After the “cool” ST and TI, another brand in the spot market recently attracted our attention frequently. At the bottom of the recent article, we were surprised to see the view that “TI can’t save, but ADI is scarce”. Some people directly shipped ADI at the market price in the message, and some readers want to see the market of ADI.
There are signs in the spot market that the price of some models of ADI chips, which have always been “resistant to decline”, has also started to plunge.
The main reason for the contrast is that in 2020, ADI and Meixin (now acquired by ADI) also saw price increases in the spot market. Due to the COVID-19 sweeping the world, production was suspended everywhere, and supply exceeded demand. The price of some models used for medical products doubled, and “the increase exceeded the house price”. There were many cases where goods could not be delivered at high prices.
Now, more than two years have passed, and the impact of the early epidemic that suddenly stirred the balance of supply and demand has gradually subsided. This year, chip brands represented by ST and TI suffered from the embarrassing situation of cold demand and price reduction in the spot market.
ADI and TI are both analog chip giants. The market of chips that were still in short supply last year has also been significantly lower in recent months. The arrival of a large number of goods, like the sudden storm in summer, has almost wiped out the demand of the dying spot market. Is there no shortage of ADI? What is the real situation? How to view the current market of ADI? This article will try to show you:
1. ADI is not lacking?? Technical barriers are too high
2. ADI spot market price change
3. Inside volume ADI spot market
01
Not lacking
ADI the final say
For the domestic market, the shortage of ADI fundamentally depends on the technical barriers of ADI. In fact, ADI has an unshakable position in high-end industrial materials and automotive materials. Is TI, the leader of the global analog chip field, out of position? Of course not.
ADI is still too young to compete with TI, the leader of analog chips. On a global distribution platform, TI significantly crushed the number of ADI more than 45000 with more than 86000 chip types.
If the passive component is Nongfu Mountain Spring, then DC/DC is wine. In order to compete with TI in power management IC, ADI may still be a little poor. What’s more, TI’s gross profit margin exceeded 70% in the first quarter of this year, and the analog chip is still TI’s “cash cow”.
As the second in the industry, ADI’s route is precisely “refined”? Chip? Therefore, it was named “Moutai” in the analog chip industry. From the perspective of the proportion of high-end products and the technicality of signal chain products, ADI is actually ahead.
First of all, ADI is willing to pay more attention to its R&D investment. In 2021, the R&D investment will be about US $1.3 billion, accounting for 17.7% of the operating revenue. TI’s R&D investment will be nearly US $1.6 billion, accounting for only 8.5% of the current year’s revenue. Does ADI also spend money? merger? Lingte? Meixin? Wait, wait?,? Broaden the new? Field?, continued? Improve its performance? In?? Analog? Chip? In the field? Core competitiveness.
The simulated sales of ADI end-use applications in 2021 are industry (50%), automobile (21%), communication (15%) and consumption (14%). In 2021, TI’s industrial (41%) and automobile (21%) sales accounted for 62% of its revenue, lower than the proportion of ADI’s industrial and automobile sales of more than 70%.
Corresponding to downstream applications, ADI’s customers, industrial, automotive, and medical enterprises, have a large number of capital,? Many of them are top enterprises in their respective industries, and high technology requires customized B2B services. In 2019, up to 87% of ADI’s operating income came from the B2B market, with strong user stickiness.
Analog chips are divided into signal chain products and power supply products. ADI ranks first in the signal chain, and has been leading the data converter for many years. Some people have said that if the building of ordinary chips is compared to the building of aircraft, the building of high-performance ADC chips is the building of aircraft carriers, which requires extremely high technology, performance and reliability, and is very difficult.
According to the report of Anxin Securities, in the ADC market in 2021, TI, ADI and Maxim accounted for more than 95% of the domestic high-speed and high-precision ADC/DAC market. The share of ADI is about 58%, far higher than that of TI, which is about 25%. According to Databeans statistics, the unit price of high-end ADC chips is several times that of low-end ADC chips. For example, high-speed ADC accounts for less than 10% of the total shipments, but accounts for nearly 50% of the industry’s sales.
Is high cold? A? D? I? Different from? most? Analog? Chip? Enterprise? of Background color?.? Compared with power management chip, the design of signal chain chip is more complex and has a higher gross profit level. As the leader of data converter, ADI’s gross profit margin remained around 65% from 2011 to 2019, which was quite strong.
However, the wafer production capacity under the ADI IDM mode does not take advantage. In 2021, the proportion of ADI wafer OEM production is about 45%, which is highly dependent on external wafer factories.
On the other hand, in emerging fields such as 5G, artificial intelligence, the Internet of Things, and automotive electronics, the demand for signal processing (including speed, accuracy, noise, etc.) has increased rapidly, and the demand for ADC chips has continued to rise to a higher level. However, it is difficult to achieve the large-scale replacement of consumer MCUs like ST’s in China. Therefore, in the short term, the high-performance analog chips of ADI have experienced cycles and twists in the spot market, but the demand trend Irreplaceability still prevails.
02
ADI spot market price change:
Price diving vs high
Like the chip market of ST and TI before, the current market of ADI is also low. The most intuitive phenomenon is that agents and terminals have arrived in large quantities. In the face of a large number of chips, terminals do not pick up the goods, or even start to sell goods in order to alleviate the backlog, resulting in a large number of spot goods flowing into the market, which has impacted the spot market price of ADI to varying degrees.
According to the spot market report of Quiksol in July, the price of many materials in ADI has directly dropped to less than half of the peak period, and the price has plunged greatly. For example, OP2177ARMZ has not received a batch of goods from the terminal in a short week, and the price has dropped from about $10 to about $3 (as of the time of publishing, it has dropped to 12-13 yuan).
The chips with exaggerated price decline of ADI basically experienced a high premium stage of soaring prices. For example, the agent supply of interface isolation ICs (such as ADMx and ADUMx) has been pushed to the market, and the price has plunged a lot.
However, compared with other brands, ADI has few models with crazy price increases. As for ADI’s individual high-priced chips in the market, “LT series has risen sharply”, a friend familiar with the ADI market told us.
The LT series (Power by Linear) is mainly from the high-end analog chip giant Linear, which was acquired by ADI in the early years. The combination of the power supply products that Linear is good at (about 85%) and ADI’s customized products (about 15%) has made a good fist in the fields of industry, automobile and communication.
The price of this kind of chips has risen by a large margin and remains high after the price falls:
Linear’s auto material market is still hot. LTC6813HLWE-1 # 3ZZTRPBF and LTC6994HS6-1 # TRPBF prices are very high and still hard to find. The former (as low as 60 yuan last year) rose to more than 100 yuan, while the latter (about 10 yuan in the normal price) rose to about 500 yuan;
The price of LT1964ES5-BYP for instruments has been reduced from 300 yuan to 100 yuan, but it is still at a high level compared with the normal price of more than 7 pieces.
In addition to LT series, the prices of digital isolators led by ADUM, interfaces led by ADM, AD5 series and AD7 series are basically higher than the normal market prices, and the prices remain high:
The normal price of AD5290YRMZ10-R7 is about 13 yuan, which plummeted from the four-digit price of 3000 yuan in May to about 120 yuan;
The normal price of ADUM1200ARZ-RL7 is about 9 yuan, down from 100 yuan in April to about 18 yuan;
The normal price of the hot search model ADUM1201ARZ (interface and isolation, industrial and automotive) is 4-6 yuan, which is about 13 yuan at present;
The unit price of AD8657ARMZ-R7 is about 50 yuan at present, and it was about 9 yuan before October last year.
The above stagnant market price also reflects the shortage of high-end chips such as ADI automotive and industrial chips. Previously, Quiksol said that the delivery period of ADI is still very long, most of which will be more than one year, and some of which will be extended to 80 weeks or even 90 weeks, which means that the shortage of ADI in the past year may not be relieved on a large scale.
03
Frequent price comparison, high price without market
Inside ADI spot market
The upstream delivery period is tight and continues to be in short supply. However, from the feedback of the downstream spot market, high prices are out of market and frequent price comparisons are taking place. Special materials? Cold demand??,? Wait and see? Mainly?,? In the shop? of influence? Next?,? General material? What is the price? continued? fall.
Last year, Ms. Xiao, who purchased medical equipment, also suffered from a digital isolator ADUM6000ARWZ of ADI. At that time, the price of this chip rose sharply from more than 40 yuan. “At the end of September, it was still more than 400 yuan. We missed it. After the National Day, the price rose by a hundred and one hundred points, and finally rose to more than 700 yuan. Later, we simply had to buy futures.” After a year of stock, ADI chips arrived through various channels. Now their demand for ADI is actually low.
Xiao Wu, who is engaged in chip sales, said that the demand of ADI is somewhat, but it is relatively cold compared with the end of April. Even the demand of industrial customers is pitiful, and some customers have been waiting for the market and have no stock.
In the past two years, the performance of ADI has always been strong. Since April this year, the overall demand of ADI has begun to weaken. In May, ADI’s popular materials ADUM, ADG, AD7 and AD8 continued to be in high circulation, but the price of some LTC power management ICs fell, and the overall delivery period of ADI showed signs of extending compared with the first quarter. In June, how about the decline of ADI demand? More? Obvious.
“The price fluctuation is very normal, but the current situation is that the quantity of goods is large and the quantity is small.” The main melody of the current ADI market is that the price of some models has plunged, the supply has exceeded the demand, and the market demand has weakened. The price of the ADI model contacted by Xiao Wu is not likely to plunge collectively. “There is too much overstock of goods in general materials, resulting in a continuous decline in the price. As for the price, there is very little jump at once.”
The general materials of analog chips are used in many scenarios such as communication, consumption and industry, and the design and performance parameters will not be specific to specific applications. Product types generally include amplifier and comparator of signal link, general interface chip, signal converter ADC/DAC and power management chip, etc. However, the proportion of general analog chips in the global analog chip market is lower than that of special analog chips, which is 40% in 2021 (the share of power management and signal chain is equal), and the proportion of other special analog chips is 60%, which is mainly used for? Communication, automobile and industry.
Due to the large market demand, liquidity and inventory of general materials, the price of general materials is easy to be affected by changes in demand and falls rapidly. Xiao Wu also said, “The customer knows that the original factory and the agent have a large number of goods. The spot market has no chance, and the price is falling day by day. The boss who came out of the agent said that the business is particularly difficult to do in recent months, and the internal volume is not good.”
This year, the businesses that operate ADI have become a little difficult. On the one hand, the speed and frequency of customers’ orders have decreased. On the other hand, terminal customers are still trying to find the bottom price. Most of them will wait and see for a while, hoping to win at the most favorable cost price.
However, there are also veterans who believe that once the market recovers, the price is likely to rise again. According to the reply of the original factory and the agent, the delivery time of ADI is longer than before, and some chips are in high circulation. For chips that cannot be delivered by the original factory at present, the price will be “fried” after the shortage.
04
epilogue
In May of this year, when the world was facing adverse conditions such as geopolitical and supply chain disruption, the CEO and Chairman of ADI released optimistic expectations – these unstable factors could not prevent ADI from entering the second half of the year with the momentum of capacity increase and continuous reservation.
The chip market has ushered in a low tide, and the longer life cycle of analog chips has given TI, ADI, Skyworks and other large manufacturers a lower risk factor. Due to its superior technology and product line advantages, ADI, which specializes in automotive and industrial chips, has obtained long-term stable demand in the automotive, industrial, medical and other markets, and the market price is more firm. It is no wonder that ADI has become the “first choice” in the eyes of chip practitioners and investors.