A Look Back at Major Events in the Electronics Industry in 2016As 2016 draws to a close, let's take a moment to review the major events that shaped the electronics industry this year.I. Market Consolidation & Precipitous ChangeApple's suppliers were the first to feel the market cool, akin to the proverbial duck sensing the river warming in spring. Small and medium-sized semiconductor companies vanished one after another. Qualcomm's acquisition of NXP epitomized the trend towards "the big getting bigger" among chipmakers, leading many to suspect a major technological transformation is imminent.II. China's Semiconductor SurgeBolstered by the National Integrated Circuit Industry Investment Fund, global wafer foundry capacity is accelerating its shift to Mainland China. Represented by SMIC and Tsinghua Unigroup, a remarkable event saw three 12-inch wafer fabs break ground on the same day on the mainland. China's semiconductor industry appears to be replicating its playbook for LCD panels.III. Proliferation of Chinese IC FirmsThe number of domestic IC companies blossomed. In 2016, China's IC design houses increased from 736 to 1,326. HiSilicon's Kirin mobile chips entered the world-class tier, while new forces like Goodix and GigaDevice entered the capital markets to grow bigger and stronger, signaling the rise of a new Chinese contingent.IV. Distribution Strategy UpheavalThe super-oligopoly pattern among original manufacturers led to seismic shifts in global IC distribution strategies. OEMs strengthened their bargaining power, with product authorizations favoring large distributors, forcing many small and medium-sized agents out. TI's strategy of building its own channels and moving away from distributors caused industry anxiety.Component e-commerce became the strongest trend in China's IC distribution industry. Major local distributors formed alliances, leveraging capital to build online trading platforms and compete for market share, leading to excessive competition and localized bubbles. Supply chain manufacturers and large contract assemblers also gradually entered the IC distribution market.VI. Metamorphosis of Chinese Phone BrandsChinese smartphone brands underwent a transformation in 2016, for the first time effectively competing with Apple and Samsung in the domestic market. OPPO and Vivo burst into the mainstream spotlight. The Galaxy Note 7 battery crisis severely damaged Samsung, allowing Huawei to rapidly gain ground. Apple saw its first revenue decline, indicating Chinese phones are now poised to compete globally.VII. Robust Supply Chain EmergesThe rapid development of China's mobile phone market relied heavily on the full support of local component and supply chain manufacturers. High-quality suppliers emerged in areas like camera modules, fingerprint sensor chips, mobile OLED panels, glass covers, CNC machining, lithium batteries, and RF, forming a scaled ecosystem.VIII. Supply Chain Management in FocusThe electronics industry began emphasizing the benefits of supply chain management. Strategies from OPPO, Vivo, and Huawei gained attention. The supply chain funding crisis at LeEco impacted manufacturers on both sides of the strait, making suppliers more cautious about commitments to OEMs and highlighting the importance of supply chain risk management.IX. Cost & Shortage CrisisA severe storm of rising raw material costs and component shortages, uncommon in the past decade, engulfed the entire electronics industry. Shortages of LCD panels and memory confused purchasers; price hikes for PCBs and semiconductors strained supply chains; soaring logistics, labor, and land costs pressured manufacturers. Chinese manufacturing faces an industry-wide crisis.X. Dawn of New TechnologiesAI, AR/VR, and autonomous driving heralded new economic models. Data centers, automotive electronics, and new consumer electronics were hailed as the three major opportunities for 2017. The intelligent life seems both distant and near, suggesting a technological explosion is coming. Is China's electronics industry ready?Furthermore, based on the above events, we have prepared the "Electronics Industry 2016 Character of the Year" selection activity. Please leave a comment with the character you believe represents the year.[Inventory] The Harsh Reality of Survival in the 2016 Electronics Industry: The Wave of ClosuresUnder market competition, the fittest survive. There's no need to over-interpret a wave of closures with "conspiracy theories." Closures are normal, perhaps an even harsher wave hasn't even begun. 2017 is approaching, bringing a new round of unemployment and closures.[Inventory] The Harsh Reality of Survival in the 2016 Electronics Industry: The Wave of LayoffsHow many people were actually laid off in the electronics industry in 2016? Should we fear large-scale layoffs?Repeated Raids in Huaqiangbei: Is This Really the Final Farewell?Raids in Huaqiangbei have become increasingly frequent in recent years, with a dramatic "overnight evacuation" occurring mid-year. Can Huaqiangbei successfully transform from a "Shanzhai Paradise" to a "Maker's Paradise" and regain its past glory? This question weighs on many minds.Is There Still a Future for Agents? Analyzing the Logic Behind TI's Distribution Model ChangeBesides price hikes and OEM mergers, the most shocking news for distributors this year was TI's move. Fortunately, while OEM models are changing, distributors are also seeking transformation.Foxconn, Huawei, Qualcomm Flee Shenzhen: High Real Estate Prices Drain the Electronics IndustryDriven by national and local pressures, manufacturing in Shenzhen is gradually fading away. Hong Kong's present might be Shenzhen's tomorrow.Raw Material Costs Soar: How to Deal with the 2017 Shortage and Price Crisis?Beyond basic materials, PCBs and semiconductors also saw price hikes. The 2016 industry-wide supply chain storm of shortages and price increases placed enormous cost pressure on Chinese manufacturing. How to cope?Insights from "Inviting Suppliers to Dinner": OPPO and Vivo's Supply Chain ManagementTo prevent corruption, some companies strictly forbid meals with suppliers. OPPO and Vivo's creative solution: welcome meals with suppliers, but the bill is paid by OPPO/Vivo staff and reimbursed by the company—a practice reportedly appreciated by suppliers who feel treated equally and warmly.Qualcomm's Acquisition of NXP Makes History, Targeting Automotive Semiconductors and ChannelsThe $47 billion acquisition, the largest in semiconductor history, signaled major changes ahead for automotive semiconductors, Fabless models, the new Qualcomm, and the IoT market.
