On December 30, it was reported that according to the price increase letter on the Internet, the world's second largest analog chip manufacturer Analog Devices (ADI), which only launched a new round of layoffs in the middle of this month, has recently issued a price increase notice to China's ** businessmen, announcing that it will start from February 4 next year to increase prices by 10-20% for some product lines.
In the price increase letter, ADI said that the company attaches great importance to the reliability of stable component production, so it will not arbitrarily stop stopping the production of components within a controllable range, and in order to assure customers, the company will increase the price of some old product lines to offset the cost pressure of maintaining production.
Taiwanese analog chip manufacturers said that ADI's price increase includes new orders and existing demandAnd the price increase of products in different periods will be different, for example, products that have been mass-produced for 20 years will increase by 15%, and products that have been mass-produced for 25 to 30 years will increase by 20%. A more precise magnitude of the price increase has yet to be confirmed.
According to some analysts, ADI will have different price increases for new and old products this time, hoping to take advantage of the opportunity of low inventory in the first chain to stimulate customers to switch to new products. To a certain extent, ADI's move reflects that the semiconductor market has bottomed out, which may trigger a stocking wave, which should also be good news for domestic semiconductor manufacturers.
However, judging from ADI's latest financial results for the fourth quarter of fiscal 2023 ending October 28, 2023, the situation is still not optimistic. ADI revenue for the quarter was 27$1.6 billion, down 16% year-on-year, with only the automotive segment maintaining growth, and all other segments posted double-digit percentage declines.
ADI's revenue and profit forecast for the first quarter of fiscal 2024 is also in line with market expectations.
Perhaps due to the negative performance impact, ADI recently launched a new round of layoffs, which will cut another 350 jobs, which is expected to take effect on January 12, 2024.
ADI noted that customers hit by inflation are no longer placing new chip orders. ADI is planning to reduce inventories by slowing the pace of capacity expansion, which is expected to help reduce ADI's capital expenditures by about $500 million in fiscal 2024.
However, ADI's inventory levels are decreasing compared to before. Jim Molika, ADI's chief treasurer, said, "The company reduced its inventory by $70 million in the fourth quarter (sequentially). He added that inventories should continue to decline in the fiscal second quarter.
For the long-term trend of the industry, ADI is still optimistic, ADI pointed out at the first meeting in November that the company's new products Design-Wins and more mature products will continue to grow year-on-year, and are optimistic about the current situation of the industry and the future pricing environment.
Industry insiders also pointed out that ADI has raised prices for old products, showing the company's optimism about the recovery of industrial demand. On the one hand, ADI pushes customers to replace new products by improving old productsOn the other hand, the life cycle of analog ICs is relatively long, and chip factories often increase the price of old products in order to promote and popularize new products and other applications. On the other hand, it also reveals the rebound of downstream demand and confidence in future performance growth.
Since the fourth quarter of this year, with the successive launch of new smartphone products and AI PCs that support generative AI, it is expected to stimulate the accelerated recovery of the smartphone and PC markets, which will also directly drive the demand for memory chips, CIS chips and analog chips to rebound.
It is worth noting that under the background of the continuous reduction of production capacity by upstream original factories, memory chips have been rising recently. For example, it is rumored that Samsung has raised the NAND Flash chip by 10% to 20% in the fourth quarter, and will increase the price by 20% quarter-to-quarter in the first and second quarters of next year. Western Digital also issued a price increase notice letter to customers at the beginning of this month, emphasizing that the ** of NAND Flash products will adopt a cyclical increase method in the next few quarters, and it is expected that the cumulative increase will be **55%. Samsung Electronics, a major global CMOS image sensor (CIS) manufacturer, was also revealed in November that it had issued a price increase notice to customers, and in the first quarter of 2024, it will significantly increase its CIS products**25 30%.
Editor: Xinzhixun-Rogue Sword.