Combined MCU inventories held by chip suppliers, as well as channel distributors and retailers, have swelled to record high levels, according to Armstrong Tsai, spokesperson for Taiwan-based Holtek Semiconductor.
Distributors and retailers have held about five months of MCU inventories, compared with "healthy" levels of about two months or less, said Tsai. For IC design house, their MCU inventories have come to alarming levels of about four months, Tsai indicated.
MCU suppliers, as well as channel players, are unlikely to reduce their inventories to appropriate levels until the first half of 2023, Tsai noted.
Holtek has decided to slash its orders placed with mature-node fabs by over 10% in the fourth quarter of 2022, which may shrink its demanded fab capacities in 2022 to levels 5% less than last year's, according to Tsai. The MCU firm estimated previously an around 8% on-year rise in its demanded fab capacities this year.
Holtek still maintains its LTAs and will not violate the contracts with its manufacturing partners, Tsai added.
Holtek's channel partners and system customers are slowing down their pace of orders, but Holtek has no plans to implement across-the-board price adjustments, Tsai said. Price adjustments will only be made for specific customers and orders.
Commenting on reports of foundries cutting prices, Tsai said Holtek has yet to be notified by its contract manufacturers regarding such matters.
Holtek reported revenue fell 13% sequentially to NT$1.67 billion (US$55.7 million) in the second quarter of 2022, with gross margin edging up 1.3pp to 52.8%. The company generated net profits of NT$355 million during the quarter, down 31% on quarter.
Holtek's revenue grew 14% on year to NT$3.58 billion in the first half of 2022, with gross margin climbing 2.5pp to 52.1%. Net profits for the six-month period came to NT$867 million, up a slight 0.8% compared to the same period in 2021.
