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Chip price hikes, distributors' carnival! May 28 , 2021

Into the second quarter, many semiconductor companies opened a new round of price increases, the price of the lack of core is still continuing.At present, many categories are rising, analog IC, memory chip, logic IC supply is tight, the price continues to rise.


IC Insights' latest report raised its global IC market growth to 24% year-over-year in 2021 from 19%, mainly due to continued strength in DRAM and NAND Flash prices, as well as better-than-expected prospects for many logical and analog IC product categories.


Due to tight supply in the analog IC market, the average price of analog ICs is expected to rise by a rare 4% this year, following the last increase in 2004.Among them, automotive applications saw the highest year-on-year growth in analog ICs this year at 31 per cent, driven almost entirely by a 30 per cent increase in unit shipments.


For the logic IC market, it is expected to grow by 24% in 2021, including industrial (47%), automotive (39%), consumer (38%), and display drivers (31%).Average selling prices for logic ICs are expected to fall 5 per cent this year, offset by a 30 per cent surge in shipments.

Among them, IC Insights has increased its full-year forecast for the DRAM market in 2021 to 41%, with DRAM prices rising from 39 cents/GB in Q4 2020 to 50 cents/GB in Q2 2021.In addition, DRAM unit prices are expected to continue to rise in the second half of this year as supply remains tight.

The NAND Flash market is expected to grow by 22%, with prices dropping 26% from Q1 2020 to Q1 2021, but prices stabilizing in Q2 2021 and are expected to rise in the second half of this year.Overall, the overall memory market is expected to grow 32% for the full year of 2021.


Distributor revenue binge

Distributors are cashing in on rising shipments and rising chip prices.These distributors are busier and more profitable than ever before.

Let's take a look at the top three global distributors' recent results:

Arrow Electronics: Sales for the first quarter of 2021 were $8.39 billion (53.887 billion yuan), up 31% year over year.

General Assembly: Revenue in the first quarter of 2021 was NT $177.115 billion (about RMB40.843 billion), up 35.2% year on year.

Amfli: Sales for the quarter ended April 3, 2021 were $4.917 billion (RMB31.454 billion), an increase of 14.08% over the same period last year.

The global distributor leader, Arrow Electronics, and the second largest, Lianda, both reported significant sales growth in the first quarter, up more than 30 percent compared with the same period last year.Old San Fu-li saw slightly less growth, at 14.08 per cent.


Let's take a look at the performance of listed companies of domestic component distributors in Q1 2021:

From the published data of listed companies, domestic components distributors have more revenue growth, the torch electronic nearly doubled, shenzhen huaqiang and farce can increase more than 50% of science and technology, the British Tang Zhi control overall revenue decline, but the company revealed that remove other business, the electronic components distribution business revenue of 140 million yuan,It increased 96.28% over the same period.

Not only is the revenue much higher, the net profit is much higher than before.For example, the net profit of Ruineng Technology increased by more than 3497% in the same period, which is quite ridiculous.Shenzhen Huaqiang, English Tang Zhi Control, Torch Electronics net profit is doubled, more than before to make money.


After all, during periods of shortage, many distributors set prices.Industry insiders say distributors typically quote costs plus a 10 per cent margin, or more if they offer consultancy services such as replacement components and product design.


conclusion

By specialising in the smaller customers that the original factory has no time for, the distributor helps the original factory gain market share while taking a share of the inventory risk.The original factory has pricing power and channel control, and sells goods through distributors to achieve market penetration.The two are interdependent.


Before the fierce competition in the market, distributors' profit margins have been shrinking, and survival is also facing challenges.But the outbreak, and the historic stock shortages that have it, have forced big buyers, who used to buy chips directly from the original factory, to turn instead to distributors.And these distributors in chip prices driven by higher profits than before, become a big winner in the core market.


Especially for domestic distributors, in the background of imported chips out of stock, the downstream demand is still strong, domestic MCU, power IC and other product lines sell well, the contribution of domestic brand agency line rose sharply.



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