At the beginning of this year, the domestic MCU market experienced a short-term supply shortage due to the outbreak of epidemic prevention demand such as thermometers and oximeters. By then, the semiconductor industry chain will step up production and emergency dispatch to jointly help prevent the epidemic, and MCU manufacturers' shipments will rise sharply, fully benefiting from the outbreak of epidemic prevention market demand.

Today, the supply and demand imbalance in the MCU market has become more and more serious. According to industry insiders, the major international MCU products have basically been postponed across the board, and the new orders are basically not accepted. In the MCU spot market, distributors have been roasting stocks for some time, and prices have basically doubled.

When the supply of major international manufacturers is not enough and the market gaps, it is often the best time for domestically-made MCUs to replace imported products. However, the capacity of upstream wafer fabs and packaging and testing plants has been tight for a long time. Domestic MCU manufacturers are trapped here. It is unknown whether they can seize the market share that was originally a major international manufacturer or increase prices to enjoy market dividends.

Large international manufacturers are out of stock and increase prices, and lead time is lengthened

Recently, manufacturers such as Renesas and NXP successively issued notices of price increases, and the shortage of MCU market began to attract public attention.

In fact, as early as November, the well-known international agent Future Electronics stated in the "Q4 Market Report" that the delivery time of some manufacturers' high-end device products (MCU) is basically 15 to 25 weeks, and the delivery time of some products is expected to be extended in the fourth quarter. Long, product prices will increase.

It is understood that the normal delivery time for MCU products is about 8 weeks. The purchase of products from large foreign manufacturers usually requires reservations, while domestic manufacturers need to deliver the goods.

At present, the domestic 32-bit high-end MCU market has to be monopolized by foreign manufacturers such as ST, Cypress, Renesas, and manufacturers including Infineon (Cypress), NXP, ST, Renesas, etc. In the case of an extended delivery period, ST's MCU delivery period has reached 30-40 weeks.

According to industry insiders, the domestic MCU market has been monopolized by foreign MCU manufacturers for a long time. As long as foreign manufacturers have insufficient supply, it is difficult to guarantee the demand in the domestic market.

Since the beginning of this year, the internationally leading MCU manufacturer Renesas Malaysia plant has been suspended due to worker infections, and ST also has strikes. In addition, Taiwan Semiconductor Manufacturing Co., UMC, World Advanced and other Taiwanese foundries as well as SMIC, Huahong Grace and other domestic Foundry production capacity is fully loaded, almost all MCU manufacturers have limited production capacity.

For a long time, ST's MCU products have been popular and concerned in the domestic market and have a relatively high market share. Downstream manufacturers generally refer to their chips to design terminal products. Therefore, large shortages in the domestic MCU market are often caused by the lack of timely supply of ST to the market.

Industry insiders pointed out that ST is not actively out of stock, nor will it be out of stock. The MCU industry is out of stock mainly because some major market outbreaks did not respond in time, such as twisted cars in 2014 and shared bicycles in 2017. The market suddenly broke out, making ST's MCU chips out of stock on a large scale. Of course, the final result must be a combination of man-made factors and market outbreaks.

For the artificial reasons stated by the above-mentioned industry insiders, it is often that downstream distributors are in a state of short supply in the market, and some distributors will not lock the goods and wait for a high price before shipping. At the same time, downstream manufacturers are constantly looking for sources of goods, which is likely to cause panic in the market and create the illusion that the market is out of stock.

Domestic manufacturers are in a price war

Regarding the reason for the large shortage in the market this time, an executive of a domestic MCU manufacturer said that from our perspective, due to the pessimistic view of the downstream manufacturers on the market in the first half of the epidemic, the negative stocking was not transmitted to the entire industry chain. Actively stock up, but the domestic economy is recovering very fast. The backlog of orders in the first half of the year is all suppressed to the second half of the year, and downstream manufacturers are rushing to achieve performance, and the market has entered a period of major shortages.

At the same time, the 5G market has driven the development of many industries, and the demand for 5G-related chips has exploded, which is also part of the reason for the tight capacity supply of wafer factories and packaging and testing plants.

Another industry insider said that it usually takes half a year from wafer to chip shipment, and the negative stocking of wafers in the first half of the year led to a shortage of supply in the market. In terms of production capacity, the squeeze of high-margin products will result in low-margin product capacity. In addition, major customers are worried about the lack of stock and increase their stocking efforts. In order to ensure the interests of major customers, the original factory has even worsened the shortage of small customers.

Many people in the industry have said that under the situation of tight production capacity, there is a serious panic stocking in the industry. In order to be able to distribute the goods, customers have doubled the order volume, and the continuous order preparation has led to increasingly tight production capacity. Scheduled to the second quarter of next year!

The author has learned from the industry that at present, domestic MCU manufacturers are basically investing in foundries such as SMIC and Hua Honghongli, and the production capacity of packaging and testing plants is more difficult to arrange than fabs. Therefore, they generally face the problem of capacity shortage. Zhongying Electronics also stated on the interactive platform that the company's MCU chip product supply is indeed insufficient in the near future. Upstream foundries are tight in capacity, which may cause delays in delivery.

In a period of shortage of production capacity, whoever can ship products to customers in a more timely manner can seize more of the market. However, the current situation is that despite the lack of stock in the market, domestic MCU manufacturers also have the problem of insufficient chip supply and can only increase stocking. As to whether they can seize the market, they can only see the company's inventory.

On the other hand, the prices of foundries for wafer fabs and packaging and testing plants have risen sharply. While major international manufacturers and Taiwanese manufacturers have announced their MCU price increases, domestic MCU companies are still in fierce market competition. The cost cannot be passed on to downstream manufacturers.

The author learned from the industry that up to now, only a small number of domestic MCU manufacturers have issued price increase notices on the grounds that the production capacity of fabs and packaging and testing plants is tight, and the price of raw materials has increased. Most of the companies are on the sidelines and are not sure. Whether there will be a price increase, some companies have made it clear that in order to protect customers, the company will never increase prices.

In fact, domestic semiconductor manufacturers usually start by importing and replacing the explosive IC products of a certain foreign brand, and then gradually choose the direction of differentiation and specialization to deepen their cultivation. The same is true for the MCU field.

It is understood that the development path of the above-mentioned semiconductor companies often leads to serious homogeneity of chip products. The domestic MCU product market is highly competitive, and the price of 8-bit MCU products has dropped to a freezing point.

In terms of 32-bit MCU products, many domestic manufacturers have already shipped a large number of them after 2018. The 32-bit MCU cores of domestic manufacturers basically use ARM Cortex-M series processors. Some manufacturers rely on low prices to win in the market. M4 core MCU products in the mid-to-high-end field compete with M0 core MCU products for low-cost fields, and 32-bit MCU products with M0 core are used to seize the 8-bit MCU market. The phenomenon of price wars is very serious.