China's economic situation has deteriorated. Murata Mfg, the leading global manufacturer of multilayer ceramic capacitors (MLCC), predicts that the smartphone market in China will not show signs of recovery this year, but says that it will continue to increase MLCC production at an annual rate of 10%.

According to Japanese news reports, the president of Murata Manufacturing Co., Ltd. said in an exclusive interview on the 18th that "the market situation in China has deteriorated and the situation is very severe". Nakajima said that when the company announced its April-June financial report in July, it had originally predicted that the demand for smartphones in China would recover after October as the impact of the closure of the city weakened. However, according to the current situation, it is necessary to revise the demand forecast, "There is no possibility that the smartphone market in China will show signs of recovery this year".

Murata is the world's leading manufacturer of "MLCC", an indispensable electronic component for smartphones, supplying MLCC to global smartphone manufacturers such as China and the United States. Murata previously estimated that the annual global smartphone scale will be 1.4 billion to 1.5 billion, but with the Chinese market demand stepping on the brakes, it is currently estimated that "it may be around 1.2 billion."

The report pointed out that the news that the big customer Apple had given up increasing the production of iPhone 14 did not seem to have much impact on Murata at this stage.

Regarding MLCC, Nakajima said, "At present, we will continue to invest in increasing production at an annual rate of 10%".

Murakami rose 1.55% to close at 7,085 yen on the 18th. So far this year, its share price has tumbled 22.63%, which is worse than the 4.56% decline of TOPIX in the same period.

According to the financial report released by Murakami on July 28th, the total order amount received in the first quarter of 2022 (April-June 2022) was 426.5 billion yen, which was 14% lower than that in the previous quarter (January-March 2022). Among them, the order amount of capacitors (mainly MLCC) decreased by 12.2% to 197.5 billion yen.

Murata pointed out that due to the decrease in orders, the BB value (order-to-bill ratio) in the April-June quarter fell below the line indicating whether the order received was active again, which was the second time in three quarters that it fell below this line.

Nomura: Semiconductor market continues to deteriorate

As the near-term outlook for semiconductors deteriorates, Nomura (Nomura) conservatively viewed the growth rate of global chip shipments this year and next two years after the end of August, predicting that the growth rate of semiconductors will shrink by 6% year-on-year next year. Nomura pointed out that the technology industry has downside risks until next year, mainly due to weak end demand, inventory adjustments, and pressure on the prices of semiconductors and other components.

According to comprehensive media reports, Nomura mentioned its views on the prospects of semiconductors in the latest "Global Science and Technology Strategy" report. Nomura revised the semiconductor market forecast this year from the original estimated 9.9% growth rate of global wafer shipments to 5.7%, and even expanded from a recession of 0.5% to a recession of 6% next year; Although the demand for power semiconductors and other products is relatively stable, the inventory of consumer products such as personal computers and smart phones has been greatly adjusted.

Although TSMC's sales increased strongly by 59% in August, the sales of 267 technology companies in Taiwan Province only increased by 10.9% in August, and the notebook computer shipments of five personal computers ODM (OEM) even dropped by 24%. It can be found that the demand continues to weaken.

Nomura pointed out that DRAM prices are mainly affected by the changes of supply and demand, while both quantity and price tend to develop in the same direction. DRAM shipments increased by 21% annually in May, declined by 26% in June, and decreased by 35% annually in July. With the further deterioration of memory prices, the possibility of profit decline in the near future will be increased, but there is a chance to rebound at some point next year.

The current spot price of 8GB dynamic random access memory (DRAM) is $2.59, a monthly decrease of 12%, while the spot price of 256GB TLC storage flash memory (NAND) is $2.43, a monthly decrease of 4%.

In addition, after the market for end products such as personal computers fell into recession, companies continued to reduce inventory and avoid buying memory inventory to prevent the risk of price declines. Nomura said that for the third and fourth quarters of DRAM and NAND prices, the original forecast was a quarterly decrease of 10% to 12%, but now they are adjusted to a quarterly decrease of 15%.

As for fab equipment, Nomura estimates that this year's growth will be revised down to 9.2%, and the decline will expand to 4.9% next year; in terms of test equipment, this year and next year will decline by 5.5% and 7.3% respectively.

Source: MondyDJ