Uneven inventories across chipmakers are generating more costs facing downstream device assemblers in not only the PC and handset sectors but also the auto industry, according to industry sources.
Tight foundry capacity has caused shortages of chips in varying degrees, resulting in uneven availabilities of different chips, the sources said.
Downstream assemblers engaged in the notebook and PC segments have started slowing down their pace of orders for chips, particularly those that have been already stockpiled, the sources indicated. Nevertheless, dealing with the uneven availabilities of various chips remains a challenge for downstream assemblers and distributors who have now moved to adjust their inventory levels, the sources said.
In the handset sector, China-based brand vendors have decelerated substantially their demand in the latter half of the second quarter, whereas demand from Apple is picking up, the sources noted. Demand for the upcoming iPhone series will be among the main forces driving IC consumptions in the fourth quarter of this year, the sources said.
The car industry supply chain is also gearing up for production for new models in late 2021 or early next year, which will further drive the overall IC demand growth, the sources said.
With raw materials prices showing signs of stabilization, chip prices particularly those that are in less tight supply than other chips will come under downward pressure, the sources indicated. As a result, downstream assemblers and distributors are encouraged to step up their inventory adjustments particularly adjustments in certain chip inventories that are already at appropriate levels. Such scenario has already taken place in the notebook sector as production for notebooks yields much lower gross margins than production for smartphones and cars, the sources said.
The supply of automotive ICs is expected to be greatly improve in the third quarter, but the overall supply will stay tight in the second half of this year, according to sources in the car industry supply chain. Nevertheless, it remains to be seen whether the ongoing COVID-19 pandemic will create demand uncertainty for car businesses later this year, the sources said.
