In the middle of January, many semiconductor industry observers have made predictions about the market situation in the first quarter of the new year. On January 10, local time, TrendFroce wrote that due to limited capacity additions in this quarter, the market supply is expected to be roughly the same as in the fourth quarter of last year. However, some terminal products have entered the traditional off-season cycle, and the slowdown in demand momentum is expected to ease the supply chain stocking pressure faced by OEMs and ODMs.
While all foundries around the world are ramping up capital expenditures to expand capacity, these expansions have yet to materialize and do not alleviate existing supply problems. In addition, the uneven distribution of supply chain resources that exacerbates the shortage of parts and components has not been completely alleviated. Global factors will continue to affect shipments of related complete machines. Only the PC category is expected to survive the first quarter of 2022.
Integrated Circuit
As far as the whole machine is concerned, the current delivery cycle of FPGA is more than 50 weeks at most, while the delivery cycle of Lan chip is significantly shortened, from the original 50+ weeks to about 40 weeks. However, the escalation of purchase order activity due to the uncertainty of the epidemic and the accumulated demand backlog (Back order/backlog) has generally pushed the SMT capacity of ODMs to full capacity.
The above phenomenon not only accelerates the consumption of ICs such as FPGA and PMIC, but also the demand for additional purchase orders for FPGA, PMIC and MOSFET is still strong. The overall market is still tight, and the production of server motherboards may face hidden dangers in the future. The research institute said that taking L6 servers as an example, its production scale in the first quarter of this year will be roughly the same as the previous quarter. However, there will be a seasonal decline in overall server shipments, with a month-on-month decline of about 8%.
In 1Q22, the market supply is expected to be roughly the same as in 4Q21 due to limited capacity additions. However, some terminal products have entered the traditional off-season cycle, and the demand momentum has slowed down, which is expected to slightly ease the supply chain stocking pressure faced by OEMs and ODMs.
Smart Phone
In terms of mobile phones, starting from the second half of 2021, the shortage of materials has gradually eased, partly due to the free adjustment of the specifications of mobile phones on sale. Due to shortages, brands have made adjustments to product specifications and configurations based on component availability.
Currently, there are four types of mobile phone components that are still relatively tight in supply. Among them, 4GSoC (30-40 weeks) and OLED DDIC/Touch IC (20-22 weeks) have a greater impact on the market. The former will affect brands that focus on selling 4G phones. The latter is affected by the oligopolistic market structure and the adjustment of foundry production capacity, and there will be concerns about insufficient supply with the production capacity of manufacturers. In addition, although the supply of PMICs and A+G sensors is still tight, the risk of material shortages can be largely mitigated by component substitution or adjustment of product specifications and configurations.
In terms of smartphone production, the supply chain in the first quarter of 2022 will basically continue the performance of the previous quarter. However, due to disappointing holiday demand at the end of 2021, mobile phone brands must adjust their distributed inventory levels of finished products in a timely manner. Coupled with the uncertainty caused by the production disruption caused by the winter epidemic, smartphone production in the first quarter of 2022 is expected to decline by about 13% quarter-on-quarter.
Computer and PC
In PCs and laptops, material shortages have been partially alleviated from November 2021. As a result, PC ODM shipments in 4Q21 have been revised upwards. Originally, compared with mobile phones and complete machines, the shortage of materials has relatively little impact on terminal PCs and notebook computers.
Apart from the SSD PCIe 3.0 controller, the current tight component supply is due to delays in transitioning to Intel's new platform. This temporary shortage has resulted in lead times of around 8-12 weeks, while supply constraints for C-type ICs, WiFi and PMICs are gradually easing. TrendForce estimates that with the recovery of overall supply chain stability, ODM brand notebook shipments will only drop by 5.1% QoQ in 1Q22. At present, if component shortages are not considered, follow-on sales from various distribution channels will be the main variable affecting supply and demand.
In addition, there are also media reports that Taiwanese foundries may avoid raising their IC manufacturing service offers in the second quarter of 2022, as their fabless customers find it difficult to pass on cost increases to downstream customers. Since there is no market for high quotations, some industry insiders said that pure-play foundries in Taiwan may freeze quotations in the second quarter of 2022.
