In the first half of 2022, the consumer electronics market is affected by home economics, the epidemic in China, international tensions, and high inflation. In addition to the traditional off-season, the demand for related applications such as PCs, laptops, TVs, and smartphones has cooled significantly.
In the first half of 2022, the consumer electronics market is affected by home economics, the epidemic in China, international tensions, and high inflation. In addition to the traditional off-season, the demand for applications such as PCs, laptops, TVs, and smartphones has cooled significantly, and downstream suppliers have gradually decreased the shipment target for this year; however, the demands for automotive, Internet of Things, communications, and servers still maintain good demands.
Affected by the prolonged delivery of semiconductor equipment, the new capacity in the first quarter of this year was limited, and the overall wafer OEM capacity utilization continued to be fully loaded, especially for mature process (1X~180nm) components. Looking forward to the second quarter, although the growth of global wafer production capacity is limited, the demand for terminal products is weak, coupled with the continued tension in the international situation and the recent spread of the epidemic in China, which has imposed forced lockdowns and other events can ease the supply.
The overall server critical material supply situation improved slightly in the first quarter. In addition, due to the continuous increase in orders for ultra-large data centers, the general supply cycle of chips such as LAN IC/chip is still about 40 weeks, but the demand gap can be made up through urgent production billing charges, and the impact has begun to diminish. As the above situation eases, ODM motherboard production is chasing single-frequency transmission, so that the FPGA and PMIC and other materials continue to be chasing, and chips are also overstocked. The shortage of materials still suppresses the production of motherboards for a small number of customers, but it does not affect the supply of the overall server market. With the improvement of material supply, server shipments in the second quarter will increase significantly. It is estimated that shipments will grow by about 15.8% to 360 million units.
Affected by sluggish seasonal demand, the Russian-Ukrainian war and high inflation, the market demand has cooled, and the supply chain material delivery situation has eased compared with the second half of last year. Although some components are still in short supply, they are mostly concentrated in low-end and mid-end smartphone products. In particular, the delay in the delivery of 4G SoCs is relatively obvious. The delivery time is about 30 to 40 weeks. Due to limited capacity planning, the market demand for low-end and mid-range mobile phones has not been met since last year. It is followed by A+G sensor with a delivery period of about 32~36 weeks, and OLED DDIC and Touch IC in 20~22 weeks. The production volume of smartphones in the second quarter will be affected by the interaction of the above factors. The estimated output is 316 million units, with a quarterly growth of only 3%, which is lower than the performance of previous years.
Also affected by the weakening demand in the terminal market, except for client SSDs, which are not among the long-term materials, Type C IC, Wi-Fi and PMIC delivery time is still long, and Type C IC is the longest at 20-25 weeks. With the supply chain supply continuing to improve, it is estimated that shipments of notebook computers (including Chromebooks) in the second quarter will be approximately 55.1 million units, down 0.7% quarter-on-quarter.
5. MLCC Passive Components
From the perspective of other key components, taking MLCC as an example, the demand for major consumer electronic products such as mobile phones, laptops, tablets, and TVs declined significantly in the first quarter, leading to specifications for consumer products such as original manufacturers and distributors. MLCC inventory levels are high, and the situation may continue into the second quarter. At present, the driving force of vehicle and industrial MLCCs has steadily increased, and the specifications for consumer products have not yet escaped the oversupply. In the second quarter, the MLCC market has the opportunity to gradually increase the production capacity and supply of automotive and server ICs by semiconductor IDM factories, so as to alleviate the problem of long and short materials, and promote the momentum of automotive power, servers, fast charging, and energy charging & storage equipment. Car- and industrial-grade MLCCs have the opportunity to become the main growth drivers in the second quarter. Japanese factories Murata, TDK, Taiyu and Yageo will be the main beneficiaries; the consumption regulations, which account for the bulk of MLCC suppliers in Taiwan, South Korea and China, may face with the slowdown in demand for mobile phones and laptops, and as brands and ODMs continue to adjust their inventories, market demand may remain weak in the second quarter.
Looking forward to the second quarter, except for servers, demand for consumer end products is still weak. Components that originally belonged to long materials will face more severe price challenges due to the imbalance between supply and demand; short materials that are seriously short of materials will be allocated more output to products with strong demand through internal capacity deployment. The Omicron epidemic in China has accelerated recently, and the mandatory and sudden closure and control measures under the zero-clearing policy may cause local manufacturers to face multiple and complex supply chain problems, which will be detrimental to market performance.