US chip giant, Texas Instruments (TI), is cutting prices on China’s mainland in a bid to win greater market share, reports DigiTimes.
A source close to the company said that when chips were in short supply in the past two years, it was difficult for customers to buy chips from Texas Instruments, which accelerated the process of end users in China adopting chips produced by Chinese manufacturers, and caused TI to lose part of the market.
The insider further stated that there is no fixed range for this price cut, but it is aimed at the chip prices of Chinese manufacturers. In terms of products, he believes that power management chips are the main target.
China’s semiconductor sector has been on a downward trend since last year due to fluctuations in the global economy as well as other factors. Many chipmakers are feeling the strain, with 10 out of the 31 IC designers listed on the mainland losing money, reports Chinese newgroup, Yicai Global. “So when rumors broke last month that Texas Instruments would be lowering its prices, this raised concerns in the market.”
The market believes that Texas Instruments’ price reduction strategy in China will show results as soon as possible in the second quarter of this year. Due to the long chip verification cycle and scattered categories in the industrial and automotive fields, it is difficult for Texas Instruments’ price reduction to have an impact in a short period of time, however, in other areas, such as communications and consumer electronics, China’s homegrown analog chip companies are already feeling the pinch.
The move will have a big impact on those Chinese competitors who survive by targeting the low end of the market, an insider in the integrated circuit sector told Yicai Global.
“Those chip firms whose existence depends on having the edge on pricing will indeed be affected by Texas Instruments’ price cuts,” an industry insider told Yicai Global. “But only those companies that make the same type of products as the ones that Texas Instruments has reduced the prices on will feel the strain.”
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