The semiconductor manufacturers use the supply bottlenecks to raise prices. This makes the corporations much more profitable.
(Photo: Bloomberg)
Munich These are growth rates that normally only start-ups achieve: sales of the American chip manufacturer AMD shot up by more than half in the third quarter. Especially the business with data centers is going well, said CEO Lisa Su. The Californians supply processors for PCs and servers – they are the brains of every computer.
It is true that not all chip manufacturers are making such rapid gains. But most of them are very dynamic. “The sales development was driven by the strong global demand,” said Jean-Marc Chery, CEO of ST Microelectronics, this Thursday. The turnover of the Franco-Italian semiconductor manufacturer climbed in the third quarter by 20 percent to 3.2 billion dollars. The bottom line was that at $ 474 million, almost twice as much was left over compared to the same period in 2020.
The components are literally being torn out of the hands of the chip companies, by the automotive industry as well as by the computer manufacturers or the network equipment suppliers of the new 5G mobile communications standard. The corporations use this to raise prices. AMD’s profit more than doubled in the third quarter. There is a “positive pricing environment,” said Lorenzo Grandi, Chief Financial Officer of ST Microelectronics. Nothing about that will change anytime soon.
The producers have not been able to deliver enough for months. This week Microsoft warned that business with the Xbox game console was stalling due to the lack of chips. The Korean automaker Hyundai missed the analysts’ forecasts because the bottlenecks are causing production losses.
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The overall almost euphoric mood also mixes skeptical tones: Customers would no longer push for the earliest possible delivery for every order, said the CFO of Texas Instruments (TI), Rafael Lizardi, in an interview. Things couldn’t go fast enough in the summer. The buyers are now a little more picky.
Have the order books been inflated with panic buying?
This unsettles investors – despite TI’s strong growth in the third quarter: After the quarterly figures were announced, TI’s price fell by five percent to around $ 187. The turnover of the US group climbed by 22 percent, the profit rose by as much as 44 percent. The seventh largest chip manufacturer in the world is considered a good indicator of the state and prospects of the industry. The Americans have the broadest product portfolio and serve more than 100,000 customers.
Industry observers fear that buyers have inflated the order books with panic buying. In the past, buyers were more likely to cause a slump in sales because they were afraid of going empty-handed and ordered twice or three times from several suppliers. When the manufacturers then delivered, there was a hail of cancellations.
At the moment, however, customers still have to wait a long time for delivery. On average, it took a good five months for the goods to reach the customer, according to the Susquehanna Financial Group. The delivery period in October was one day longer than in September. At least that is not another leap – like in spring and summer, for example. In addition, some types of chips are now available more quickly, such as power semiconductors.
ST Microelectronics lacks the capacities
But that doesn’t necessarily mean that demand will fall either. The industry association WSTS predicts a global increase in sales of around a quarter for the current year. Rather, the factories are running at full capacity. The chip supply will remain tense until next year, said CC Wei, head of TSMC, recently. The world’s largest contract manufacturer supplies Apple and the German chip manufacturer Infineon, among others. The Taiwanese anticipate a 24 percent increase in sales for 2021.
There is no sign of a lull in Infineon’s competitor ST Microelectronics. “The demand continues to exceed our capacities,” said CEO Chery. It will stay that way in 2022.
But things are nowhere near as steep as they were in the first nine months of the year. The Franco-Italian group supplies Apple and Tesla, among others, and expects sales of 3.4 billion dollars for the current quarter. That is a good five percent more than in the same period in 2020. All in all, Chery expects an increase in sales of around 23 percent this year.
Compared to AMD, however, this is little: Group boss Su is rapidly taking market share from world market leader Intel in the business with PC producers and server manufacturers and is promising sales growth of at least 65 percent for 2021. 52 years after it was founded, the Californians are growing like a start-up.
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