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>> Display driver chip Q4 may stop rising, some panel makers refuse to raise prices 1st,Nov,2021
According to the Science and Technology Innovation Board Daily (Shanghai, researcher Song Ziqiao), in the context of slowing panel demand, downstream terminal manufacturers seem to be gradually gaining the upper hand in the struggle between chip makers and panel makers. According to the Taiwan Electronic Times, since the beginning of this year, the price of display driver chips (DDI) has continued to increase, boosting supplier sales and profitability. However, industry sources said that some end customers have rejected DDI suppliers' requests to increase their quotations, and DDI may stop rising in the fourth quarter of this year.
DDI is an indispensable component for panel manufacturing. Indicators to measure the performance of the display include refresh rate, gray level, high brightness, etc., which are directly determined by DDI. The news that DDI may stop rising has cast a layer of uncertainty on the performance of display driver chip manufacturers in the second half of the year.
"Electronic Times" quoted the above-mentioned person as saying that despite strong panel shipments, DDI demand in the third quarter still exceeded supply, but since the second half of the year, LCD panel inventory preparations of TV brands have been decelerating, resulting in a decline in panel prices.
Brand manufacturers start a strategy of price-based pricing, slowing demand adds confidence
According to data from the research institute WitsView, the quotations of all sizes of TV panels declined at the end of August, and the decline was greater than expected. This is due to the fact that TV brand manufacturers carried out inventory replenishment and stocking for the year-end sales peak season in July, which led to excessive procurement demand in July. Some TV brand manufacturers have taken a conservative approach in purchasing goods since August, while taking into account the inventory of their hands and channels. The effect of falling panel prices has also forced panel makers to lower prices for sales in order to obtain shipments.
On the other hand, although large TV brand manufacturers have a large purchase demand, after more than a year of strong LCD growth, brand manufacturers want to reverse the pressure of panel cost increase. Subject to guest translocation occurs, and the "buyer's market" is further dominated.
More importantly, according to a report by the research organization Omdia, since July, panel supply chain manufacturers have found that there is no longer a shortage of LCD panels. The agency expects that the bargaining power of LCD panels has been regained by TV manufacturers and predicts the price of TV panels. It will drop sharply in 2022.
Some major DDI factories have issued a number of policies to prohibit distributors from roasting
Since the second half of last year, manufacturers in the driver IC industry have started to increase prices. Among the A-share companies that are mainly engaged in LED display driver chips, Ming Microelectronics has issued a price increase letter in October stating that it will increase the prices of the three major series of driver ICs for general lighting, landscape lighting and LED display by 5%-10%; Fuman Electronics also raised the prices of all products by 10% in January this year; Jingfeng Mingyuan has increased its prices for 6 times since last year.
The semi-annual report shows that the revenue of Fuman Electronics' LED lamp and LED control and driver chip business has increased by more than three times year-on-year, and the gross profit margin has increased by 34.03 percentage points to 52.88%. Jingfeng Mingyuan also stated in its semi-annual report that during the reporting period, the company adjusted product prices, and the unit price increase drove the product's comprehensive gross profit margin to increase from 25.03% in the same period of the previous year to 46.76%, an increase of 21.73. Percentage points. Ming Microelectronics' gross profit margin increased by 30% compared to the same period last year.
However, the news that DDI may stop rising in the fourth quarter of this year casts a layer of uncertainty on the performance of display driver chip manufacturers in the second half of the year.
Jingfeng Mingyuan has stated that in terms of product prices, a number of policies have been issued to prohibit distributors from roasting seeds, so as to avoid irrational prices from terminal clients and harm the company's long-term brand image.
According to the 2021 semi-annual report of Fuman Electronics and Ming Microelectronics, the sales model of the products of the two companies adopts the sales model of "direct sales as the mainstay and distribution as the supplement". Ming Microelectronics stated that under the direct sales model, customers place orders directly with the company, and the company arranges production and sales according to customer needs. In the distribution model, dealers place orders with the company based on factors such as customer needs and their own sales and stocking. The company and dealers conduct buy-out sales. The dealers bear the risks after the company sells products to the dealers.
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