{"id":23874,"date":"2024-05-03T17:00:00","date_gmt":"2024-05-03T09:00:00","guid":{"rendered":"https:\/\/www.tejwin.com\/?post_type=insight&#038;p=23874"},"modified":"2024-06-14T14:25:01","modified_gmt":"2024-06-14T06:25:01","slug":"high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities","status":"publish","type":"insight","link":"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/","title":{"rendered":"High-Speed Transmission IC Design Industry Overcomes Inventory Peaks, Paving the Way for New Opportunities"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-423-1-1024x576.png\" alt=\"\" class=\"wp-image-23889\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-423-1-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-423-1-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-423-1-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-423-1-768x432.png 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-423-1-1536x864.png 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-423-1.png 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>With the advancement of technology, the amount of data computers need to process has become increasingly massive. The transmission speed of computers in the past has become insufficient to meet the demands of next-generation high-speed computing. Therefore, when faster transmission interface specifications are introduced, high-speed transmission IC design companies must also increase their investment in developing related products. However, in recent years, high-speed transmission IC design companies have experienced declining revenues and profits. After a two-year inventory adjustment period, by the second half of 2023, most manufacturers\u2019 inventories have returned to a healthier level. Additionally, with inflation gradually cooling down and the surge in AI demand, terminal demand is expected to gradually recover. This article will introduce you to the high-speed transmission IC design industry and provide insights into the latest trends in the IC industry.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a05a595e9db7\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a05a595e9db7\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#What_is_High-Speed_Transmission_IC_Design_Industry%EF%BC%9F\" >What is High-Speed Transmission IC Design Industry\uff1f<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#The_Characteristics_of_IC_Design_Industry\" >The Characteristics of IC Design Industry<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Main_Products_of_High-Speed_Transmission_IC_Design_Industry\" >Main Products of High-Speed Transmission IC Design Industry<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Market_Size_of_High-Speed_Transmission_IC_Design_Industry%EF%BC%9F\" >Market Size of High-Speed Transmission IC Design Industry\uff1f<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Global_Market_Size\" >Global Market Size<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Operation_and_Division_of_Taiwan_IC_Supply_Chain\" >Operation and Division of Taiwan IC Supply Chain<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#High-Speed_Transmission_IC_Design_in_Taiwan\" >High-Speed Transmission IC Design in Taiwan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#High-Speed_Transmission_IC_Design_Recent_Trends\" >High-Speed Transmission IC Design Recent Trends<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Demand_Bloom_in_end_products\" >Demand Bloom in end products<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Step-by-step_adjustment_in_Inventory_level\" >Step-by-step adjustment in Inventory level<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Has_Revenue_and_Earnings_Reached_the_Bottom\" >Has Revenue and Earnings Reached the Bottom?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Competition_heats_up_%E2%80%94_Survival_of_the_fittest\" >Competition heats up \u2014 Survival of the fittest<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tejwin.com\/en\/insight\/high-speed-transmission-ic-design-industry-overcomes-inventory-peaks-paving-the-way-for-new-opportunities\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_High-Speed_Transmission_IC_Design_Industry%EF%BC%9F\"><\/span><strong>What is High-Speed Transmission IC Design Industry\uff1f<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before introducing high-speed transmission IC design, we must first understand Application-Specific Integrated Circuit (ASIC). ASIC is a custom-designed integrated circuit tailored to specific product requirements. ASIC chips are commonly used in various specialized domains such as automotive assistance systems, audio processing, weapon systems, and communication transmission. High-speed transmission IC design, which falls under the category of ASIC design, serves as a bridge for communication between CPUs, GPUs, and memory. With \u201cInformation Explosion\u201d and the emergence of AI, the demand for data transmission has significantly increased. As a result, there are notable requirements for improving the specifications of high-speed transmission ICs, and the pace of iteration continues to accelerate.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/\u65b0\u589e\u526f\u6a19\u984c-1024x576.jpg\" alt=\"\" class=\"wp-image-23875\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/\u65b0\u589e\u526f\u6a19\u984c-1024x576.jpg 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/\u65b0\u589e\u526f\u6a19\u984c-300x169.jpg 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/\u65b0\u589e\u526f\u6a19\u984c-150x84.jpg 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/\u65b0\u589e\u526f\u6a19\u984c-768x432.jpg 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/\u65b0\u589e\u526f\u6a19\u984c-1536x864.jpg 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/\u65b0\u589e\u526f\u6a19\u984c.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Characteristics_of_IC_Design_Industry\"><\/span><strong>The Characteristics of IC Design Industry<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Low PP&amp;E<\/li>\n<\/ul>\n\n\n\n<p>High-speed transmission IC design companies, like other IC design firms, create circuit diagrams and then hand them over to downstream wafer foundries and packaging &amp; testing facilities for manufacturing and packaging testing. The IC design companies themselves are not involved in the production process; therefore, they do not construct factories, resulting in lower capital expenditures and fewer fixed assets. Due to the lower required capital investment, they tend to retain a higher proportion of cash, which typically reduces liquidity concerns. Recent data shows that for other types of manufacturers, fixed assets account for more than 30% of total assets, with some even exceeding 50%, while cash represents only about 20% of total assets. In contrast, high-speed transmission IC design companies generally have fixed assets accounting for less than 10% of total assets, primarily consisting of offices and computer equipment, while cash makes up around 40% of their assets.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>High R&amp;D Expense<\/li>\n<\/ul>\n\n\n\n<p>As mentioned above, this industry doesn\u2019t rely on capital for profit; instead, it thrives on intellectual prowess and technical expertise. Consequently, research and development (R&amp;D) expenses constitute a significant proportion. For high-speed transmission IC design companies, the recent transition in specifications has further elevated R&amp;D investment. On average, these companies allocate approximately 20-30% of their revenue to R&amp;D, where across the entire IC design industry, R&amp;D spending typically falls within the range of 10-20% of revenue.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Main_Products_of_High-Speed_Transmission_IC_Design_Industry\"><\/span><strong>Main Products of High-Speed Transmission IC Design Industry<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the future, the widespread adoption of AI applications will lead to a shift in computing endpoints from the cloud to decentralized physical endpoints, a concept known as &#8220;Edge Computing&#8221;, requiring even greater data transfer capabilities. While CPUs and GPUs have become faster, memory technology has evolved to DDR5, and network speeds have upgraded to 5G, the data transfer rates between these electronic components remain insufficient. The same issue persists in data transmission between computers and external devices.<\/p>\n\n\n\n<p>To address this challenge, the USB Implementers Forum (USB-IF) and the PCI-SIG organization introduced the USB 4.0 and PCIe 5.0 standards in 2019, while these high-speed transmission IC design companies are responsible for designing chips abided by these rules.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li style=\"--ek-indent:20px\" class=\"has-ek-indent\">Universal Serial Bus(USB)<\/li>\n<\/ol>\n\n\n\n<p style=\"--ek-indent:80px\" class=\"has-ek-indent\">The most common type of transmission standards, mostly used for the connection between PC and external devices. Despite having a slower transmission speed compared to PCIe, USB are easier to swap and compatible to other devices, resulting in a higher versatility. Based on application, USB can be categorized as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Host: Mainly used inside computer chips. However as laptops become lighter, fewer USB ports are available.<\/li>\n\n\n\n<li>Hub: Plugin device for computer to expand USB ports.<\/li>\n\n\n\n<li>Device: Installed on control chips inside flash drives, mice, and other peripherals.<\/li>\n<\/ul>\n\n\n\n<p style=\"--ek-indent:80px\" class=\"has-ek-indent\">USB-IF released USB 4.0 v2 standards in November 2022. However, since it usually takes 1-2 years for manufacturers to develop a new product, and it generally takes another 1-2 years for the product to be verified and promoted, products now are mostly still based on USB 4.0.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li>Peripheral Component Interconnect Express \uff08PCIe\uff09<\/li>\n<\/ol>\n\n\n\n<p style=\"--ek-indent:80px\" class=\"has-ek-indent\">PCIe is primarily used for internal connections and transmissions within computers and host systems, such as connecting CPUs, memory, and other devices. It offers the fastest speed, but due to its placement within the host system, it cannot be casually removed. In January 2022, the PCI-SIG announced the PCIe 6.0 specification. However, similar to USB, current vendor development still focuses on PCIe 5.0 products<\/p>\n\n\n\n<ol class=\"wp-block-list\" start=\"3\">\n<li>Repeater\uff1a<\/li>\n<\/ol>\n\n\n\n<p style=\"--ek-indent:80px\" class=\"has-ek-indent\">During high-speed signal transmission, signal attenuation occurs, leading to a decline in signal integrity and quality. As the signal travels farther, the transmission speed also slows down. To mitigate this, repeaters are introduced to adjust the signal and prevent excessive attenuation. Repeaters can be further categorized into Retimers and Redrivers.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Redrivers: Enhance signal stability and are cost-effective, making them suitable for shorter-distance transmissions in general electronic devices and motherboards.<\/li>\n\n\n\n<li>Retimers: Strengthen signals and perform equalization as well as repairment on signals. Due to higher cost, they are primarily used in long-distance scenarios or data centers where signal integrity requirements are more stringent.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Market_Size_of_High-Speed_Transmission_IC_Design_Industry%EF%BC%9F\"><\/span><strong>Market Size of High-Speed Transmission IC Design Industry\uff1f<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Global_Market_Size\"><\/span>Global Market Size<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>According to a Skyquest survey, the global transmission interface IC market had reached USD $9.871 billion in 2022. It is projected to exceed USD&nbsp; $17.041 billion by 2030, with a CAGR of 7.76%. However, the transmission interface IC market is still dominated by European and American IC design companies and IDM (Integrated Device Manufacturer) factories. These companies have large scales and broad product lines. They can bundle transmission interface ICs with other types of chips, offering competitive pricing and comprehensive product services. As a result, Taiwanese manufacturers account for less than 10% of the overall market size.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Operation_and_Division_of_Taiwan_IC_Supply_Chain\"><\/span>Operation and Division of Taiwan IC Supply Chain<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>High-speed transmission IC design companies can be divided into three categories based on their operation,<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Southbridge Chipset Manufacturers: These companies produce southbridge chipsets and supply them to CPU manufacturers. Currently, only ASMedia(5269.TW) operates in this mode.<\/li>\n\n\n\n<li>USB Host and Repeater Manufacturers: These manufacturers create USB host and repeater components and distribute these chips through IC distributors to motherboard manufacturers or contract manufacturers, one of which in Taiwan is Parade(4966.TW).<\/li>\n\n\n\n<li>USB Hub and Device Manufacturers: These companies primarily supply components like USB hubs and devices, such as flash drives, to peripheral accessory manufacturers. However, their profitability tends to be less stable, especially during economic downturns, often resulting in losses.<\/li>\n<\/ol>\n\n\n\n<p>Initially, chipsets were divided into northbridge and southbridge. The northbridge chipset facilitated communication between the CPU and memory. However, over time, the northbridge\u2019s functionality was integrated into the CPU itself. As a result, chipsets nowadays primarily consist of only southbridge components. Initially, most chipsets were produced by CPU manufacturers. However, in recent years, AMD shifted its focus to compete with Intel in the CPU market and invested resources in developing AI-related processors. Consequently, AMD entrusted the design of its mid-range and low-end chipsets to ASMedia (5269.TW); therefore, ASMedia\u2019s chipsets are directly supplied to AMD. This revenue stream has contributed to ASMedia\u2019s overall stable performance compared to other competitors.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/4-5-1024x576.jpg\" alt=\"\" class=\"wp-image-23877\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/4-5-1024x576.jpg 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/4-5-300x169.jpg 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/4-5-150x84.jpg 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/4-5-768x432.jpg 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/4-5-1536x864.jpg 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/4-5.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Earlier we mentioned that USB host chips and repeaters are primarily installed internally in computers or hosts. USB hubs, on the other hand, are used to expand connection ports, while USB device chips control peripherals like flash drives. Consequently, the first two types of products are mainly supplied to motherboard manufacturers, while the latter two are primarily provided to peripheral accessory manufacturers. For the former group of manufacturers, since their chips are installed on the motherboard and connected to the CPU via the southbridge chipset, compatibility issues and certification concerns are common. Therefore, they maintain close relationships with customers and often have stable supply arrangements. In contrast, manufacturers of the latter group face higher product homogeneity and may engage in price competition due to the lack of differentiation. Generally, the operational performance of the former tends to be more stable than the latter. Additionally, companies that offer multiple product categories are less susceptible to the impact of competition in a single product area, resulting in more stable operations.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"High-Speed_Transmission_IC_Design_in_Taiwan\"><\/span><strong>High-Speed Transmission IC Design in Taiwan<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Taiwan has 9 companies setting foot in High-Speed Transmission IC Design with the following main products in the list:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"High-Speed_Transmission_IC_Design_Recent_Trends\"><\/span><strong>High-Speed Transmission IC Design Recent Trends<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Demand_Bloom_in_end_products\"><\/span>Demand Bloom in end products<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Due to the widespread use of high-speed transmission ICs in consumer electronics products such as laptops and desktop computers, the demand for end products significantly impacts the operational performance of upstream IC design companies. According to data from Gartner research firm, the fourth quarter of 2023 finally marked the end of eight consecutive quarters of declining shipments. Considering overall inventory levels and the official discontinuation of Microsoft Windows 8 updates in September 2023 (with Windows 10 also scheduled to end updates in 2025), there is a potential trend of consumers replacing laptops and computers in 2024, which may lead to a boost in product shipments.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/6-4-1024x576.jpg\" alt=\"\" class=\"wp-image-23879\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/6-4-1024x576.jpg 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/6-4-300x169.jpg 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/6-4-150x84.jpg 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/6-4-768x432.jpg 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/6-4-1536x864.jpg 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/6-4.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Step-by-step_adjustment_in_Inventory_level\"><\/span>Step-by-step adjustment in Inventory level<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the year 2020, at the outbreak of the pandemic, issues such as labor shortages and material scarcity emerged. Additionally, transportation disruptions due to port congestion exacerbated the situation. Semiconductor foundries faced tightening production capacities, while the pandemic escalated, leading to a surge in demand for consumer electronics products like laptops. However, upstream IC design companies found themselves in a predicament of having full order books but insufficient inventory to fulfill them.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/8-1-1024x576.jpg\" alt=\"\" class=\"wp-image-23881\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/8-1-1024x576.jpg 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-1-300x169.jpg 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-1-150x84.jpg 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-1-768x432.jpg 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-1-1536x864.jpg 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/8-1.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>As a result, many companies increased wafer production, and some even signed long-term capacity supply agreements with semiconductor foundries to secure production capabilities. By 2021, inventory levels and days inventory outstanding (DIO) gradually rose. Moving into 2022, although the pandemic eased, macroeconomic challenges such as inflation and geopolitical tensions persisted. Declining end-demand further slowed down inventory reduction. Moreover, the previously signed long-term capacity agreements required prepayments or deposits and specified minimum wafer shipments, contributing to elevated inventory levels and days inventory outstanding in 2022.<\/p>\n\n\n\n<p>In the latter half of 2023, as end-product manufacturers gradually depleted their inventories, high-speed transmission IC design companies implemented inventory management measures. Inventory levels decreased from $10 billion at the end of 2022 to $7.5 billion in September 2023, and days sales outstanding (DSO) reduced from 179 to 156. With inventory control in place, the previously tied-up capital in inventory was released, leading to improved cash flow for most companies. It is speculated that the pressure on working capital eased during this period.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Has_Revenue_and_Earnings_Reached_the_Bottom\"><\/span>Has Revenue and Earnings Reached the Bottom?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In 2020 and 2021, despite benefiting from the increasing demand caused by the \u2018stay-at-home\u2019 economy, subsequent factors such as reopening and the \u2018bullwhip effect\u2019 caused by excessive ordering gradually emerged. As a result, overall revenue declined continuously after reaching its peak in 2021\u2014a necessary path toward inventory reduction. However, gross profit margins remained relatively stable, hovering around 50%, and profitability rates showed signs of bottoming out in the second half of 2023.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/10-1-1024x576.jpg\" alt=\"\" class=\"wp-image-23883\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/10-1-1024x576.jpg 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/10-1-300x169.jpg 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/10-1-150x84.jpg 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/10-1-768x432.jpg 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/10-1-1536x864.jpg 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/10-1.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>As end-demand gradually rebounds, operational performance is expected to stabilize. Additionally, the gradual ramp-up of USB 4.0 and PCIe 5.0-related products in 2024, coupled with the industry\u2019s lower base in the current year, should contribute to a gradual recovery trend. The extent of profit performance due to specification transitions will depend on the pace of economic recovery. If overall economic conditions do not fully improve, consumers may be less willing to replace existing products, decelerating the recovery of companies\u2019 revenues.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Competition_heats_up_%E2%80%94_Survival_of_the_fittest\"><\/span>Competition heats up \u2014 Survival of the fittest<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Due to the lack of difference in products between USB hub-side and device-side manufacturers, the competition in the industry has become increasingly fierce. In recent years, the United States has consistently targeted China\u2019s semiconductor industry, prompting China to enhance its entire semiconductor supply chain to achieve self-sufficiency and reduce reliance on the U.S. market.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/12-2-1024x576.jpg\" alt=\"\" class=\"wp-image-23885\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/12-2-1024x576.jpg 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/12-2-300x169.jpg 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/12-2-150x84.jpg 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/12-2-768x432.jpg 768w, https:\/\/www.tejwin.com\/wp-content\/uploads\/12-2-1536x864.jpg 1536w, https:\/\/www.tejwin.com\/wp-content\/uploads\/12-2.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div style=\"height:52px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>While the U.S. semiconductor restrictions primarily focus on advanced processes, the control over IC design mainly targets high-performance chips, including those related to AI computation. Notably, high-speed transmission-related chips are not within the scope of U.S. restrictions. Additionally, Chinese manufacturers have a history of excelling in cost reduction and adopting low-price competition strategies.<\/p>\n\n\n\n<p>If the Chinese government redirects funds originally intended for high-performance chips toward other product categories, it could pose a threat to USB hub-side and device-side manufacturers with relatively small competitive differentiation. Despite a recent downturn in market demand, some Chinese IC design companies established for subsidy purposes have faced closures. Consequently, existing Chinese IC design companies are adopting more conservative strategies, focusing on existing product lines rather than pursuing cutting-edge processes. As a result, this shift may intensify competition in the high-speed transmission IC design industry.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Looking ahead to 2024, despite ongoing unfavorable macroeconomic factors and incomplete recovery in end-demand, but since<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>The U.S. CPI indicates a gradual easing of inflationary pressures<\/li>\n\n\n\n<li>The discontinuation of older Windows operating systems and the transition in transmission standards has impacted the industry.<\/li>\n\n\n\n<li>The second half of the year, typically an industry peak season, holds the potential for higher growth rates.<\/li>\n<\/ol>\n\n\n\n<p>The outlook suggests a gradual recovery, and the high-speed transmission IC design sector should continue to adapt and grow in 2024.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-luminous-vivid-amber-to-luminous-vivid-orange-gradient-background has-background wp-element-button\" href=\"https:\/\/www.tejwin.com\/en\/insight-category\/market-research\">Click to learn more market research and industry analysis&nbsp;<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:79px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>TEJ datasets specifically provides the information required for basic analysis of the securities financial market, quickly solve your data needs, and efficiently help your decision-making.<\/p>\n\n\n\n<div style=\"height:27px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-text-align-center has-luminous-vivid-orange-color has-text-color has-link-color wp-elements-eb505c39ecc5ceb607cc2e0d1489bc8d\"><a href=\"https:\/\/www.tejwin.com\/en\/databank-solution\/fundamental-data\/\" class=\"ek-link\"><strong><span style=\"text-decoration: underline;\" class=\"ek-underline\"><span style=\"background-color:#ffffff\" class=\"has-inline-background\">Check what TEJ dataset provide<\/span><\/span><\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With the advancement of technology, the amount of data computers need to process has become increasingly massive. The transmission speed of computers in the past has become insufficient to meet the demands of next-generation high-speed computing. Therefore, when faster transmission interface specifications are introduced, high-speed transmission IC design companies must also increase their investment in developing related products. However, in recent years, high-speed transmission IC design companies have experienced declining revenues and profits. After a two-year inventory adjustment period, by the second half of 2023, most manufacturers\u2019 inventories have returned to a healthier level. Additionally, with inflation gradually cooling down and the surge in AI demand, terminal demand is expected to gradually recover. This article will introduce you to the high-speed transmission IC design industry and provide insights into the latest trends in the IC industry.<\/p>\n","protected":false},"featured_media":23889,"template":"","tags":[2921,3042,2946,2962],"insight-category":[],"class_list":["post-23874","insight","type-insight","status-publish","has-post-thumbnail","hentry","tag-electronic-stocks","tag-ic-design","tag-industry-analysis","tag-market-data"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/23874","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight"}],"about":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/types\/insight"}],"version-history":[{"count":4,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/23874\/revisions"}],"predecessor-version":[{"id":25493,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/23874\/revisions\/25493"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media\/23889"}],"wp:attachment":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media?parent=23874"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/tags?post=23874"},{"taxonomy":"insight-category","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight-category?post=23874"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}