-on-year; communication infrastructure and other business revenue increased by 14% year-on-year %.
If God closes a door for you, he will definitely open a window for you. Under the double cycle, chip companies are strengthening the layout of diversified products to resist market risks. Of course, the cold winter has arrived, and spring will return naturally. Some experts predict that the semiconductor industry will start to pick up in the second half of next year.
Chip companies: from triumphant progress to rational adjustment
The double cyclical effect is superimposed, and the weak demand for consumer electronics will continue until 2023. The agency predicts that global semiconductor capital expenditures will decline by 26% year-on-year in 2023. Under the influence of multiple factors, semiconductor companies are moving forward under pressure, and have entered a stage of rational adjustment from triumphant progress in 2021. They have optimized product portfolios, adjusted production capacity layout, and formulated strategic plans rationally.
It is reported that SK Hynix will reduce investment by 50% in 2023 and reduce the production of low-margin products; Micron will cut capital expenditure by 30% in 2023 and cut half of its investment in chip packaging equipment; Kioxia will reduce 3D NAND flash memory Production, reduced by about 30%; Intel will achieve cost reductions of $3 billion in 2023, and increase annualized cost reductions and efficiency gains to $8 billion to $10 billion by the end of 2025. It is expected that major chip manufacturers will maintain a period of capital reduction and production reduction to promote the normalization of market supply and demand balance. At the same time, the cold wave in the market has penetrated into chip design, manufacturing, packaging and testing, equipment and other links. “Layoffs” and vacation-style “reductions” are not uncommon. In addition, the “order cut wave” has also swept through major manufacturers such as Samsung, LG, and TSMC, covering key chips such as driver ICs, PMICs, and MCUs.
Although the market development continues to decline, IDC said that the global semiconductor market will double in the next 10 years, with a total market value of more than 1 trillion US dollars. Therefore, closely following market trends and adjusting product strategies is still the main tone of chip companies. Taking TSMC as an example, in response to market changes, TSMC plans to lower its capital expenditure forecast for 2022 from at least US$40 billion to US$36 billion. But at the same time, TSMC is keeping up with the high computing power demand of the current society, promoting the development of 3D IC to achieve better system performance; actively expanding the production capacity of mature processes to meet the rapid growth of chips in different application fields; increasing Balance supply chain flexibility with increased costs.
As the saying goes, the offense is the best defense, and the new growth momentum has more demand for quality improvement in the semiconductor industry. Therefore, chip companies have not slowed down the pace of innovation, but have promoted various technological breakthroughs with a long-term perspective.
In 2022, advanced manufacturing processes will continue to advance, 3nm process technology will start mass production, and 2nm plans will be released one after another. At the same time, chip design, advanced packaging, packaging and testing and other links have been steadily upgraded, and the industry’s exploration of post-Moore technology has also continued to deepen. In the post-Moore era, small chips are an important technical idea to break through the limitations of Moore’s Law. In March this year, Intel, ARM, Qualcomm, and TSMC jointly established the Small Chip Alliance and launched the universal chip interconnection standard UCle. On December 16, my country released the first native Chiplet technical standard, taking a key step to breaking through the limitations of advanced manufacturing processes.
In 2022, my country will officially enter the era of the “superman of things”, and the scale of the mobile Internet of Things industry will continue to grow, driving the rapid growth of IoT chip shipments. This year, chip companies and module companies have jointly launched a variety of module products that support the latest 5G R17. Many chip companies have completed technical verification based on R17 and RedCap. The research and development and industrialization of lightweight 5G chips will further improve the terminal cost-effectiveness of the mod.
Chinese market: from impetuous to calm
In 2022, the United States will intensify the blockade of Chinese technology companies, and China will still face problems such as talent shortage and dependence on chip imports. However, the rational investment of capital, the precise implementation of policies and the focused development of enterprises will make the Chinese chip market turn from impetuous to calm. The silkworm chrysalis, which worked silently before the butterfly transformation, aims to lay a solid foundation, continue to innovate and pursue breakthroughs so that domestic chips will one day hang high on the branches and sing loudly.
With the efforts of all parties, more talents, funds, and policies have been implemented in the semiconductor industry. In 2022, my country’s semiconductor industry will continue to maintain a growth trend. According to statistics from the China Semiconductor Industry Association, the sales of China’s semiconductor industry will increase from 788.5 billion yuan in 2017 to 2021. It is estimated that the market size of China’s semiconductor industry will reach 1,383.9 billion yuan in 2022.
This year, leading chip companies such as SMIC, Yangtze River Storage, and Loongson Zhongke have stabilized their output, and small and medium-sized chip companies have also begun to emerge. According to New Fortune statistics, as of November 2022, 50 semiconductor unicorns have emerged in China, with a total valuation of 858.4 billion yuan. Ruili Integration, Ziguang Zhanrui, and SMIC are the top three. Among them, there are 25 chip design companies, accounting for half of the country, and 8 unicorns and 5 unicorns have been born in the fields of GPU and automotive MCU respectively, becoming the hottest track; new development forces in the fields of upstream materials, equipment and EDA software are also Roll out. It is worth mentioning that in 2022, my country’s FPGA track will also advance rapidly, with continuous financing.
Jiwei Consulting said that domestic substitution has been further deepened in many fields. The first domestic mobile phone Beidou short message communication radio frequency baseband integrated chip was successfully developed; the first domestic 28/22nm ReRAM 12-inch chip production line completed trial production; the domestic self-developed “Fuxi” power chip achieved mass production; Ziguang Guoxin launched the domestic The first LPDDR4X memory product for the car-grade market; Wuqi launched the first 1×1 dual-band concurrent Wi-Fi 6 mass-produced chip in China; JCET has achieved 4nm mobile phone chip packaging… At the same time, my country is also making progress in the development of RISC-V Some results have been achieved. China Mobile Xinsheng Technology released the first low-power NB-IoT IoT communication chip based on the RISC-V core architecture; Saifang Technology’s first industrial firewall based on the RISC-V chip achieved a new stage in the energy industry. breakthrough.
Crisis breeds new opportunities. In 2022, the chip industry will usher in a new inflection point in the down cycle. Enterprises will strengthen their diversified layout and balance product supply and demand to build a more efficient and healthy supply chain ecology. At present and in the future, chip companies will surely go through the cycle, grow resiliently, and provide a more stable driving force for the digital transformation of society.
