According to the Zhitong Finance APP, Huazhang Securities released a research report stating that Texas Instruments will initiate a new round of price increases in August, with increases exceeding those in June. If specific part numbers from TI see significant price hikes, and domestic analog chip manufacturers are willing to maintain their prices (not following TI's price increases) or further reduce prices, then domestic substitution can also be achieved in new product mass production after a period of verification. TI's current price increase will ensure the company's existing financial performance but at the cost of product market share. The firm believes that domestic analog chip manufacturers will have more opportunities to achieve domestic substitution in industrial and automotive applications, as well as in the high-end consumer sector.

Relevant companies in the analog chip field include: 3PEAK (688536.SH), JoulWatt (688141.SH), Shengbang Co., Ltd. (300661.SZ), Naxinwei (688052.SH), Aiwei Electronics (688798.SH), Xidiwei (688173.SH), Biyiwei (688045.SH), and Nanxin Technology (688484.SH).

The main points of Huazhang Securities are as follows:

Texas Instruments part numbers are expected to increase in price, with increases likely exceeding those in June

According to a comprehensive report from International Electronic Business, TI will start a new round of price increases in August, with increases exceeding those in June, focusing on industrial control, automotive, and computing-related chip products, covering categories such as LDO (Low Dropout Regulator), DC-DC (Direct Current to Direct Current Converter), digital isolation, and isolation drivers. Moreover, the price adjustment will not only involve end customers but will cover almost all customer groups except for super large clients, and the price increases will be transmitted through distributors to distribution channels, with even in-transit goods facing price hikes.

TI's current price increase focuses on three major areas, with a rapid increase in industrial control products. Over 40% of industrial control chips have seen price increases, with representative products such as the price of a 16-bit ADC chip for factory automation rising from $3.2 to $4.1 (an increase of about 28%).

In the automotive-grade chip sector, the price of BMS isolation chips for new energy vehicles has increased by 22%, and the price of automotive entertainment power management ICs has risen by 18%-25%. In consumer electronics and general communication devices, the price increases are moderate, with power management and RF front-end chips only increasing by 5%-15%.

This price adjustment also shows significant structural differences: about 9% of part numbers have price increases of 100% or more (mainly discontinued part numbers or extremely low-profit products), 55% of part numbers have price increases of 15%-30%, and 30% of part numbers have price increases of less than 15%. Signal chain products have become the focus of price increases, with some models of core categories such as ADCs (Analog-to-Digital Converters) and operational amplifiers seeing increases exceeding 100%, far exceeding market expectations.

The firm believes that subsequent transactions in analog chips will shift from the basis of great power competition to further domestic substitution, providing more replacement space and opportunities for domestic analog chip manufacturers

TI strengthens its layout in high-margin markets such as industrial and automotive through differentiated pricing, but adopts a more moderate price increase in consumer electronics and other areas that can be easily replaced by domestic chips, highlighting TI's current influence in specific product areas.

Previously, China's new regulations on "origin determination" in response to U.S. tariffs (based on the wafer fabrication location) directly raised costs for U.S. manufacturers and catalyzed the strength of the analog chip sector, making it a popular track in the semiconductor industry, with the sector's gains closely linked to the China-U.S. competition becoming the main label of the sector at that time However, as the negotiations between China and the United States gradually bring about a sense of easing, trading in the analog chip sector is also gradually returning to a focus on fundamentals. Currently, the range of price increases for TI is expected to exceed the range and magnitude of the previous price increase in June. This will further lead to domestic substitution of analog chips in multiple fields.

Taking consumer electronics as an example, the cycle from new projects to mass production in consumer electronics is shorter compared to the industrial and automotive sectors, and iteration is easier. This is also the main reason why domestic analog chips quickly replaced others in the consumer electronics market during the chip shortage era of 2021.

In the industrial and automotive application fields, due to the sudden nature of the price increase notice, customers cannot directly replace existing mass-produced products. Therefore, if there is no direct domestic substitution plan for current mass production projects, they will continue to maintain TI's fixed product selection. However, if the price increase for specific TI part numbers is significant, and domestic analog chip manufacturers are willing to maintain prices (not following TI's price increase) or further reduce prices, then domestic substitution can also occur in new mass production after a period of verification. TI's current price increase will allow the company to secure its existing financial performance but at the cost of product market share. Domestic analog chip manufacturers will have more opportunities to achieve domestic substitution in industrial and automotive applications, as well as in high-end consumer sectors.

Risk Warning

1. Downstream demand may not meet expectations; 2) Intensified competition; 3) Technology iteration may not meet expectations