Political and economic risks are eroding terminal equipment demand: Report

Industry sources say IC design firms are under increasing pressure to cut their offers as rising political and economic risks stemming from the war have eroded demand for terminal equipment.

According to Digitimes, the person said that IC design firms can only try to prevent their business performance from declining in 2022, as their optimism for robust 5G and AIoT applications earlier this year, due to the Russian-Ukrainian conflict and domestic. The surge in Covid-19 infections is getting bleak.

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It further said that design companies have managed to secure long-term foundry capacity support, but it is difficult to obtain similar shipment commitments from all downstream customers, putting downward pressure on its quotations as demand weakens.

Moreover, if the current market downturn becomes a long-term trend, IC design companies will have a hard time finding exports in the next few years, even if they are backed by a lot of capacity from foundries that are adding new capacity.

According to its judgment, among various products, the delivery time of Wi-Fi core chips is expected to return to the normal level in the second half of the year, because more foundry capacity will be provided in the case of a sharp drop in demand in other chip fields such as mobile phone APs.

The source pointed out that major mobile phone AP suppliers MediaTek and Qualcomm are expected to start a price war in the second quarter to stimulate sales to mobile phone makers. Currently, the unit price of their flagship mobile phone SoC is about $120, while the unit price of mid-range and high-end AP is $60-70. It remains to be seen if and how these prices will be lowered.

Meanwhile, panel prices are expected to fall further in the second quarter, and display panel suppliers for mobile phones and other consumer applications are reportedly asking display driver IC (DDI) makers to cut prices, the person added, adding that networking, automotive and industrial control ICs quotations remained relatively stable.

(via)