Fierce price competition in the power management IC (PMIC) industry, led by companies like Texas Instruments (TI), shows signs of abating. With limited room for further price cuts and inventory levels stabilizing, competitive pressures are easing.
In 2023, TI adopted an aggressive pricing strategy for mass-market PMICs and analog chips, particularly in the Chinese market, setting prices at unsustainably low levels. This has created significant challenges for Chinese companies, with many struggling to remain solvent, resulting in a less intense pricing battle. In contrast, some medium-sized Taiwanese firms have opted to avoid direct competition, focusing instead on maintaining stability and pursuing steady growth.
In recent years, one of the most pressing concerns for Taiwanese PMIC companies has been whether TI's aggressive pricing would impact their operations.
Taiwanese providers have leveraged the diversity of products and applications in the PMIC and analog chip sectors to concentrate on niche markets that larger competitors cannot effectively address. This strategic focus has allowed them to target applications with higher profit margins, ensuring resilience and profitability despite the challenging market environment.
Unlike other European and American IDMs, TI is more inclined to sacrifice profit margins to expand its market share. With new competitors in China seeking to benefit from domestic substitution policies, TI remains steadfast in its strategy, aggressively engaging in price wars. This approach also enables the company to offload excess inventory, reinforcing its position in the competitive landscape.
Insiders indicated that TI's proactive approach to maintaining its market share in key segments is partly motivated by the need to sustain ongoing investments in new capacities, ensuring sufficient orders to keep production lines active. If TI refrains from lowering prices, it risks poor utilization rates, which could impact profitability even more significantly.
This strategy has been effective; as government subsidies for local IC design firms in China gradually decreased, intensified competition among Chinese PMIC manufacturers led to many exiting the market.
Taiwanese companies such as Global Mixed-Mode Technology (GMT), Anpec Electronics, Leadtrend Technology, M3 Technology, and Silergy are striving to distance themselves from the intense competition in the mainstream PMIC market, which is largely dominated by TI and local Chinese firms.
For instance, GMT, Anpec, and Leadtrend Technology are investing in the development of DDR5 PMICs or non-consumer application PMICs while also expanding into motor driver chips or USB Power Delivery (PD) chips, diversifying their product lines and capitalizing on several currently popular applications to achieve breakthrough growth performance. M3 Technology focuses on the Wi-Fi-related market, whereas Silergy accelerates its entry into the automotive sector.
Although TI has temporarily halted its price-cutting measures, the competitive landscape in the PMIC sector remains challenging, with persistent pricing pressure from customers. To navigate these challenges, industry players intend to maintain their strategic focus on moderately sized markets, which are less attractive to larger IDMs due to their limited profitability.
At the same time, companies will continue to explore opportunities in non-consumer applications, which offer higher profit margins and longer product cycles. Although consumer demand is projected to recover modestly in 2025 compared to 2024, prioritizing stable operational performance aligns better with current development objectives in these more lucrative and sustainable markets.
Article translated by Jingyue Hsiao
