Chip prices,

With more and more chip related companies announcing price increases, the price increase map of the chip industry chain is gradually clear. The price increases are no longer concentrated in chip OEM enterprises, and have gradually spread to the field of chip manufacturers.
According to the financial Associated Press, MediaTek may raise the price of its most important mobile phone chips a few days ago because of the strong demand in emerging markets and the increased momentum of downstream goods after the epidemic. Then insiders also publicly confirmed that MediaTek has indeed adjusted the price of mobile phone chips recently, of which 4G chips have the highest increase, reaching 10-15%, and 5g chips have an increase of about 5%.
At present, MediaTek is the world's leading mobile phone chip manufacturer and has a high share in the Chinese market. According to the statistics released by cinno research, in the second half of 2020, MediaTek's market share showed explosive growth, rising to 31.7%, becoming the largest smartphone processor manufacturer in the domestic market for the first time.
In fact, the rise in the price of MediaTek chips is not surprising. Xu Qi, President of realme China, predicted in March: "this year is not only short of cores, but also exposed some shortages of components such as batteries and chips. At present, although the pricing mechanism has not been affected accordingly, the price may fluctuate in the second half of the year, which is my prediction based on the current situation."
The direct reason for the price increase of MediaTek this time is not only that the chip itself is in short supply, but also that a few months ago, raw material manufacturers, TSMC and other head chip processing plants announced price increases one after another.
Previously, a wave of price increases in chip processing plants has caused panic in the mobile phone industry, and now chip R & D manufacturers have also raised prices one after another. The collective price rise of the upstream industrial chain will inevitably transmit the cost pressure to the downstream market.
However, the impact of chip price rise on head mobile phone manufacturers will not be great. After the rumors of U.S. sanctions came out last year, in addition to Huawei's overnight charter flight to transport chips, Xiaomi OV and other emergency stockpiles. Domestic mainstream mobile phone manufacturers are not so "lack of core" for the time being. What is really squeezed is the small and medium-sized non mainstream brands in the "other" column of manufacturers in the global mobile phone market.
If these manufacturers do not raise the price of mobile phones, they can only bear the cost of narrowing the profit space; Once the price rises, the "cost performance" will no longer be, and the advantage will be greatly reduced.
In the mobile phone industry where resources are the king, the competition has always been fierce. Head manufacturers have been busy. Now, while dealing with mobile phone head enterprises pressing to harvest the market step by step, they are facing chip price increases. Small and medium-sized mobile phone manufacturers are afraid to face more difficult living space.
Chip price and cost rise
Small and medium-sized mobile phone manufacturers are more difficult
This round of chip price rise is transmitted from the upstream.
In March this year, Xinyue chemical, the world's largest silicon wafer manufacturer, announced that the price of silicon wafer would increase by 10% - 20% from April 1, due to the rising cost of raw material silicon. Subsequently, chip manufacturers also joined the ranks of price increases. Finally, even TSMC, the world's largest chip OEM, decided to increase the price - Taking 16 / 12NM as the dividing line, the price of high-end processes below 16 / 12NM increased by 10%, and the price of mature processes increased by 15-20%, which will take effect from the first quarter of next year.
TSMC's announcement of the above decision clearly added fire to the anxious market.
The rise in chip prices also has certain differences for different terminal enterprises. Large companies will be less affected. For example, first-line brands such as apple account for more than half of the operating profits of the global smartphone market. It has the ability to give up a certain profit margin in exchange for a larger market share. In this process, the pressure turns to small and medium-sized mobile phone manufacturers with low market position, resulting in a certain squeeze on the latter's production capacity or profit space.
Coincidentally, MediaTek's main goal of raising the price this time is 4G chips, which is expected to increase by 15%, while the price of 5g chips increases slightly, or 5%.
The reason for the high growth of 4G chips is that most semiconductor factories around the world have focused on 5g chips in recent two years, and the 4G chip wafer production line has been gradually replaced by OEM factories, resulting in the continuous contraction of 4G chip production capacity.
In fact, 4G phones are not weak in the all in 5g environment. Since the third quarter of this year, Xiaomi, oppo and vivo have increased the chip procurement of 4G smart phones. This is due to the shortage of chips. Most mobile phone manufacturers choose to launch both 4G chip phones and 5g chip phones on the same model, so as to alleviate the dilemma of insufficient chips.
Therefore, 4G chips gradually become in short supply. Facing the huge demand for 4G chips, the OEM had to raise the price.
In addition, it should be noted that MediaTek's chip itself is highly cost-effective. This strategy also makes its products popular in the middle and low-end market. In the 4G mobile phone era, Qualcomm has always been the leader in the mobile phone chip industry, and MediaTek has a large gap with it.
Later, with the advent of the 5g era, the medium and low-end mobile phones of Xiaomi ov generally adopted the 5g chip of MediaTek, especially the Tianji series processor launched by the latter, which helped MediaTek seize most of the medium and low-end mobile phone market share and return to the first position in the domestic chip market share.
Obviously, the price rise of MediaTek chips is more likely to have a great impact on medium and low-end machines, which is an important business of small and medium-sized mobile phone manufacturers.
Sun Yanbiao, President of the first mobile phone Research Institute, analyzed to the wired insight reporter that the rising price of chip related industry chain will affect the whole mobile phone terminal manufacturers. Because high-end phones do not rely on hardware to make money, but rely on software chains such as Internet applications, the impact on medium and low-end mobile phones is more obvious.
In addition, sun Yanbiao said that the cost of mobile phone chips generally accounts for 10-20% of the total price, so the price rise of chips will directly affect the price of medium and low-end machines.
Small and medium-sized mobile phone manufacturers such as Meizu and Coolpad have meager profits. They can't afford the cost rise caused by the chip price rise like "rongmi ov". They are likely to be unable to bear the pressure and raise the price.
This will fall into a dead circle. If the price increases, it is bound to lose the cost-effective advantage, resulting in the loss of consumers. After all, an important reason for the rise of domestic mobile phone manufacturers is to seize the price reduction cycle at the right time. However, if low-end mobile phone brands do not raise prices, it means that they will lose one for each mobile phone they sell.
In sun Yanbiao's view, the prices of panels, cameras and other components also fluctuate, which is also affected by the price fluctuation of mobile phone chips.
Among them, 5M and 8m mobile camera chips are in short supply in terms of cameras.
This is because in the mobile camera market, medium and low-end mobile phones are also developing to multi camera. In addition to the main camera pixel, other auxiliary cameras are mostly 5M and 8m; The periscope camera is mainly 8m, the TOF camera is mainly 5m, and the face recognition is mostly 5M and 8m.
However, the deeper reason may also be the overall shortage of 8-inch wafers. Once the price of camera chip becomes higher, it means that camera module manufacturers have to spend a lot of money on purchasing products.
At the same time, the camera module factory will also face the capital pressure of cob (chip packaging) equipment. Because cameras above 8m need to adopt cob process, but the current terminal demand has increased. Some manufacturers also adopt cob process for 2m mobile phone cameras, and cob process will also be adopted for some 5m mobile phone cameras.
From this point of view, the camera module factory will not only face the pressure of rising chip prices, but also need more funds for production.
In terms of mobile phone panels, due to the strong demand caused by various mobile phone manufacturers seizing the market, a-Si (amorphous silicon) panels and medium and low-end white brand smart phone panels are subject to demand accumulation and insufficient supply. According to the data observation report of China's mobile communication industry, the price of mobile phone panel may continue to rise in the future.
Obviously, the shortage and price rise of mobile phone chips have caused the collective price rise of relevant supply chain links, which makes the survival situation of small and medium-sized mobile phone manufacturers with small market scale and thin profits more difficult.
Chip price without market
Large manufacturers are guaranteed, and small and medium-sized manufacturers are difficult to get goods
After a round of reshuffle, the voice of the mobile phone market is concentrated among several mobile phone giants.
"Those who get production capacity get the market". This abnormal market rule goes back to a ban of two years. On May 15, 2020, the U.S. Department of Commerce announced to strengthen export control, especially in the chip industry, targeting some Chinese enterprises such as Huawei - Huawei needs to obtain a license before purchasing American chips.
It is the export control of Huawei that has become the fuse for the shortage and price rise of the whole chip industry chain.
Since Huawei only has the ability of chip design and no ability of chip manufacturing, in order to stabilize the future business, it must ensure the production capacity. Therefore, after the ban was issued, Huawei urgently increased its procurement in wafer foundries and upstream chip suppliers, and urgently added a large order of up to US $700 million to TSMC. The products covered 5 nm and 7 nm processes, making the relevant capacity of TSMC full.
However, the more chip raw materials Huawei grabs, the less capacity will be allocated to other companies. As a mobile phone giant, Huawei's massive purchase orders directly affect the capacity plan of the wafer factory. Huawei is in a priority position in the scheduling of the wafer factory.
According to Zhongshi electronic news, TSMC even communicated and coordinated directly with Qualcomm, MediaTek, AMD, nivdia and other head chips at that time. It was suggested to transfer part of the latter's production capacity to Huawei and strive to help China produce enough chips within a 120 day buffer period. According to Tencent News, as of the first half of 2020, Huawei has invested 180 billion yuan in chip inventory, which is enough for Huawei to support a year's chip supply, and even the core telecom equipment division has hoarded foreign supplied parts and components for up to a year.
It is also the upstream chip industry chain that focuses on completing the capacity cycle of Huawei's orders, which makes the ecology of mobile phone chip supply chain tense.
Later, some other Chinese enterprises included in the US control list also joined the large-scale hoarding team. Especially after the ban, "rongmi ov" and other first-line mobile phone brands have made great efforts to seize the medium and high-end market vacated by Huawei. As a result, the demand of downstream customers for core chip devices has been sharply amplified again, and the orders of head mobile phone manufacturers such as Xiaomi and oppo have occupied the original upstream chip manufacturers, especially the wafer foundry such as TSMC.
Compared with the head mobile phone brands that have the ability to grab production capacity and even prepare goods in advance, Entrepreneurial Small and medium-sized mobile phone brands simply can't make half a year or a year's production plan like large enterprises and even car enterprises, resulting in many small enterprises unable to enter the original factory's supply chain system, and their voice is at a disadvantage when the chip market is tight.
This can also be seen from the market share analysis report of each mobile phone shipment. Only Huawei, Xiaomi, oppo and other top brands can appear in the analysis report. The list has been fixed for many years, while the other small and medium-sized mobile phone brands are often integrated and put in the column of "others".
Although some mobile phone manufacturers have the ability to place orders, the delivery cycle is also very long. Andre volostnov, Dean of the school of robotics and mechatronics of Russia synergy University, has publicly said that the demand for chips in the field of mobile devices exceeds 10% - 30% of the supply. Large smartphone manufacturers need to wait for chips for 4-5 months, while small manufacturers need at least 10 months.
Therefore, in the panic hoarding environment, the contradiction between limited chips and a large number of purchase demand makes the price of chips rise and shortage, and the shortage and rise.
Now, with the speculation of downstream channels, the upstream chip supply chain has begun to collectively raise prices, from "unable to buy" to "unable to afford". The plight of small and medium-sized mobile phone manufacturers is self-evident. If the "lack of core" can not be alleviated in time, its survival situation will only become more and more difficult.
Small and medium-sized manufacturers began to seek "domestic replacement"
The market leaves little space for small and medium-sized mobile phone brands.
The competition for small and medium-sized brands is much more intense than that of head manufacturers. According to IDC's report, in the third quarter of 2021, the shipment volume of China's smartphone market was about 80.8 million units, a year-on-year decrease of 4.7%. The continuous rise of average unit price and insufficient product innovation to stimulate consumers to shorten the change cycle are the main factors for the decline of the mobile phone market.

Among them, the top five manufacturers are still vivo, oppo, glory, Xiaomi and apple, all rising, accounting for 86% of China's smartphone market share, slightly higher than 85% a year ago.
The total market share decreased, but the market share of head mobile phone manufacturers increased in reverse, which means that the "Matthew effect" is increasing in the mobile phone industry, and the living space of small and medium-sized manufacturers is getting smaller and smaller. In this situation, small and medium-sized brands have "difficult classics".
Even though these mobile phone brands have made efforts to improve their market position, with the intensification of polarization in the domestic mobile phone market in the past two years, it is difficult for the market to leave an enterprise many years to grow slowly. What's more, we have to face the pressure of industry core shortage and rising costs.
However, among the small and medium-sized brands, some manufacturers try to recover their place in the highly competitive Chinese market by looking for "domestic replacement".
Take cool 20 as an example. When promoting the product, Qin Tao, senior vice president of Coolpad, said that Coolpad said it would use the domestic supply chain on a large scale, "we give priority to domestic components if there are domestic components" and "our mobile phones have realized the localization of 80% - 90% components".
The actual situation seems to be moving towards this goal. According to interface news, Coolpad is currently trying a new supply chain cooperation model and joint research model. For example, the camera on the back of cool mobile phone has written the name of Hong Ruan, a domestic mobile camera operating system supplier.
In addition to the nearly full localization of Coolpad, the hardware and software services of LETV mobile phones have basically been produced nationwide.
On September 30 this year, LETV released its first new product after its return - LETV S1. In terms of specific configuration, LETV S1 is equipped with Tanggula T740 (Huben t7510 chip) of Ziguang zhanrui, with a battery capacity of 4900mah. The comprehensive performance is slightly stronger than Xiaolong 660 and Xiaolong 662, close to Xiaolong 675. Mobile phones equipped with the same processor include Hisense reading mobile phone A7, China Telecom Tianyi No. 1, little pepper 20, etc.
It is worth mentioning that LETV S1 also has Huawei's HMS core and Huawei application services built in. Therefore, for this mobile phone, LETV also labeled it as a "national product", and said that the chip, memory, screen and manufacturing are provided by domestic suppliers.
Wired insight also found that many new mobile phone manufacturers such as ZTE, Meizu, realme and even glory use domestic processor chips produced by Ziguang zhanrui. For example, the glory medium and low-end series models changwan 20 are equipped with Ziguang zhanrui Huben T610 processor.
Small and medium-sized mobile phone manufacturers choose "domestic flat replacement", which is also a helpless move in the face of global core shortage, overall price rise of product supply chain and increasingly shrinking market. They have to survive in the cracks.
In the future, the competition in the mobile phone market will become more and more fierce. Different from the giants who want to make more profits, for those small and medium-sized mobile phone manufacturers whose brands are not well-known, living is the most important goal.

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