Susquehanna: The chip delivery cycle has been shortened for 9 consecutive months

According to foreign media SemiMedia, the latest report from financial institution Susquehanna Financial pointed out that the chip delivery cycle has been shortened for 9 consecutive months, indicating that the tide of chip shortage lasting for about two years has passed. The current semiconductor delivery cycle is 4 weeks lower than the historical peak in May 2022, and the actual delivery cycle may be shortened faster than expected because dealers are worried that customers will cancel orders.

Currently, the average lead time of semiconductors is<>weeks shorter than the historical peak of 4 years and 2022. The actual delivery time may be shortened faster than expected because distributors are unwilling to shorten the delivery time due to concerns about customer order cancellation.

Specifically, Microchip's lead time has significantly shortened, and Xilinx's lead time has significantly shortened in the past few months. Although the delivery times of suppliers such as Microchip, TI, and XNP are rapidly declining, the delivery times of ST, Infineon, and Ansemy are still relatively stable.

2. Warm up the IC design order and restart some chip placement

According to MoneyDJ, quoted by Science and Technology Innovation Board Daily, the recent order demand in the IC design industry has warmed up, with urgent orders and short orders being the main ones. After the application of backtracking in the IC design sector, some chip material numbers have also experienced inventory pull alarms. Some IC design manufacturers are gradually starting to restart chip placement, and are expected to receive discounts from wafer foundries, which will be reflected in the cost in the second half of the year.

Some manufacturers have admitted that they will increase the number of films due to the attractiveness of prices, and are not pessimistic about the market outlook for the second half of the year. However, some manufacturers have stated that their customers' demand for subsequent orders is unclear, but as some material numbers have already been digested, they have also begun to resupply, but the amount of tablets being resupplied is not too large.

3. Driving IC quotation decline convergence, the maximum pressure period has passed

According to the Taiwan, China Economic Daily quoted by the Science and Technology Innovation Board Daily, affected by the price reduction of wafer foundry, the convergence of chip quotation decline, and the gradual reduction of high inventory, the relevant manufacturers of drive IC and power management IC have become the first manufacturers to take a breather in recent IC design.

Related companies have bluntly stated that the "most stressful quarter" of the fourth quarter of last year has passed, and the cost structure is improving, gradually easing the pressure on gross profit margin. In terms of IC sales prices, some driving IC manufacturers said that if the price reduction was compared from an angle, it would be about 45 degrees, but at that time, the cost of upstream wafer foundry had not yet decreased; This year, IC prices have decreased by about 15 degrees in January, but in February they have converged to about 5 degrees.

4. Global wafer factory equipment expenditure slows down in 2023 and is expected to recover in 2024

The International Semiconductor Industry Association (SEMI) predicts in its latest report that global wafer factory equipment spending is expected to decline by 22% year-on-year in 2023, from a record high of $98 billion in 2022 to $76 billion, and will increase by 21% year-on-year in 2024, recovering to $92 billion.

As more and more suppliers provide OEM services, Foundry is expected to lead semiconductor expansion with an investment of 43.4 billion US dollars in 2023, a year-on-year decrease of 12.1%; In 2024, it will increase by 12.4% to US $48.8 billion. Memory is expected to rank second in global spending in 2023, despite a year-on-year decrease of 44.4% to $17.1 billion; Memory investment will increase to $28.2 billion in 2024. Due to the steady growth of the automotive market, Analog and Power will steadily expand, with expenditures expected to increase by 1.3% to $9.7 billion in 2023.

5. Texas Instruments Launches Several New Arm R0+Microcontrollers

Texas Instruments (TI) announced on its official website last week that it will launch the scalable ARM Cortex-M0+microcontroller (MCU) product line, further expanding its extensive analog and embedded processing semiconductor product portfolio. The product family has a wealth of computing, pin placement, memory, and integrated simulation options.

MSPM0L and MSPM0G can be purchased through TI's official website and authorized distributors. These MCUs are available in a variety of package sizes, including 16 to 32 pin package options and 8 to 128 kB flash memory options. Designers can now begin prototyping by applying for the LaunchPad development kit for MSPM0L1306 and MSPM0G3507.

6. TSMC's US factory plans to mass produce 4nm next year, and Qualcomm will place the first batch of orders

According to a related report quoted by Fast Technology, TSMC's new plant in Arizona is expected to begin mass production of the new generation 4nm process in 2024, and Qualcomm promises to place the first batch of orders. TSMC's Arizona plant in the United States initially planned to invest $12 billion, with a production capacity of 5 nm in 2024. Later, the investment increased to $40 billion, and the number of plants increased to two. The process of the Arizona plant was upgraded to 4 nm, while the other one will be directly put into production at 3 nm in 2026.

However, due to delays in engineering and equipment installation, human resource shortages, and tight costs, it is unlikely that the factory will be fully operational in 2024, and may be delayed to 2025. In particular, various costs far exceeded TSMC's expected 50% increase and may eventually reach 100%, which is bound to seriously affect its market competitiveness.

7. Samsung and SK Hynix have high inventory piles and memory prices have fallen close to costs

According to a report from Fast Tech, Samsung submitted a declaration to the Korea Financial Supervisory Authority on March 19th, indicating that as of the fourth quarter of 2022, its overall inventory assets had reached 52.2 trillion won (approximately 274.5 billion yuan), a record high, with the semiconductor sector accounting for the highest proportion, with the inventory amount reaching 29.1 trillion won (approximately 152.7 billion yuan).

SK Hynix faced similar problems, with its overall inventory assets climbing to 15.7 trillion won (approximately 82.5 billion yuan) in the fourth quarter. As a result, both major manufacturers are expected to experience significant losses in the chip business in the first quarter of this year. Industry insiders said that the prices of PC DRAM and NAND Flash chips have fallen to near cost, and it is expected that the transaction prices will decline by another 19% and 18% respectively in the first quarter.

At the industry level, large particle factories such as Armor, Meguiar, Western Digital, and SK Hynix have reduced production to alleviate the oversupply situation, which may lead to a narrowing of the decline.