CE Demand 'Cooled' on Weakening Stay-at-Home Trends: TrendForce

Consumer tech will feel the brunt of “the weakening stay-at-home economy, the pandemic in China, international tensions, and rising inflation” in first-half 2022, blogged TrendForce Tuesday. In the category’s traditional off-season period, demand for PCs, laptops, TVs and smartphones has “cooled significantly," leading downstream customers to lower shipment targets for the year, it said. Demand for automotive, IoTs, communications and servers remains “good."

Despite lower demand for CE products, the supply chain will build higher inventories to mitigate the risk of material shortages owing to transportation issues due to the COVID-19 pandemic and the war in Ukraine, TrendForce said. Foundry capacity utilization remains “fully loaded” and component “mismatch issues” continue for parts produced at mature nodes, such as 10-20 nanometers and 180 nm.

Looking to Q2, despite limited global wafer production capacity due to weak demand for end products, continued geopolitical tension and China’s forced COVID-19 lockdowns, the supply chain has an opportunity to secure wafers that were previously squeezed by production capacity, it said.

Seasonal trends, the Russia-Ukraine war and rising inflation cooled demand for smartphones, said the report. Material delivery issues in the supply chain have eased vs. second-half ’21; component shortages are now concentrated in mid- to low-end devices. The lead time for 4G and low-end 5G SoCs is 30-40 weeks, limited by production capacity planning in response to slow demand. Accelerometer and gyroscope sensors have a lead time of about 32-36 weeks, and OLED display driver ICs, 20-22 weeks. The combination will affect production volume in the second half, forecast at 323 million units, lower than the performance of previous years, it said.

Demand for mobile phones, laptops, tablets and TVs “declined significantly” in Q1, resulting in high inventory levels of multilayer ceramic capacitors (MLCCs) held by suppliers and channel agents, a situation that may continue into Q2, said the report. Stocking momentum for automotive and industrial MLCCs has steadily increased, but products for the consumer market, which are the bulk of MLCC production from suppliers in Taiwan, South Korea and China, may face “continued market demand weakness” this quarter on the demand slowdown for mobile phones and laptops and inventory adjustments by branded companies and ODMs, it said.

Demand for consumer end products “remains weak,” it said. Components that were originally oversupplied will face “severe price tests due to the imbalance between supply and demand.” TrendForce believes demand has caused purchasing behavior to switch from an “over-ordering strategy to actively cutting orders.” COVID-19 lockdowns could create “multiple and complex supply chain problems” for local manufacturers.

As supply chain backlog continues to improve, shipments of notebook computers is expected to reach approximately 55.1 million in Q2, down 0.7% from Q1. Type C ICs, Wi-Fi chips and power management ICs have long lead times but are expected to improve by the end of June, it said.