China's sluggish economic recovery continues to affect the consumer electronics market, with microcontroller unit (MCU) industry insiders reporting that significant signs of demand recovery are still scarce. As the fourth quarter of 2024 nears, industry players note that order visibility remains limited, and short lead-time orders are crucial for sustaining operations through the end of the year.
With end-market demand remaining weak, MCU industry players indicate that while overall market prices have stabilized, supply-demand imbalances are still fueling competitive pricing in certain product lines. The sector is actively pursuing cost-reduction strategies, particularly through negotiations with wafer foundries to secure better production cost discounts.
From a demand standpoint, the MCU industry anticipates that fourth-quarter 2024 demand will stay muted. While distributors and customers are gradually clearing out inventories with some modest restocking, most current orders remain short lead-time.
On the supply side, industry experts point out that Chinese wafer foundries are running at near full capacity, with current production allocation and wafer input levels offering limited scope for further cost reductions. Several MCU manufacturers allocate a large share of their wafer production to Taiwan, citing competitive wafer prices and minimal production capacity constraints.
Operationally, industry players stress that market demand fluctuations, rather than pricing, are the key challenge facing the sector. A recovery in China's domestic market would have a much larger impact on future business performance, making the country's economic revival a critical factor.
For Taiwanese MCU firms, including Nuvoton, Holtek, Sonix, Generalplus, Megawin, Nyquest, ENE Technology, and Hycon, a key market indicator for the second half of the year is China's Singles' Day shopping festival. Supply chains usually prepare inventory 2-3 months ahead of time, with these preparations often reflected in third-quarter revenue. However, most companies have seen limited growth in their third-quarter 2024 results, with some even reporting slight declines.
Nuvoton reported NT$2.708 billion (approx. US$83.95 million) in revenue for September, reflecting a 3.39% month-over-month increase but a 12.71% decline year-over-year. Third-quarter 2024 revenue came in at NT$7.956 billion, a 3.29% decline quarter-over-quarter and an 11.29% year-over-year drop. Cumulative revenue for the first nine months reached NT$24.652 billion, down 8.28% compared to last year.
Nuvoton has attributed the decline in third-quarter 2024 revenue mainly to weak automotive market demand. Additionally, price pressures and soft demand in the consumer electronics sector further contributed to the drop. However, the computer segment showed steady growth. Looking forward, Nuvoton's outlook for the second half of the year largely hinges on the recovery of automotive inventory adjustments.
Holtek posted NT$236 million in September revenue, showing a 7.93% month-over-month increase and a 19.31% year-over-year rise. Third-quarter 2024 revenue reached NT$683 million, up 0.1% from the previous quarter and 8.24% higher than the same period last year. Cumulative revenue for the first nine months totaled NT$1.809 billion, marking a 14.16% year-over-year decline.
Despite the traditional peak season, Holtek saw little growth in the third quarter of 2024 due to ongoing uncertainty in the consumer electronics market. To adapt, Holtek plans to roll out new products in the second half of the year. Starting on October 22, the company will host its 2024 product launches across various locations, focusing on smart living, IoT, and green energy. The events will highlight new technologies and products, including health and measurement devices, security solutions, interface processors, low-power ICs and MCUs, sensors, digital modules, and BLDC motor control systems.
Article translated by Levi Li
