The supply and demand of chips may continue to be tense

In fact, as early as the second half of last year, due to the impact of rising prices of raw materials, the volume and price of LED driver chips, which attracted the attention of the industry at that time. I didn't expect that this phenomenon has continued to this day, and there is a trend of aggravation. From this month (April 1), a number of enterprises said that they would implement price increases, including wafer factories, material factories, chip design factories, etc., causing an uproar.

It is understood that the world has fallen into the core shortage dilemma, and the chip shortage is 50%. This adverse effect also affects the LED display industry. The rise of LED Driver IC chips can not be separated from the impact of the general environment. In the early stage, Huawei increased its stock due to the US crackdown on Huawei, which led to the shortage of supply and demand of wafers and ultimately directly affected the IC supply of LED display industry.

8-inch wafer sets off a new round of price hike, LED Driver IC capacity is tight

Generally speaking, the 12 inch (300nm) wafer used for mobile phone chips can be used in 5g, automotive electronics and other fields, while the driving IC chip needed for LED display screen is mainly made of 8 inch (200nm) wafer. There is no conflict between the two. However, due to the larger profit space and wider application fields of the former, many expansion enterprises turn to 12 inch wafer production. So the shortage of 8-inch wafers is still unsolvable.

At the present stage, there are only a limited number of 8-inch wafer expansion enterprises. The reason is that the cost of new 8-inch wafer equipment is high and the profit margin is small. Therefore, most of them rent or buy second-hand machines to expand production or improve production efficiency in the existing plant space. At present, the rate of domestic 8-inch wafers is about 10%, which largely depends on foreign imports. Under the epidemic situation, the contradiction between supply and demand is more obvious.

The imbalance between supply and demand, price changes are inevitable. At present, the rising price of wafers is heard all the time. On the one hand, the production capacity is tight, but the market demand is surging. On the other hand, the price of wafer processing is rising. According to Taiwan Economic Daily, the foundry capacity of wafers continues to be seriously in short supply, and the 8-inch capacity is the most scarce. The industry is frantically bidding for the capacity. Recently, a batch of 0.13 micron 8-inch capacity won the bidding price, which is as high as US $1000 per piece. It is not only more than 40% higher than the industry's price after the price has been increased, but also a new high price in the past decade, highlighting the 8-inch capacity shortage. According to statistics, in 2020, the price of 8-inch wafers increased significantly in the fourth quarter, about 5-10%.

The rise of wafer price will naturally lead to the rise of LED Driver IC product price. Since September last year, IC manufacturers such as SUNMOON, Fuman electronics and CHIPONE have successively raised product prices, and the whole industrial chain has started a wave of price increases. "The driver IC is indeed out of stock, and it will continue for some time. At present, the price increase is about 10% - 15%." Recently, a number of panel enterprises reflected.

When the upstream raw materials rise, the downstream display application end can't raise the price at will, which leads to contradiction. Seeing a new round of raw material price rise, the prospect of LED display industry with small profit margin is worrying. However, when our reporter visited enterprises recently, the vast majority of enterprises clearly said that they would not follow the rise, mainly relying on some technological innovation to resolve the cost crisis, hoping to take advantage of this year's good market situation and trade scale for profits.

Short term solution to the shortage of LED driver chips

The reason why the lack of chip is particularly serious in the world is mainly due to the unbalanced development of the semiconductor industry. In order to completely control the high-end semiconductor industry, the developed countries led by the United States set up many obstacles artificially, resulting in the shortage of chips in the world. In addition, coupled with the rapid development of global 5g and intelligent automobile industry, high-end production capacity is transferred to it, which aggravates the production capacity supply of medium and low-end wafers such as LED Driver IC, resulting in the shortage of raw material supply of the whole LED upstream.

In addition to the driver chip, this year, copper, aluminum and other large comprehensive raw material commodities also launched a crazy price increase mode, as well as key accessories in the industry, such as connecting wires, carrier boards, circuit boards, etc. Whether future price increases will be transmitted to the terminal market remains to be seen. However, it is expected that this year's price rise of raw materials will be a severe test for the newly revived LED display application market and many LED display manufacturers.