The US-China trade conflict continues as both countries raise a levy on customs tariffs on varied items while adding to global economic recovery. This has also disrupted the market conditions for four major electronic components such as passive components, panels, memory, and semiconductor wafers.

 

At present, the price of NAND chips and large-size panels in memory have remained the only components that have ceased to decline. However, the quotation prices for passive components, DRAM, silicon wafers, and small and medium-sized panels continue to decline in this quarter. While it is expected that this decline will be controlled, component manufacturers will continue to be impacted by it. This decrease in the quotation prices of these key components strongly reflect the trend of the electronics industry and also affects the operation of the Taiwan manufacturing plants, such as Yageo, Innolux, AU, Nanya Technology, Wafer Works, and FStech and more.  

 

Moreover, the US-China trade negotiations failed to reach an agreement as scheduled. This has resulted in US President Trump’s decision to force China to make concessions. These concessions include a rise in the tax rate by 25% on products worth US$200 billion that are exported from Mainland China to the United States. Furthermore, an administrative order has been issued that has rendered Huawei and more than 70 of its affiliated products onto the blacklist for export controls.

 

According to the survey, each of the major factories has, recently committed to dividing their production capacity to reduce their contact with Mainland China while moving to Southeast Asia or returning to Taiwan. In light of this movement of factories’ supply chains; the technology industry has become the subject of being levied with the highest tariffs, resulting in fast reactions from the industry. Therefore, the trend of ensuring high stock levels has already emerged this season, including the high demand for key electronic components such as DRAM and NAND chips. 

 

Among these key electronic components, the price of NAND chips has started to stabilize as the leading manufacturer Samsung works to maintain the market demand for these products. As for DRAM, an increase in purchases has been observed in the first quarter, particularly purchases of the frozen server DRAM. In addition, the demands from the North American data center users have recovered. However, since the stock of the three major manufacturers (Samsung, Sk Hynix, and Micron Lux and Micron) are still on high demand and the US-China trade war continues, these enterprises have predicted that the contract prices for this quarter will continue to decline. 

 

As for wafer, manufacturers that adopt half-year or quarterly price-negotiations have additionally been affected by US-China trade war and the pressure on price cuts has significantly increased. However, Globalwafers, which adopts price-negotiations once a year, has no intention of reducing their prices on its long-contract accounts for the purpose of ensuring high proportions. Moreover, the price of passive components is also affected by the US-China trade war, despite its drastic increase last year. The price of passive components will further be affected by US-China tensions that cause prices to decline, while also weakening the electronic components market. As for the supply and demand of panels, the two major panel enterprises (AU and Innolux) are experiencing a moderate impact for the first half-year of 2019. However, the enterprises in the industry believe that the price of large-size TV panels is expected to remain stable this season as a result of the supply of polarizers. As for the prospects of the second half of 2019, this will be significantly dependent on the negotiation progress between the US and China. (News source: Economic News)