With shortage in chips and surge in chip demand globally, the new digital supply chain has become the “Sweet Cake” of the electronics industry.
An unprecedented epidemic has brought an almost fatal challenge to many industries. Among which, the global semiconductor supply chain is the one most significantly disrupted, and many industries such as mobile phones and automobiles are crying out for chip shortages. With shortage in chips and surge in chip demand globally, the new digital supply chain has become the “Sweet Cake” of the electronics industry
The Global Chip Shortage
Affected by factors such as the international environment and the Covid-19 pandemic, the global chip shortage has been intensified since June, 2020. The main cause for the shortage of chips is due to the misjudgment of chip manufacturing companies during the epidemic last year. When reducing chip supply, they did not realize the explosive growth of chip demand brought by the home office in major economies around the world, which lead to demands of chips far exceeding its supply. With various chip design companies competing for production capacity, the trend of chip shortages and price increases has spread like wildfire.
Due to the influence of chip shortage, the price of many imported electronic components has been soaring and the delivery date has also been extended. This is a great challenge for end enterprises that heavily rely on imported component, because they not only deal with the rising procurement costs, but also face the crisis of production suspension if the raw materials cannot be delivered in time. According to the results derived from the big data and intelligent BOM quotation system of Allchips, the price for many raw materials has been soaring. Taking ST materials as an example, the prices of popular materials such as STM32F407**** and STM32F103**** have been significant increased about 10-50 times since Aug, 2020. Coincidentally, the market is also similar for Texas Instruments, NXP, ADI, and AVX.
However, this round of chip shortage is estimated to last for one more year. From the perspective of the division of labor in the industry chain, the chip industry is divided into chip design, chip manufacturing, and chip packaging. The root cause of this round of chip shortages and price increases is the insufficient chip production capacity. At present, global chip demand is 10-30 percent higher than that of production capacity. To fill this gap, manufacturers need 3 to 4 months to increase production capacity. In addition, it may take approximate half a year from the chip packaging to system application. To sum up, it may take one year for the products to reach the consumer. Therefore, the chip shortage is estimated to last till 2022.
Under the background of chip shortage, the traditional electronic components circulation channels are facing huge challenges, and the procurement process is long yet painful. Under such circumstance, the new one-stop digital supply chain service provider with strong data, supply chain integration and service providing capabilities has become the optimal choice of increasing number of electronic terminal manufacturers.
Allchips, as the representative of new digital supply chain service provider, is aiming to provide an one-stop flexible supply chain and intelligent manufacturing platform for the electronic manufacturing industry with the big data of BOM tool to solve industry difficulties, and it carries out the industrial digital and intelligent transformation on the upstream and downstream of the supply chain, as well as empowers the supply chain and traditional manufacturing enterprises.
According to the transaction data of Allchips, the raw material sales have witnessed an explosive growth since 2020. The shipped revenue in 2021 far exceeds the amount in 2020. The revenue in the first quarter of 2021 is two times as much as that of 2020, among which the revenue in March and April is more than doubled compared with the same period in last year respectively. It is witnessed by an increasing number of customers that Allchips not only assisted them to obtain the raw materials, but also greatly reduced their sourcing time and procurement costs even when the chips are in shortage, which has fully illustrated the competitiveness of Allchips in the supply chain.
The epidemic has brought a surge in downstream demand
Due to the epidemic, many factories around the world are unable to make production as scheduled. Working from home and education online are becoming popular in many regions, which cause the increasing demand for consumer electronic products. According to data from the second quarter of HP’s fiscal 2021, the sales of personal and commercial computers as well as printers have increased by more than 70% year-on-year, which has achieved the highest sales record for the past decade.
Accelerating the substitution process of China made chips
In the context of global uncertainty and shortage for chips, the localization of semiconductors is the driving force for technological progress. Therefore, many upstream semiconductor companies attract great attention from multiple fields. The development in the crucial process, especially in the chip design, packaging, and foundry has been increasing significantly.The round of chip crisis makes countries realize the importance of chip autonomy.
By now, Allchips has built in-depth cooperation with 500+ domestic original brands. Allchips, equipped with big data and artificial intelligence technology, aims to assist customers to find alternative domestic components. In addition, many customers have been asking for alternative chip replacement during past months, and Allchips has assisted them to replace the imported brands with alternative brands such as HangShun, Sgmicro, Silergy Corp, Tri-Ring Group and Sunlord.
Allchips customers are increasingly open to the domestic chip brands. According to the data from Allchips from 2017 to 2020, the acceptance rate for domestic IC brands, discrete components and passive components have been increased from 2.3% to 10.57%, 14.78% to 41.43% and 8.44% to 34.87% respectively, which shows that the overall acceptance of domestic alternatives has been increased.
