[News] Chinese MCU Manufacturers Halt Price-Cutting, MCU Industry Signals Recovery

2023-10-16 Semiconductors editor

Semiconductor inventory adjustments are showing positive signs, with the MCU market, which was among the first to bear the brunt of price pressure, now leading the way as Chinese companies have recently ceased their aggressive price-cutting strategies to clear their inventory. In fact, some MCU product lines have even begun to see price increases.

According to reports from Taiwan’s Economic Daily, MCUs are widely used across various key sectors, including consumer electronics, automotive, and industrial control. The recent increase in pricing suggests a resurgence in end-demand, indicating that the semiconductor industry is on the path to recovery.

Prominent global MCU manufacturers include Renesas, NXP, and Microchip, all of which play essential roles in the global semiconductor industry. On the other hand, Taiwanese companies such as Holtek, Nuvoton, Elan, and Sonix represent the local landscape.

Industry experts attribute the current developments to the COVID-19 pandemic, which caused disruptions in the supply chain throughout 2020 and 2021, leading to a frenzied rush to secure semiconductor components. This resulted in a surge in orders and significant price increases for ICs. However, 2022 marked a change in the industry landscape as demand weakened in various end-user applications. MCUs were hit hardest, and manufacturers’ inventories climbed steadily, reaching historical highs, with some industry leaders acknowledging that their inventory levels reached several months’ worth of supply.

To address the challenges posed by these soaring inventories, the MCU industry faced its darkest period from the fourth quarter of last year to the first half of this year. Chinese MCU manufacturers resorted to aggressive price cuts, even drawing renowned IDMs into the price-cutting competition. Fortunately, recent market conditions have started to ease the inventory-clearing phase. Chinese MCU manufacturers, who could no longer bear losses, have stopped selling below cost and have even made slight price adjustments to return to a more reasonable pricing range.

Unnamed Taiwanese MCU manufacturers revealed that as the attitude of Chinese companies towards price-cutting has softened, the pricing gap between products from Taiwanese and Chinese companies have gradually narrowed. Moreover, there are indications of small, urgently needed orders coming in, which will facilitate faster inventory reduction.