Microcontroller unit (MCU) suppliers have observed a pause in price competition, but remain cautious since end market demand has yet to recover, according to industry sources.
Since the pandemic, overall economic weakness has caused end demand to decline. To seize market share, MCU players in China and Taiwan have been engaged in a price war; however, after half a year of adjustments, price cutting has begun to ease.
During the pandemic, there was a shortage of MCUs, which caused many companies to expand MCU product lines with lower thresholds. The number of companies increased rapidly, resulting in fierce market competition. But overall market conditions have declined in 2023, accelerating an industry reshuffle, with some companies calling 2023 the year of "irrational and excessive competition."
After a year and a half of inventory adjustments, some product lines have returned to normal levels. Market prices began to stabilize in the third quarter of 2023 and are expected to further stabilize and bottom out in the fourth quarter, according to industry players.
It has been reported that some companies have begun to raise prices. However, according to industry players, the price increases are limited to certain manufacturers, and large-scale increases have yet to occur. At present, overall industry prices are tending toward pre-pandemic levels.
Industry players pointed out that major international manufacturers such as STMicroelectronics and Texas Instruments (TI) have continued to launch products with even higher cost-performance ratios, but raising prices in a short timeframe to compete with the international market is difficult.
Taiwanese MCU manufacturers recently announced their October revenue, which revealed mixed results.
Sonix Technology and Megawin Technology both witnessed double-digit growth in October. Sonix's October revenue increased 33.04% YoY and 0.4% from September to NT$248 million (US$7.68 million). Revenue for the third quarter totaled NT$698 million, up 5.33% from September. Megawin saw its October revenue reach a 17-month high, up 4.02% YoY and 28.92% from September to NT$40 million.
Many industry players have pointed out that visibility in the end market will be limited in the fourth quarter due to slow economic recovery and industry seasonality. They expect fourth-quarter performance will be similar to the third quarter. Industry players are still actively adjusting inventories and expect them to reach healthy levels by no later than the first quarter of 2024.
Article translated by Eifeh Strom
