China-based IC distributors are cutting their prices for consumer MCUs to offload excess inventory, according to industry sources.
China-based IC distributors stockpiled previously consumer MCUs when price levels were high, and they held three to four months of inventory, the sources indicated. With uncertainty emerging on the demand prospects this year, the distributors moved to drop their prices for consumer MCUs recently.
Holtek Semiconductor is aware of the "chaotic" pricing conditions in China, and may have its distribution partners make appropriate price adjustments to respond to their fellow competitors' aggressive pricing strategies, according to Armstrong Tsai, spokesperson for the Taiwan-based MCU specialist.
The recent drops in consumer MCU prices in China, initiated by IC distributors but not chipmakers themselves, have started affecting adversely the market for low-price MCUs particularly those for small household electrical appliances, said Tsai.
Sources at backend houses specializing in consumer MCUs have warned they may be struggling to maintain high factory capacity utilization rates between the third and fourth quarters of 2022, as they are about to fulfill all the orders deferred from 2021. Besides, major China- and Taiwan-based OSATs are poised to have their new production capacities come online in the second half of 2022.
MCU suppliers have also become less aggressive in seeking more available fab capacities at their foundry partners, casting a further shadow on the demand prospects this year, the sources said.
Holtek is among the Taiwan-based MCU suppliers stepping up their deployments in the non-consumer segment. A slowdown in demand for gaming related applications dragged down Holtek's 32-bit MCU shipments during the first quarter of 2022, but the company expects the demand to pick up in the second quarter.
