The price hikes of chip manufacturers are still ups and downs, the latest ones to join are ADI and Silicon
Labs (Xinxin Technology). On November 2nd, The Paper News reporter learned from ADI China that due to rising costs, ADI plans to raise prices for some products from December 5th. “We have experienced rising costs in all aspects of the supply chain, such as wafer manufacturing. Costs have risen dramatically. We have tried to minimize the impact of these increased costs on customers, but we must now reflect some of these costs in our pricing.”
Previously, the ADI price increase letter circulating on the Internet showed that: ADI will increase the price of some products in ADI and its Maxim product portfolio, but did not mention the specific increase. The price increase will be implemented from December 5, 2021. For Maxim products that are not affected by additional price increases, they will continue to implement the previously communicated 6% price increase plan.
ADI China told The Paper that the online price increase letter is true, and that the company is facing all-round price increase pressure from the industry supply chain, especially the challenge of a substantial increase in wafer manufacturing costs. The company has been doing everything in the past. Efforts are made to minimize the impact of this situation on customers, but currently have to make adjustments to meet the challenges shared by this industry.
ADI was founded in 1965 and is headquartered in Norwood, Massachusetts. After more than 50 years of development, its digital-to-analog converters, optical fiber and optical communication chips, MEMS and sensors have covered industries, communications, automotive electrification, and consumer electronics. Multiple areas. ADI’s operating income for fiscal year 2020 was US$5.603 billion.
IC Insights data shows that in 2019, ADI is the world’s second largest analog IC supplier, second only to the largest manufacturer Texas Instruments (TI). From the perspective of revenue and market share in the analog IC market, ADI’s revenue is 5.169 billion U.S. dollars, with a market share of 10%; TI’s revenue reaches 10.223 billion U.S. dollars, and its market share is as high as 19%.
At present, major fabs are raising prices. Following the price hikes by UMC, Power Semiconductor Manufacturing Co., Ltd., and World Advanced, Japan Frontier Semiconductor Manufacturing Co., Ltd. also announced that it will start to increase the production capacity of foundry quotations by 10-20% in the fourth quarter. A new round of price increases by chip manufacturers.
Another chip company Silicon Labs also announced price increases. The price increase letter circulating online shows that Silicon Labs will increase the pricing of all its product lines starting from November 28, 2021, including the existing backlog of product orders. Silicon Labs did not disclose the specific price increase in the price increase letter.
Regarding the reasons for the price increase, Silicon Labs stated in the price increase letter: “The semiconductor supply chain crisis continues to severely affect industries around the world, and there is no sign of recovery in the short term. This crisis highlights the investment in semiconductor capacity expansion to meet the growing demand of the global economy. The urgent need. Silicon Labs is working hard to meet current demand and achieve meaningful capacity expansion through all levels of the supply chain as soon as possible. Due to the capacity crisis of the entire industry and the inflation that occurs in almost all industries, we are in the entire supply chain ( Raw materials, foundries, testing and assembly, logistics, labor/wages) have seen unprecedented cost increases.” Therefore, Silicon Labs will decide to increase the pricing of all product lines to reflect costs.
Silicon Labs also stated, “We recognize that passing on the cost increases we see to customers is disruptive. As inflation and shortages in the supply chain ease, we will work hard to find and pass on cost reductions.”
Silicon Labs is a very young chip company, founded in 1996 in Austin, Texas, USA. In the first three years of its establishment, the company focused on RF and CMOS integration, and in 1999 released the world’s firstcell phoneCMOS RF chip. After Tyson Tuttle became CEO in 2012, Silicon Labs began to shift more of its focus to the Internet of Things market technology, and its revenue accounted for more than 50% in 2019. In 2020, Silicon Labs revenue will be 886.7 million US dollars. In 2021, Silicon Labs will spin off its infrastructure and automotive business to Skyworks.
A semiconductor analyst told The Paper that the chip makers are now raising product prices to resolve cost pressures on the one hand, and to control the stocking of the supply chain and smooth performance on the other. “Some factories no longer provide certain chip products even for a few months, and many products are also stocked when they are sold. If they are too stocked, they will affect sales next year.”