Chinese listed chipmakers face losses or performance declines in 2022, with inventory impairment as main reason
Chinese article by 李杭森
English Editor 张未名
02-07 15:29

By Gabby Chen

(JW Insights) Feb 1 -- The newly released 2022 performance forecasts of some Chinese listed IC companies report losses or sharp declines in their performance last year, with inventory impairment being the main reason, according to the incomplete statistics of JW Insights.

The prominent companies that suffer net profit loss are Goodix (汇顶科技), Fine Made Micro (富满微), BPS (晶丰明源), MEMSensing (敏芯股份), and Halo Micro (希荻微).

Will Semi (韦尔股份), Longsys (江波龙), Maxscend (卓胜微), Kiwi Instruments (必易微) all saw a sharp decline in revenue. Fudan Micro (复旦微电) is among the less number still maintaining growth.

There are a large number of A-shares IC companies that mentioned impairment of their assets in performance forecasts.

Under the pressure of "chip shortage" and "price increase", big semiconductor companies constantly increased their stocking one year ago, and ended up with a rising inventory in 2022.

According to Wind Data, among 158 companies in the IC sector, 44 companies had an inventory growth of more than 20% in Q3 of 2022. And seven companies had growth rates of more than 50%.

Meanwhile, the cumulative IC output in China is 324.2 billion units in 2022, a year-on-year decrease of 9.8% compared with 359.43 billion units in 2021, according to the National Bureau of Statistics.

As the industry entered a downward cycle, cutting prices to destock and reducing production volume became the leading business strategies of major chipmakers. Losses from falling prices of inventories gradually emerged.

MEMSensing stated in its performance forecast that its estimated net realizable value (NRV) of some inventories is lower than the cost as a long inventory turnover period and prices decline in some products.

BPS adopted a pricing strategy based on the future cost of products for some general-purpose products starting from Q3 of 2022 to accelerate the return of funds, reduce the risk of sluggish inventory, and accelerate the optimization of the product cost structure.

According to data recently released by China's General Administration of Customs, IC imports in 2022 fell 15% to 538.4 billion units in 2022 from 635.6 billion units in 2021, the first annual decline since 2004.

Now the price of chip products continues to decrease, including CPU, GPU, MCU, driver IC, memory, CIS, PA, and power management chips, said the JW Insights report.

Some industry insiders pointed out that the inventory is still at a high level. Prices of IC products are expected to continue the downward trend in 2023.

However, some companies still maintain a cautiously optimistic outlook for the industry. They expect consumer electronics market demand to rebound with the new epidemic situation and the inventory recovery in the home appliance sector.

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