Chip Spot Market Analysis — UniBetter May 2024 Edition

Published on: May 30, 2024

As we approach the end of the first half of 2024, the chip market remains in a state of slow recovery. The industry is still urging itself and competitors to persevere. The current sluggish market isn't just due to a poor economy but also the severe supply-demand imbalance from past market crazes, leading to a vicious cycle of shortages, price hikes, and eventually selling at a loss. At this stage, our focus is on actively clearing excess inventory and seizing new opportunities. A full recovery will still require some patience.

Manufacturer Updates

Texas Instruments (TI)

In its fiscal Q1 2024 report, TI’s analog revenue declined by 14% year-over-year, embedded processing revenue dropped by 22%, and other segments fell by 33%. The decline in industrial market demand has significantly impacted embedded processor revenue. TI’s current strategy is to control prices of non-critical models to regain market share, while critical models such as analog and embedded ones may still follow a profit margin control approach, making price applications more challenging. Customers are advised to place orders early.

SeriesCurrent Lead TimeLead Time Trend
PMIC(UCCx、TPSx、LMRx、TLx)6-8 WEEKSsignificantly shortened.
DSP(TMS320x)6-30 WEEKSsome models have longer lead times while most have significantly shortened.
Data Converters(DACx、ADCx、ADSx)6-12 WEEKSstable
MCU and Processors(MSP430x、SMx)6-16 WEEKSmost models return to 6 weeks.
Logic ICs(SN74XX、SN54XX、CD4x、74Ax)6-12 WEEKSstable
SeriesCurrent Lead TimeLead Time Trend
Interface Isolation ICs(ADMx、ADUMx、ADGx)13-15 WEEKSbasically returned to normal
Amplifier ICs(ADA4x、ADLx、AD8x)12-31 WEEKSaverage reduction of 3-5 weeks
Linear Products(ADRx、LT10x、16x、66x、67x)15-28 WEEKSsigns of lengthening
MAXIM Products10-36 WEEKSsome products have extended lead times

ADI Brand

Starting from April 30, 2024, ARROW will no longer be approved for new demands from ADI, while other functions remain the same. Effective from May 26, this decision indicates that under the current market conditions, major manufacturers tend to let distributors take on simple order processing and logistics transportation functions, while obtaining key demands and continuously following up with major customers is where the original factory has greater initiative. ADI’s move to follow TI in promoting direct sales will be more conducive to improving operational efficiency and profit margins, better grasping market demands, and thus more conducive to long-term operations.


According to the financial report for the Second Quarter of 2024,Revenue dropped to $2.16 billion, with a gross margin decrease of 11% from the same period in previous years, but still at 54.7%. The industrial category saw the most significant drop at 47%, but it remains the largest business line. The automotive category increased by 8% to 30%, firmly in second place; communications and consumer categories are both around 11%.

Xilinx (XILINX)

Since announcing in December last year the plan to discontinue some older products, the original factory’s orders have slightly increased. As there is still time before the deadline for orders, customers are not in a hurry. Currently, XILINX encourages customers to stock up actively to make full use of its existing production capacity; therefore, it is proactive in price applications and lead time feedback. The capacity for most general materials has basically returned to normal.

SeriesCurrent Lead TimeLead Time Trend
FPGA 16nm AU\KU\VU(XCAU7P、KU5P、VU3P)12-35 WEEKSreturning to normal
FPGA 20nm KU\VU(XCKU035、065)12-48 WEEKSmost still require a 40-week lead time
FPGA 28nm 7 Series(XC7S\7A\7K\7V)12-30 WEEKSreturning to normal
FPGA 45nm 6S Series(XC6S)17-50 WEEKSsome models have eased
SoC(XC7Z\ZU)20-48 WEEKSbasically returned to normal
SeriesCurrent Lead TimeLead Time Trend
Traditional 16-bit MCU(S912x)13-25 WEEKSfurther shortened
Traditional 32-bit MCU(MK64x、MK70x)18-54 WEEKSunstable lead times
General-purpose MCU(LPC17x)13-50 WEEKSfurther shortened
Automotive MCU(MP5x、FS32x、MCFx)36-54 WEEKSno significant change
Interface ICs(TJAx)12-16 WEEKSbasically returned to normal

NXP (NXP)

NXP is currently focusing on the automotive field, and its capacity is also leaning towards this area. Recently, it officially launched the world’s first 5nm automotive MCU, the S32N55, for applications in the body, chassis, and automotive gateway fields. High-integration and high-computing power MCUs are the future development trends. Non-automotive field products may face a decline in product quality or service or discontinuation, etc. The delivery cycle for 8/16/32-bit and DSP products has improved, but a few automotive and industrial MCUs are still restricted.

SeriesCurrent Lead TimeLead Time Trend
8-bit MCU(PIC16x、AT89x、ATMEGA25x)6-12 WEEKSbasically normal
16-bit MCU(PIC24x、DSPIC3x)6-30 WEEKSsome models have significantly shortened
32-bit MCU(ATSAMA5x、PIC32x)4-14 WEEKSmost lead times shortened, a few models still have long lead times.
Ethernet Switch ICs(KSZ9x、LAN8x)4-24 WEEKSlead times shortened
Interface ICs(MCP2x)4-24 WEEKSlead times shortened
EEPROM(AT24x、24LCx)4-24 WEEKSlead times shortened

Microchip (MICROCHIP)

MICROCHIP’s revenue forecast for the second quarter is lower than market expectations, originating from the current inventory adjustment phase in the automotive chip market, with poor customer demand and an overstock that needs a longer period to digest. The current inventory level has relatively bottomed out, and revenue growth is expected to return to positive in the third quarter. The chip market for the automotive, AI, and new energy sectors, which are currently popular, may be the main position of its capacity. In April, it acquired two companies, one mainly focused on in-vehicle networking products to expand its share in the automotive field, and the other mainly assisting the AI market with FPGA products.

Storage Devices

The demand for memory and storage devices is driven by artificial intelligence, industrial control, and automotive intelligent technology. Despite recent reports of a shortage-like situation, memory chip manufacturers still maintain a tight supply. By mid-April, most of the facilities damaged by the earthquake in Hualien, Taiwan, have resumed normal production. Although the wafer loss was not severe, Micron and other companies reported that the supply of DRAM and NAND flash memory in the second quarter would be affected. Korean manufacturers such as SK Hynix and Samsung Electronics are expected to raise the price of DDR5 by 13% and DDR4 by 10% by the middle of the second quarter. Overall, the price increase in the memory market is expected to be between 20% and 25% by the second quarter. Micron suspended quoting after the earthquake and notified customers of a 25% increase in DRAM and SSD contract prices. Similarly, Samsung’s decision to stop producing DDR3 1Gb and 2Gb products has led to an increase in demand for Huabang and Nanya’s DDR3 product lines. As a result, both companies will raise prices by 10% to 15%. Experts predict that by the second half of 2024, the supply-demand gap will begin to exceed 20%-30%, leading to further price increases for DDR3 and possibly a brief period of panic buying.

MCU and Diode Connectors

The market for MCU and diode connectors is currently facing the challenge of domestication. The domestic market in this segment is relatively stable with no significant changes. European and American original factories are not making significant moves to compete for the Chinese market. Overall, domestic products are in a state of steady growth, and there is an expectation that domestic brands will move towards the global stage in the future.

Market Trends

The market in April was unusually calm, with demand decreasing to some extent compared to March. Traditionally, March might be the procurement peak season. Although the growth in March 2024 was not satisfactory, it was still slowly recovering. After entering April, the market demand was noticeably reduced, and the willingness of customers to purchase further decreased, which was another heavy blow to the market. Overall, market confidence was not as strong as in March.

ADI Brand

For linear products such as LT, due to the stabilization of lead times and prices, the market price is currently strong, making it difficult to negotiate. The market inventory level continues to decline. Some power module products, such as LTM4620, are experiencing tight lead times and rising market prices. The original factory is in an allocated state, and for HMC products that have always had longer lead times, the current demand is low, the market supply is not abundant, and the price is relatively stable. Due to the long lead times and fewer production lines, the original factory’s willingness to offer discounts is also minimal, so the market continues to remain stable. Some of ADI’s isolation and interface chips currently have a high inventory, with a serious upside-down situation, and there is a certain increase in customer willingness to purchase, but they are all within the normal price fluctuation range. Overall, the market is currently in a phase where supply and demand are seeking balance.

TI Brand

The market and agents of TI currently have a relatively high inventory level and are still in the process of clearing inventory. In the short term, TI’s prices will continue to decline. However, with the original factory tightening prices, TI’s prices should stabilize soon. The overall demand for TI is gradually recovering, and due to price support, customer willingness to purchase is higher than before, so TI is currently in a slow growth trend.

MICROCHIP Brand

Starting this month, the number of inverted models for MICROCHIP is gradually increasing, especially some low-end MCU products. The market price for MICROCHIP will face a period of price reduction in the future. The current price of agents is still relatively strong, and the next step is to see how to cooperate with agents. If they maintain a strong price, the market inventory may become the mainstream direction for transactions in the future.

NXP Brand

The market inventory is still high, and there is a large amount of stock in the agent market. The most abundant inventory is in interface chips, and the inversion is also very serious. It will take a longer period to face the pressure of inventory reduction. Customers’ willingness to PPV is not high, and it is possible that the inverted models in the market will be the mainstream for customers to reduce costs in the future.

FPGA Brands

The mainstream FPGA products are currently XILINX, ALTERA, and LATTICE. Affected by the shortage, ALTERA has experienced a severe supply-demand imbalance in the past few years, coupled with INTEL’s neglect of new product research and development, its market share has been replaced by XILINX to a large extent. LATTICE focuses on the consumer and industrial sectors, and with the current low demand in these two categories, it has not caused much of a stir. XILINX is still quite active and cherishes its reputation. Since being acquired by AMD, it has brought 1+1>2 advantages in technology, making AMD’s competition with its old rival NVIDIA in the AI industry even more intense.

ALTERA Brand

Since being acquired by Intel, the delivery time has been extended, and new product development has been slow, with market share gradually declining. Currently, there is news that Altera will be separated from Intel and operate independently. The mainstream product Cyclone is currently priced close to 2020 prices, with no significant price inversion, stable sources, and stable prices. Customers can arrange their purchases according to their needs.

Storage Products

Affected by production reduction, the pace of inventory reduction for storage products in the market is still relatively fast, and stockpilers in the market are also seizing the opportunity to sell quickly. In the past two years, affected by the low demand for PCs and mobile phones, storage product stockpilers did not profit but accumulated a lot of inventory. This year, taking advantage of the rise in storage prices, many stockpilers are still focusing on reducing inventory. So far, although the original factory has increased prices, the market bargaining space is still large, and the mainstream procurement may be staying in the market. Customers can seize the opportunity to start from the market. As storage prices continue to rise in the future, stocking up now should be a very good opportunity. If the market inventory level continues to decrease, this price gap may not exist.

Customer Trends

New Energy Vehicle Sector:

Currently, it is understood that due to the revision of the definition of automotive safety parts and non-safety parts, many automotive manufacturers have a large accumulation of automotive chips. Most of them have changed to non-vehicle specifications for cost considerations, and the demand for the original vehicle specifications has decreased, with a lot of stagnation. If you need to purchase vehicle-specific chips, there may be many opportunities to reduce costs with stagnant materials. In terms of the market, new energy vehicles, as the largest market capacity in recent years, many companies have laid out automotive business, and old car manufacturers are facing the huge challenge of new energy. On April 24th, news reported that Volkswagen started a large-scale layoff to save costs, relaxed retirement policies, to ensure that Volkswagen can survive in the fierce competitive environment. From the chip end demand perspective, the intelligence and electrification of automobiles have driven the growth of chips, mainly power devices and power management chips. In the future, autonomous driving will require a large number of computing power chips, vision chips, radar, storage, and control-related chips. Major chip manufacturers are also optimistic about this trend, investing a lot of manpower, material resources, and financial resources for research and development to seize the opportunity.

Artificial Intelligence:

As the competition for AI large models becomes increasingly fierce, NVIDIA, as a giant in the AI industry, plans to cut the price of H20 AI chips supplied to the Chinese market. The domestic large model market has started a price war, and the competition is very intense.

Communications, Industrial, Medical, Consumer and Other Customer Fields:

There are currently no major changes, still in a slow recovery state. The demand growth is less than 10%, some industries are almost negligible, and there is no significant increase expected at present.

Summary

The overall growth of the global semiconductor market is mainly driven by industries such as automotive electronics, data storage, and wireless communications, and the current market still shows signs of contraction compared to previous years; most end customers have excess inventory, and most original chip factories have shortened product delivery times, and are vigorously promoting the release of new orders, entering the capacity planning stage to reduce idle costs. Overall, the customer side is in a conservative ordering mode, and the original factory’s inaccurate grasp of future order visibility will continue to reduce capacity to optimize current production costs. If there is no explosive demand in the short term, the current supply chain status is still in a recovery stage with twists and turns.


The above is the monthly spot market analysis report from UniBetter. We hope that this practical summary and analysis of the chip spot market can bring you some help and value.

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