In recent months, many semiconductor industry companies have seen a reduction in production or order cancellations, with a sharp decline in chip prices. Some chip prices have plummeted from over 3500 yuan to just over 600 yuan, with a price reduction of more than 80%.

Let's take a look at the specific situation.

Texas Instruments in the United States saw the price of a power management chip rise to $45 per piece in May 2021, and now it has dropped to five or six dollars per piece; some of the company's chips that were priced at around 100 yuan in the market in March have now fallen to around 20 yuan.

In addition, the price of driver chips has also dropped by about 40%. Furthermore, the price of an analog chip has fallen from $5 per piece last year to $0.8 now. Storage chips are also starting to decrease in price, with the average contract price of DRAM in the second quarter of this year falling by 10.6% year-on-year, marking the first decline in recent years.

It can be said that from driver chips, analog chips, to consumer MCUs, storage chips, and GPUs, no matter how "hard to find" they were before, they all seem to be unable to escape the fate of price reduction now.

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In this situation, Taiwan's Novatek's consolidated revenue in June decreased by 25.7% month-on-month, setting a new low since February 2021. Taiwan's Himax's second-quarter revenue is expected to decrease by 22%-27% quarter-on-quarter.

Intel has also started to reduce orders, expecting to reduce the price of some flagship mobile chips by 30%-40% by the end of the year. Samsung has also suspended the purchase of LCD panels from its suppliers and announced that it will lower the price of storage chips in the second half of the year.

Speaking of this, some netizens will definitely say, that's a good thing, the phenomenon of "hard to find a chip" before has finally been solved. You are right, this is definitely a good thing for chip demanders, but for our country's chip manufacturers, it is a price encirclement war, a premeditated move by the United States and Europe!

Because through the price reduction of these chips, we can see that only the process requirement of GPUs is beyond the standard of 14 nanometers, and the process requirements of other reduced-price chips are not high, most of them are still above 40 nanometers.

We must know that some of our country's chip companies have initially possessed the industrial manufacturing capability of 12-nanometer chips. And Yangtze Memory's domestic storage chip with 128 layers of 3D flash memory has also entered the mass production stage, this chip has the highest storage density per unit area in the industry, and its process level is leading the world, far higher than Samsung, Micron, Hynix and other first-line chips.Have you all understood? That is to say, our country has already achieved independent mass production of low-end chips, and the process and standards are even higher than those of foreign chips. With the realization of independent mass production of low-end chips in our country, the demand for foreign low-end chips has also begun to decrease.

According to data, from January to April this year, China imported 186 billion integrated circuits, a decrease of 11.4% compared to the same period last year. Intel Corporation warned that weak demand will drag down chip companies.

Seeing this situation, foreign chip companies became anxious and immediately started to significantly reduce prices for low-end chips to encircle the Chinese low-end chip market. This is the main reason for the current sharp drop in low-end chip prices. However, high-end chips, such as automotive chips and power grid chips, are still in short supply.

What's even more shameless is that the United States is considering restricting the export of U.S. semiconductor manufacturing equipment to Chinese memory semiconductor manufacturers. You have made the chips, right? Then how can you make them without my machines?

For such shameless acts by the United States and Europe, similar situations have occurred many times in our country before, but without exception, they have been severely countered by our companies.

Let's talk about vitamin C first!

In 1933, Swiss chemist Reichstein invented the industrial production method for vitamin C, and later this patent was purchased by Swiss Roche Company. With the production technology of the Reich method, Roche Company became the world's leading pharmaceutical company. In 1973, the price of vitamin C soared from $4 per kilogram to $18 in 1994, a 3.5-fold increase.

In order to break through the technical blockade of Roche Company, our country later independently developed a lower-cost "two-step fermentation method". By 1994, China's vitamin C production had reached 26,000 tons, of which 23,000 tons were exported, accounting for half of the global vitamin C export share.

After seeing the rise of China's vitamin C market, the global vitamin C alliance began to encircle China's vitamin C industry. In order to defeat Chinese pharmaceutical companies, these companies started a price war with Chinese pharmaceutical companies. As a result, the price of vitamin C fell from $18 per kilogram in 1994 to $4 per kilogram.

Later, due to Roche Company being investigated for antitrust violations by the European Union and the United States, a huge fine of 500 million US dollars was imposed. Since then, the vitamin C monopoly alliance has been in decline, and the vitamin C market has been gradually swallowed by our companies.Chinese pharmaceutical companies, leveraging their robust production capabilities and price advantages, have managed to overtake and successfully capture the global Vitamin C (VC) market, becoming the industry leader.

Additionally, Bosch's braking systems from Germany used to sell for 2,000 yuan, but as soon as BYD, a Chinese company, developed its own version, Bosch immediately reduced the price to 800 yuan. After Shanghai Microelectronics developed a 28-nanometer photolithography machine, ASML suddenly became willing to sell us the 28-nanometer photolithography machine at a significantly reduced price.

Once Hefei Changxin began producing DDR4 memory modules, Samsung's Kingston immediately lowered its prices. The same pattern was observed with liquid crystal displays, seamless steel pipes, and tunnel boring machines; as soon as we started manufacturing these products, they immediately reduced their prices, resorting to price wars to encircle and suppress our domestic enterprises.

In conclusion, China has always grown in adversity and surpassed others under siege. Today, we are turning the tide with low-end chips, and tomorrow, the high-end chip market will be ours.