China’s IC chip prices are upside down, what should agents do?
The chip inventory level has finally come down, but chip agents feel that life is getting tighter and tighter. “Profits are low, the account period is long, and after wages are paid and loans are repaid, there are still rebates.”
That year when chips were out of stock everywhere, a large number of customers, as well as large buyers who couldn’t buy the goods from the original factory, all came over. With limited supply, they only had to screen customers and serve them well. At the end of 2021, when the market calmed down, they turned to proactively visiting customers. After being so busy, agents generally find that even if they can get the latest batch of chips, their prices will be caught in the market’s all-round involution and bargaining.
In an era when there are more wolves than meat, when traders offer lower prices and customers use their opponents’ quotations to lower prices, they are all stabbed in the back without exception. “Sending a sample to a customer is often known to other agents the next day”, “You can’t sell the goods at cost price, you have to sell them at a loss”…
After checking the price, they found that the profit was very small. The agents lamented that what they earned was “transportation fees” and “pure free labor.” When chip traders are actively clearing inventory, agents are still burdened with higher operating costs and financial pressure, and customers still run away when they should.
Chip agents were pushed to the brink of crisis.
Selling at a loss: customers go to traders
Domestic chips have emerged in recent years, and many terminals have replaced them with domestic chips amid the wave of core shortages. However, there is a global glut of chips that cannot be sold. Domestic MCU, PMIC (power management IC) and other chips are also facing the problems of slow sales and involution. The agents were miserable.
This year’s analog chip price war is very fierce, whether it is domestic or other brands. Even the leading brand TI has joined in, resulting in “trading volume” between agents and traders, “trading volume” between agents and agents, and everyone “trading volume”. But there are more wolves and less meat. For one order, five to ten colleagues may come to grab it. Originally, the unit price of the goods was very low, but after the forced price reduction, it became even less valuable, and all that was earned was the freight.
Domestic MCU agent A Bin couldn’t help but ask, “With the involution of chips, where is the bottom line of agent prices?” It is already November, and their chips are still being priced day by day. In order to support their customers, they basically sell at entry price and are almost pure in what they do. Free labor.
Help customers share the pressure: low profits are still taken advantage of by the original factory
Unlike traders, agents mainly do business with terminal factories and have to pay customers. There is basically no “cash transaction”. When the market is down, financial pressure becomes prominent.
One agent said, “Domestic agents are like hammers, with low profits and long billing periods. After wages are paid and loans are repaid, they still have to pay back.”
Business is difficult, But I still want to serve customers well
In the past eight months in the chip industry, as a newcomer, Abin felt that the development prospects of agents might be greater. Just in time to catch up with the company’s shortage of personnel, he transferred from sales to product manager, managing a product line, communicating with the original factory, Communicating with customers is a test and a good exercise for your abilities.
Regarding the decline in demand and sluggish consumption, he pointed out that not only the chip industry, but also all walks of life are facing the problem of decline and involution. From the real economy to home appliances, everyone’s purchasing power is not very strong, and the chip industry cannot stay out of it.
