Shulou(Shulou.com)11/24 Report--

The chip industry has been wrapped in magical realism over the years.

At the end of 2020, the wave of core shortage caused by the strike of Malaysian fab workers spread all over the world. MCU lack of production capacity, structural lack of core, so that the entire industry has changed.

The orderly market is instantly engulfed by fear.

And fear is the biggest enemy of order: the well-established distribution model, the pricing system, suddenly collapsed.

Terminal manufacturers skip agents and directly strive for supply from the original factory; dealers launch interpersonal relationships to get scarce chips and make a lot of money in the market; the original factory does not have the production capacity to kneel at the gate of the wafer factory; a car gauge-grade MCU, the price soars a hundred times to five digits.

The anxious market is like bloody meat bait, attracting greedy sharks.

Buffett said: "I am greedy when the market is scared."

With the help of scooters and poles, Sharks collided and ate in Huaqiang North, Shenzhen, completely forgetting Buffett's words: "I am afraid when the market is greedy."

For the practitioners on display in this rotten chess game, the trajectory of fate began to be changed mercilessly.

Recently, the price of MCU has plummeted, and the general-purpose MCU that used to cost 200 yuan has dropped to 20 yuan, but there is still a lot of room for 6-10 yuan from the actual original factory price.

Hoarders who try to recreate the myth of wealth have been the hardest hit in the upheaval, with some selling cash at low prices while there is still demand, watching unsold goods worry day and night, and others grieving for their own miscalculation because of the large amount of debt owed by hoarding.

When the tide receded, I was already naked on the beach.

Huaqiang North gambling table, there is no winner MCU sometimes shortage, sometimes oversupply, so that both terminals and dealers into chaos and entanglement, constantly pulling, leading to a lose-lose situation.

A hardware entrepreneur whose throat was locked by MCU in March 2021, Tian Yulong, founder of a smart hardware company, was grabbed by the throat by MCU.

The team was developing an intelligent hardware for children's education, but there was a supply chain crisis on the eve of production: MCU, which had agreed to use Hongjing with a unit price of 3.80 yuan, was out of stock when Tian Yulong found Hongjing again two months later. You can only place an order with an agent.

Tian Yulong was so angry that he contacted a number of agents he was familiar with overnight.

But at this time is different from the past, the price of the same chip in the hands of the agent has been bid up to 35 yuan each, and suddenly there is a 10-fold premium, which really makes Tian Yulong feel unaffordable.

At this time, there are only two ways for Tian Yulong: either to ensure the performance of the chip with 35 yuan, but to increase the price of the product and apportion the cost to consumers. Or modify the scheme and use other chips.

At that time, the entire education hardware market was being hit by byte, Tencent, NetEase and other big manufacturers, and high subsidies significantly reduced the price of products. If you take the first path, it will be difficult to have price competitiveness in the market.

Under the sandwiched attack around, Tian Yulong had to compromise and choose the second path, switching to the MCU with a unit price of 6 yuan elsewhere, and finally "pass" through the risk.

Compromise was the norm in those days and a passport for entrepreneurs to have no choice but to do so.

In fact, there have never been clear rules for the price game between terminal manufacturers and dealers.

When all the information is opaque, the chip trading market is like a black box, no one really knows how much inventory there is, and no one can see the real demand.

There are three ways for a chip to go from the original factory to the terminal.

One is to directly enter the terminal products with high demand through the direct sales of the original factory; one is to enter the end products from the original factory through the agent; and the other is from the original factory to the agent and then to the distributor and spot merchant. and finally into the end customer.

No matter which way to go, the original manufacturer of the market price of the chip, there is not much room for beak. The ones who can really grasp the ups and downs of the market are the agents and dealers with materials in hand.

In the eyes of entrepreneurs like Tian Yulong, agents and dealers hastily raise prices at the most dangerous time for hardware entrepreneurs, which is the enemy of the industry.

But this group of so-called "enemies" seem to be facing a more dangerous situation. They stand on both sides of ice and fire, gambling blindly and digging their own graves.

And gamblers who are not favored by fate, the footprints of life stay on the rooftop of Huaqiang north.

Greed is the epitaph of dealers. "since the second half of last year, videos leaping from the Seg building have spread in our industry community, all said to be because loans hoarded a lot of chips and couldn't sell them." Chen Yi, head of chip supply chain software platform, told Leifeng net.

When Leifeng network and terminal manufacturers a line of business project engineer Li Qing chat and Huaqiang north jump rumors, Li Qing told us the story of A Jie.

"if Ajie doesn't pay back, he may eventually choose to jump off a building." Li Qing could not help sighing the fate of Ah Jie.

A Jie is a distributor of domestic MCU manufacturer Zhaoyi Innovation (GD) in Huaqiangbei. After seeing GD's MCU experience a small increase, he was told by dozens of friends around him that the price of this batch of MCU would continue to rise in the future, so he applied to the bank for an operating loan and asked a friend to order a large quantity of goods within GD.

Contrary to one's wishes, GD's MCU not only did not continue to raise prices, but because of too much inventory and insufficient market demand, the price fell, Ajie's goods had to be sold at a loss, and the monthly entry was not enough to pay the bank interest.

"in Huaqiang North, there are many Ah Jie." Li Qing finally sighed.

We no longer know exactly what Ajie's fate is. But more Ajay people have put an eternal end to them and their stories on the rooftop of the Seg Building.

For Ajie, the "old guns" of the chip sales industry gave different comments.

When the big agent saw the move, the small dealer was arrested. Liu Cixin wrote a fable in "three-body": there was a farmer who raised a flock of turkeys. The farmer would feed the turkeys on time at 11:00 in the morning.

Scientists in turkey observe this phenomenon and come up with a law of the turkey universe that food arrives on time at 11:00 every morning.

On Thanksgiving Day, the farmer's butcher's knife falsified the "theory" of turkey scientists in the most intense way.

In the view of Yang Yang, a trader and salesman, Ajie is the "turkey scientist" of Huaqiangbei. Their understanding of the market as a "farmer" has a set of self-justifiable gambler logic, but in fact it is far from the real law of the market.

Yang Yang believes that Ajie is probably the group of people in the circle who have economic strength and think they have connections, and think they have mastered the trend of shopping malls.

But in fact, the information of Huaqiang North is very closed, and if you just listen to the market predictions of the people around you, you will choose Soha, which will often backfire in the end.

Ze Hong, who has more than 20 years of experience in the electronics industry, is even more dismissive of Ajie. Ze Hong believes that Ajie must not be the old birds in this industry, and the old birds will not choose this risky road.

Ajie is likely to be desperate people who want to gamble on a "reversal of money".

Zehong currently operates a chip agent with more than 20 agency certificates, ordering goods directly from the original factory and trading with the factories of terminal manufacturers.

Ze Hong told Leifeng that when trading with larger chip manufacturers, agents need to mortgage fixed assets and make promises on sales, and if they fail to meet the promised sales, they will face the risk that the agency certificate will be confiscated. "if the monthly sales of an agent's material number are not enough, there will be a temporary storage of goods, resulting in hoarding."

On the contrary, there will be another situation, and sometimes agents will encounter terminal manufacturers who repeatedly delay delivery, especially the current insufficient demand for consumer electronics. Zehong's company has encountered a similar situation recently. an end customer promised to pick up the goods within a month, which is now the third month, and this order is still not making progress.

But Ze Hong did not worry about the goods that had not yet been delivered on time. "if the customer finally does not take away this batch of chip material, we will resell it to other customers, and then communicate with the original factory and take less next time to pick up the goods."

Larger agents have formed their own system, no matter how the outside world changes, as long as the usual step-by-step operation can ensure smooth revenue.

But smaller operators will not be able to stand firm under the impact of this wave.

This is the case with the company where Wang Weiwei works.

Two years ago, the chip dealer where Wang Weiwei worked had customized the 100kk MCU according to the needs of customers, but there was no time for customers to pick up and deliver the goods, so the company boss had to find a way to sell the goods on his own, and called on his employees to reward 100, 000 yuan if anyone could find a way to sell the goods.

Wang Weiwei believes that this is a good opportunity for promotion and raise, looking for shipping opportunities everywhere, but two years later, the goods have not been sold.

To find the most suitable "sewer" and flush out the dead goods that are about to rot in their hands has become something that operators think about day and night.

The "miracle" can not save the dead goods redemption plan, is in Huaqiang north in the form of "holding high" and "gray area wandering" two forms.

In the movie "Miracle stupid Kids," its owner, Gong Jinghao, started from a mobile phone maintenance pawnshop in Huaqiang North, successfully built an industry chain for the recycling of mobile phone parts by recycling mobile phone parts, and finally set up his own mobile phone company.

In reality, Zhang Jiacheng is the miracle stupid child of MCU circle.

"can anyone put this MCU into the solution?" Zhang Jiacheng asked in a WeChat group of 500 people.

Zhang Jiacheng has been working in Huaqiang North for more than a decade and has accumulated a group of engineers who can do solutions on their own. when they encounter chips that are not willing to sell at a low price, Zhang Jiacheng will shout in the community to see if any engineers have the ability to embed "out-of-date" chips into the overall solution. If so, Zhang Jiacheng will recycle these chips at a low price and make a certain profit from them.

After the message was sent out, 20 minutes later, someone contacted Zhang Jiacheng to say that he needed the goods and discussed cooperation with him.

"the family becomes this kind of business model, not everyone can do it, a large number of engineer resources is the key, and also need to align the needs of both sides." Zhang Jiacheng's industry friend Chen Yiru commented on this.

Unmarketable MCU also starts with millions, and only a small part can be recycled through integration, so there is another illegal way to consume a large amount of MCU inventory in the industry.

"Today, the general-purpose MCU has been saturated or even reduced in price, but the general-purpose MCU is still out of stock. Many people will wear off the general-purpose MCU logo, tamper it with the certification mark of the car-grade MCU, and then sell it on the market, and you can make a small profit," one operator told Leifeng. Com.

This approach has touched the red line of the law, but there are still gamblers who are willing to put all their eggs in one basket.

In the official explanation, the requirements and difficulty of vehicle gauge-level MCU are higher than commercial and industrial grade, second only to military grade, and have stringent requirements for safety, reliability and working temperature. They must meet a series of industry standards such as AEC Q100 and IATF 16949. The certification cycle is often as long as two years. In addition to the requirements for design companies, upstream and downstream enterprises such as wafer factories and packaging plants are also required to meet the relevant standards.

But Ze Hong said that the car specification-level MCU is nothing more than a higher requirement for temperature and environment, and the circuit principle is the same. The chip itself can pass the original factory certification, even after adding the car specification-level logo, it can still pass the certification test.

However, these "miracles" that can bring dead goods back to life do not happen very often, and GM's MCU business has become more difficult after the decline in market demand, not only in extreme cases such as hoarding goods and jumping from buildings, but also in the sales performance of chip dealers.

Yu Xi, who once engaged in online education, joined a chip dealer and worked as a sales manager a few months ago, driven by his brother. Before joining the job, Yu Xi heard a lot of rich myths about buying and selling chips and was full of drive.

After entering the company, Yu Xi's daily job is to call the terminal manufacturer's procurement to ask whether the other side needs chip materials, often the second sentence is still in the throat, it will be held back by the hanging sound of the other side, after dialing 120 calls a day, only one customer expressed his willingness to further communicate with Yuxi.

In the face of the company's performance target of selling an order of 200000 yuan to become a regular employee, Yu Xi felt the pressure.

"the interns who came in in the first half of last year were basically able to close the deal as soon as they made a phone call, and customers rushed for goods, and they successfully became regular employees in one month. Colleagues who joined in September last year have not been able to become regular employees until now. Now GM MCU is no longer out of stock, making it more difficult to sell chips." Yu Xi thinks he didn't catch up with the good time.

"but our boss said that in this line of work, you should have a good mindset and survive." Yu Xi pretended to easily swallow the boss's big cake, and then continued to call, "maybe good luck is on the next phone."

Who makes it difficult for MCU sales to earn tens of thousands of dollars a day?

People who ruin the dreams of hoarders: local MCU manufacturers are lower silicon-based creatures than high-performance SoC,MCU in the chip world.

With the domestic expansion, the price of MCU has declined year after year, and some foreign chip designers simply give up the low-end GM MCU business, or sell the relevant business lines to local companies.

Local GM MCU in the lack of core tide period, the fierce attack is unprecedented, coupled with the lack of downstream demand, has become an important reason for the decline in MCU prices.

The revenue growth of GD in the past two years and the rapid growth of Fangshun in the past year are the best proof.

So how do domestic manufacturers rise from the edge and squeeze out part of the market of overseas companies?

Around 2010, when the first batch of wafer factories on the mainland matured, local MCU companies began to replace them under the banner of pin to pin.

During this period, international MCU companies have not only accumulated thousands of models of MCU, but also cooperated with various universities to cultivate the user habits of prospective engineers, and then layout them to every corner.

For the time being, domestic manufacturers have not kept up with the pace and can only compete on the general scheme with the largest shipments.

"Product technology is on the one hand. But the low acceptance of domestic MCU is mainly due to the high cost of learning. It takes engineers about three months or a year to familiarize themselves with various configurations and programming methods when switching to new MCU products. Not all engineers are willing to spend such energy." When talking about the development of domestic MCU, Li Qing said.

It is not easy to switch from MCU products of large international companies to domestic MCU products, and it often takes more than a year from contact to complete import.

Although Li Qing's company relies more on overseas giants of international customers, due to policy restrictions, it has to use a large number of domestic MCU. In the past two years, the supply chain is in short supply and overseas MCU is not available. Li Qing's colleagues can only spend a lot of time revising the program code, and at the same time, they also need to promote cheaper domestic MCU solutions to European and American customers.

Even if the customer attitude is loose and agrees to import domestic MCU, these MCU may not be able to be packaged and tested in domestic wafer factories, nor can they successfully meet all the needs of overseas customers at once, and many engineers often work overtime for this.

During the period of lack of core, a local MCU manufacturer designed a MCU chip for massage chair against TI, and its target customer happened to be the end customer who cooperated with Zehong company, so he reached a cooperation with Zehong company to speed up the landing process of his own MCU.

However, this accelerated replacement still needs to go through sample certification testing, small batch certification testing, small and new project replacement, and finally to the old and large project replacement.

"both agents and end customers need to bear certain risks, so we need to make steady progress. We have been involved in this domestic MCU replacement project for about a year and a half." Ze Hong said.

This coincides with the time period from shortage to price increase and then to the big dive of GM MCU.

And in this year and a half, the world of MCU chips has been very different.

With the uncertainty of Sino-US relations and the increasing lack of core in imports, many downstream manufacturers are gradually aware of the instability of the international supply chain, actively or passively change their user habits and try to join the tide of using local MCU.

Semus, who developed testing instruments, took into account the fragility of the semiconductor supply chain before the core shortage tide, selected redundancy at the beginning of the product design, completed the redundant design in 2018, and localized all the analog devices in 2021.

Because of the advanced layout, Semus was hardly affected by the price increase.

When there is an obvious upward trend in the price of international MCU, the MCU products used in Seymus's cleaning equipment have been successfully switched from ST's products to GD's E103VBT6, and the price of the latter is less than 1/10 of the former.

In Saemus's view, Ajie's behavior is almost absurd: "I order only a few hundred pieces a month, all of which are supplied directly by the original chip factory. I really can't understand why speculators hoard GD chips."

Agents and dealers also play a key role in the domestic substitution of MCU.

Zhong Yin's company was originally a distributor of international manufacturers, TI, ST, Microchip and other international manufacturers of MCU was originally the advantage of this company, but during the core shortage tide, unable to provide customers with chips or chip prices seriously exceed the customer budget occurs from time to time, so in 2020, the company adjusted its market strategy, set up a new domestic chip agent company, domestic car specification-level MCU manufacturer chipway is impressively listed.

"encounter the market can not buy goods or the chip price is too expensive, we will compare the chip production capacity and specifications, to provide customers with appropriate domestic alternative solutions." Zhong Yin said.

It is precisely because the local car specification MCU is still in its infancy, the performance and specifications are far from the international level, and there are few models that can be replaced, so while the domestic universal MCU is killing all directions in the market, the car specification MCU can "survive", and the price remains strong.

The long-term doctrine of the chip business the price of chips in the semiconductor industry has been accompanied by uncontrollable fluctuations.

There is an obvious cycle of capital expenditure and production capacity in the storage industry, the price and revenue of the industry fluctuate greatly, and the expenditure of the non-storage industry is robust, but there is also an obvious inventory cycle. Chip design companies from issuing orders to wafer foundry to produce chips, there is an one-quarter time lag, and fluctuations in supply and demand affect chip prices.

A complete semiconductor cycle usually needs to go through seven stages: demand explosion, shortage price increase, investment expansion, gradual release of production capacity, shrinking market demand, overcapacity and price decline.

The first four stages are called the semiconductor business cycle, in which the market is booming and prices are rising. This is a good time for semiconductor companies to make a profit.

Not only they, but also the agents, dealers and spot merchants in the chip distribution system also come to the rising tide market to "catch up with the sea" and take advantage of the opportunity to make a lot of money.

But also in the rising cycle to catch up with the sea, some people are still diligent in repairing the boat and mending the net after going to the sea, but some people have been lost in this pleasure of "gambling" ever since.

In the tide of lack of core, many spot merchants who have not long been in the industry find that they can get the original factory-certified supply and have the pricing power, and have tasted the benefits, and have since become a turkey who thinks they understand the laws of the universe, looking forward to the food that will appear automatically every day.

But once you embark on the road of hoarding and speculation, you will find that the risk coefficient is very high, which is not a long-term solution.

Wafer factories have raised prices because they need capital investment to expand production and build factories. Most chip designers have no bargaining power. If they do not accept the price increase, they will face the risk of not getting production capacity and losing opportunities to cooperate with fabs. They have no choice but to control their own costs by raising prices.

In the field of general MCU, where the technical threshold is not too high, low-cost products have a certain competitive advantage. Chip designers will control the range within a certain range in order to do long-term business, even if it is a price increase, and will "cut seats" with the dealers who participate in speculation and price increases.

Agents who have grown up from dealers have already experienced the ups and downs of the industry. Even if they participate in the "going to the sea" carnival in the uplink cycle, most of them use the price of spot merchants as a bargaining chip with terminal manufacturers to increase prices appropriately, and maintaining customer relations is the first priority.

During the period when chip prices skyrocketed, Ze Hong originally had plenty of opportunities to sell scarce chip materials to dealers at higher prices, but Ze Hong did not do so. In his view, although selling to dealers can make huge profits in a short period of time, dealers keep an eye on the lowest price in the market, lack of loyalty, and cannot develop into long-term customers.

"end customers have real needs, will not change suppliers casually, and are more loyal partners." Adhering to such a business experience, the small stall set up when Ze Hong first came into contact with the electronics industry ten years ago has now grown into a formal agent of initial scale.

They are well aware that "going to the sea" is only a momentary pleasure. Only by practicing the skill of fighting the sea can we overcome the turbulence that may occur at any time in the future.

When chip dealers develop to a certain scale, they will have the opportunity to consider upgrading to the original chip factory.

Before Liu Jiping founded the Hangshun chip, he was just a salesperson of the chip agent Hetai.

Yu Renrong also worked in the field of agent distribution components for more than a decade and established Weir shares after becoming the largest electronic distributor in Beijing in 2006.

Ze Hong, who adheres to long-term doctrine, is upgrading to the original chip factory as his goal.

But Ajie and Ajie, I am afraid they will never wait for this day of their own.

(at the request of the interviewees, the names in the article are all aliases)

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