The imbalance between supply and demand in the MCU market is beyond imagination, and product quotations continue to rise! The latest news, following the price increase on January 1st, STMicroelectronics (ST) issued another price increase notice, and all product lines began to increase prices from June 1st. So far, most international MCU manufacturers have raised prices, and domestic MCU manufacturers have also reported some price increases.
The price of MCU rises and rises, and the downstream terminal factories are crying, because in most cases, the price increases several times and cannot get the goods. Even if the goods can be ordered, it will weaken the consumer’s desire to buy because the delivery time is too long. Desperate downstream terminal factories take unpaid leave to ease operational pressure, but if the shortage of goods and price increases do not ease, in the long run, it will bring a fatal blow to terminal enterprises.
In order to cope with such extreme shortages and price increases, downstream terminal manufacturers are desperately seeking other devices to replace MCUs, or simply use domestic alternative brands. However, domestic MCU manufacturers have uneven products, compatibility problems, incomplete technical data, etc., which are not very friendly to developers. Choosing which domestic brand to replace has become the most important thing for downstream buyers to consider.
The core third board analyzes the main force of the local MCU one by one, hoping to answer your questions for the officials.
Performance comparison of A-share MCU manufacturers
In stark contrast to the tragic situation of the downstream terminal manufacturers, the upstream original factory’s performance rose sharply in the first quarter of this year and made a lot of money. This shows that there are indeed many downstream manufacturers using domestic MCUs. The author counted the performance of A shares in the domestic MCU field in the first quarter of 2021:
Source: Financial reports of various companies, organized by the core three boards
The most dazzling performance is the IDM manufacturer Silan Micro, whose net profit in 2021Q1 has soared 77 times! After many years of silence, Silan Micro finally ushered in the highlight of life. MCU is one of the important product lines of Silan Micro. About 30% of the company’s current revenue comes from MCU/logic devices. The MCU is mainly 32-bit, and the customers are mainly home appliances, which are sold together with IPM. In the past few years, Silan Micro has made full preparations for the production of 8-inch and 12-inch lines. The product line has been upgraded from low gross profit to high gross profit. Now it coincides with the market outbreak and supply shortage, so the outbreak is visible.
Another IDM manufacturer, China Resources Micro, also has MCU business. The company’s 32-bit CPUIP MCU products have been imported by customers. At the same time, the research projects include 32-bit motor control MCU series products. China Resources Micro’s net profit growth quadrupled, but total revenue growth was less than half. The main reason is that there is uncertainty in the supply of raw materials for the company, and it is inevitable that there will be delays in delivery, limited supply or higher prices.
In addition to IDM manufacturers, some chip design A-share companies also have a place in the MCU field. The main force of 32-bit MCU, Zhaoyi Innovation, doubled its revenue in 2021Q1, and achieved a substantial increase in net profit. The company’s MCU growth of nearly 2.5 times year-on-year is the biggest driving force for performance growth. In the case of a shortage of production capacity, GigaDevice is the most confident of all MCU manufacturers. The company said to the outside world that the increase in production capacity obtained by the company in 2021 is estimated to be more than 30%.
It is worth mentioning that GigaDevice has stepped up its offensive in the mid-to-high-end market, and has made efforts in automotive-regulated MCUs. Its latest MCU automotive-regulated products will begin tape-out in June and July this year, and it plans to enter mass production by the end of this year.
Espressif Technology, the leader in Wi-Fi MCU communication chips, doubled its revenue in 2021Q1, and its net profit nearly tripled year-on-year. The company released the first new product ESP32-C6 that supports Wi-Fi6 on April 9. This is another blockbuster product after the ESP32-C3 and ESP32-S3 since the end of last year, and it is expected to increase its performance again. .
In terms of profitability, due to the impact of the epidemic in 2020Q1, Espressif Technology implemented a special price reduction policy, but the gross profit margin has remained stable since then.
In 2021Q1, Chipsea, the only IC design company with dual ADC and MCU platforms among domestic listed companies, still achieved sales revenue of up to 104 million yuan without the sales of anti-epidemic materials such as infrared temperature measurement, a year-on-year increase of 84.03%. Chipsea’s 32-bit MCU products began mass production, which are widely used in automotive central control, portable medical, industrial measurement, high-end Electronic cigarettes and other application fields, and began to introduce benchmark customers in the fields of communication optical modules, mobile phones, and digital sensors. As the demand for MCUs such as TWS headset charging bins and personal care is still rapidly increasing, it is expected that there will be more room for growth in 2021.
The domestic home appliance MCU leader, Zhongying Electronics, also saw a double increase in revenue and net profit. The company’s sales of home appliances and motor products increased steadily by 13% year-on-year. The growth rate was smaller than that of other companies, mainly due to upstream capacity supply. Zhongying Electronics takes three major countermeasures to ensure product supply: one is to purchase the test machine and commission the OEM; the other is to switch to the 12-inch wafer process as far as possible to replace the 8-inch process with tight production capacity; the third is to adjust product prices to hedge against rising costs Pressure to gain the ability and space to compete for greater capacity bargaining.
Ninestar and Neusoft Carrier are the only two companies with negative growth among the nine MCU A-share companies. However, Ninestar’s main business is printer-related chips. The sales volume of Apex Microelectronics (including Jihai semiconductor), a wholly-owned subsidiary of the company, increased by 35% year-on-year, and sales revenue increased by 86% year-on-year.
Changes in the wind direction of the downstream purchasing end
The dazzling achievements of local MCU manufacturers have their particularities, especially in the context of shortages and price increases.
At present, China’s MCU market is still dominated by ST and NXP MCUs. Although local MCU manufacturers account for the majority in number, their market share is still low. According to the data of the Prospective Industry Research Institute, more than 74% of the Chinese MCU market is occupied by overseas manufacturers such as ST, NXP, Microchip, Renesas, and Infineon, and the market share of local MCU manufacturers is only about 10%.
Originally, many domestic companies still preferred imported products, but after experiencing such a wave of “price increases and shortages”, the domestic procurement trend began to change.
Take ST, which has the most aggressive price hike, as an example. Many companies have interrupted ST purchases after the crazy price increase of ST, and turned to the embrace of domestic MCUs. Although the domestic MCU has not been released to make people very satisfied, it is not impossible to use.
Before that, ST was favored by many engineers and R&D personnel because of its complete functions, compatibility and ecological perfection, which brought many conveniences to developers. It has many applications in the fields of home appliances, motor control, consumer electronics and industry. .
“ST’s indulgence in the channel’s roasted seeds and seeds is to counteract its harm.” The reader left a message to the core third board. A large number of manufacturers of ST MCUs have emerged in China, and they want to provide customers with products that are more cost-effective than ST MCUs. Once domestic downstream manufacturers switch to domestic brands, they will have a strong inertia to continue to use them.
In its latest annual report, ST also expressed concern that the original market may be swallowed up, especially in Asia, where many emerging companies are developing better and better, and will participate more in the company’s chip competition Come.
The offensive in the mid-to-high-end market is accelerating
The current situation has brought opportunities for domestic MCU manufacturers to enter the mid-to-high-end supply chain.
Domestic manufacturers have a relatively high self-sufficiency rate in the low-end (8-bit) MCU market with small profit margins, and their applications are mainly concentrated in consumer electronics, especially home appliances, while the high-end (32-bit) MCU market still has a lot of room for development. There are relatively few high-end application industries such as automotive electronics and industrial control.
At present, companies that have mass-produced domestic automotive-grade MCUs include Jiefa Technology, Saiteng Microelectronics, and China Microelectronics, and Zhaoyi Innovation has also joined this ranks. Its automotive MCUs are expected to be taped out in June and July, and the end of the year. Mass production is expected to erode the market share of overseas manufacturers with the help of the “core shortage tide”.
As we all know, the certification of automotive-grade MCUs is strict, but the demand for localization of the supply chain will speed up the verification of automotive-grade MCUs. Industry insiders said that in the past, the long verification process of vehicle-regulated products was largely caused by various procedural reasons. Now, due to the shortage of goods, the complexity will be simplified, and the verification at the technical level will be retained, which will greatly shorten the verification time.
Behind the dazzling achievements of local MCU manufacturers is the particularity of shortages and price increases. MCU manufacturers have experienced this wave of core shortages, and they should all see that domestic substitution takes time, products need to be verified, and supply and demand control capabilities need to be improved.
Domestic MCU companies do not lose in number. In addition to the companies listed above, there are dozens of unlisted companies, but few of them can reach the level of European and American companies. A considerable number of companies are developing 32-bit MCUs, but many companies still have a long way to go before they can be applied on a large scale.
As netizens said, “The wind is so strong at this stage that even a pig can fly. Only when the wind is calm can we know who has the stamina and can go the farthest.”
Like everyone else, the author hopes that the domestic semiconductor industry will grow rapidly, and the overall volume will become larger and larger, and thus have more bargaining power and capacity share, so that the problem of “lack of cores” faced by various industries can be easily solved.