Demand in the global foundry market remains strong in 1Q21, according to TrendForce’s latest investigations. As various end-products continue to generate high demand for chips, clients of foundries in turn stepped up their procurement activities, which subsequently led to a persistent shortage of production capacities across the foundry industry.

TrendForce therefore expects foundries to continue posting strong financial performances in 1Q21, with a 20% YoY growth in the combined revenues of the top 10 foundries, while TSMC, Samsung, and UMC rank as the top three in terms of market share. However, the future reallocation of foundry capacities still remains to be seen, since the industry-wide effort to accelerate the production of automotive chips may indirectly impair the production and lead times of chips for consumer electronics and industrial applications.

TSMC has been maintaining a steady volume of wafer inputs at its 5nm node, and these wafer inputs are projected to account for 20% of the company’s revenue. On the other hand, owing to chip orders from AMD, Nvidia, Qualcomm, and MediaTek, demand for TSMC’s 7nm node is likewise strong and likely to account for 30% of TSMC’s revenue, a slight increase from the previous quarter. On the whole, TSMC’s revenue is expected to undergo a 25% increase YoY in 1Q21 and set a new high on the back of surging demand for 5G, HPC, and automotive applications.

In response to increased client demand for 5G chips, CIS, driver ICs, and HPC chips, Samsung will continue to raise its semiconductor CAPEX this year, which is divided between its memory and foundry businesses and represents Samsung’s desire to catch up to TSMC. With regards to process technologies, the Korean company’s capacity utilization rates for the 5nm and 7nm nodes have been relatively high in 1Q21, during which Samsung is expected to increase its revenue by 11% YoY.

In addition to chip demand from the automotive sector, UMC has been keeping up with manufacturing driver ICs, PMICs, RF front-end, and IoT products. The company’s capacity thus remains fully loaded in 1Q21, and UMC is expected to undergo a 14% YoY increase in revenue. GlobalFoundries is similarly experiencing high capacity utilization rates due to the increase in automotive chip demand, as well as the military chips that it has been manufacturing for the U.S. Department of Defense. GlobalFoundries’ revenue is expected to increase by 8% YoY in 1Q21.

SMIC’s revenue for the 14nm and below nodes is expected to decline in 1Q21 as the company was added to the Entity List by the U.S. and subsequently faced constraints in the development of advanced processes. However, with the persistent demand in the foundry market for mature processes above (including) the 40nm node, SMIC’s revenue is projected to stay on a positive trajectory and reach a 17% YoY increase in 1Q21. TowerJazz will spend about US$150 million on a small-scale capacity expansion, but equipment move-in and calibrations will not be finalized until approximately 2H21, after which the expanded capacity will start measurably contributing to the company’s revenue. In 1Q21, TowerJazz’s revenue is expected to be on par with the previous quarter while reaching a 15% increase YoY.

PSMC is primarily focused on manufacturing memory products, DDICs, CIS, and PMICs. At the moment, high demand for 8-inch and 12-inch wafer capacities and for automotive chips has resulted in fully loaded capacity for PSMC. The company’s revenue is expected to increase by 20% YoY in 1Q21. Likewise, VIS’ capacity is fully loaded across all of its process technologies. Driven by increased spec requirements for PMICs and small-sized DDICs, VIS’ revenue is expected to increase by 26% YoY in 1Q21. Finally, Hua Hong is currently placing considerable emphasis on expanding the 12-inch capacity of HH Fab7 in Wuxi. Process technologies for 12-inch production lines, including NOR, BCD, Super Junction, and IGBT, have all passed qualifications, thereby injecting fresh momentum into Hua Hong’s development. Furthermore, given Hua Hong’s fully loaded 8-inch capacities and the fact that its performance in 1Q20 represents a relatively low base period for YoY comparison, Hua Hong’s revenue may likely reach a 42% YoY increase in 1Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

In compliance with the local policy, Samsung’s Austin-based foundry Line S2 partially suspended operation on Tuesday, Feb 16 due to the winter storm affecting Texas. According to TrendForce’s investigation of the event, as the city’s public utility Austin Energy was able to warn of an impending power blackout ahead of time, the partial shutdown of the plant was not accidental but planned in advance. TrendForce’s data show that the monthly 12-inch capacity of Line S2 accounts for nearly 5% of the global total. While the winter storm is estimated to impair about 1-2% of the global 12-inch wafer foundry capacity, the actual duration of the impact will still depend on the region’s temperature. Assuming that Austin will gradually warm up on Friday, Feb 19, and a phased restoration of power will take place at the fab, TrendForce now expects Line S2 to return to full operation after at least one week.

TrendForce indicates that the main process technologies of the fab are the 14nm and 11nm nodes. These technologies are mainly used to manufacture Qualcomm’s 5G RFICs. The fab’s other production capacity is distributed among production lines that feature nodes ranging from 65nm to 28nm and mainly manufacture products under Samsung System LSI. Additionally, the fab manufactures automotive chips for Tesla and Renesas. Although Samsung had implemented corresponding measures in advance of the blackout, with no silicon wafers reported to be damaged and a mere slight extension in lead times for certain products, Line S2’s increased lead times are still expected to exacerbate the strained semiconductor market in light of the industry’s shortage of production capacities for various semiconductor applications, including automotive products, which remain in extremely high demand.

Despite the blackout’s limited impact on NAND Flash controller manufacturing, urgent orders from SSD purchasers may result in a potential price hike

It should be pointed out that, although Line S2 has stopped manufacturing NAND Flash, Samsung LSI still manufactures 14-40nm NAND Flash/SSD controllers at the fab. Given that the volume of wafer starts for controllers at Line S2 is relatively low, and Samsung had already made emergency response preparations ahead of time, the blackout is expected to result in only a slight extension of lead times, without significant impact on the overall controller output. However, as PC OEMs and CSPs are now starting to negotiate for the procurement of SSDs, major SSD suppliers have taken the strained supply of controller ICs into account when quoting SSD prices. As such, despite the blackout’s relatively low impact on NAND Flash/SSD controller manufacturing, SSD purchasers, including the aforementioned PC OEMs and CSPs, may potentially accept a price hike during the negotiation process due to their urgency in procuring additional SSDs. With regards to 2Q21 prices, TrendForce is currently adhering to the previous forecast of “mostly flat” for client SSDs and “slight decline” for enterprise SSDs, but TrendForce does not rule out the possibility that overall SSD prices may move in a positive trajectory once some purchasers accept a price hike.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Not only did automotive market take a downward turn starting in 2018, but the severe impact of the COVID-19 pandemic in 2020 also led to noticeably insufficient procurement activities from major automotive module suppliers, according to TrendForce’s latest investigations. However, as the automotive market is currently set to make a recovery, TrendForce expects yearly vehicle sales to increase from 77 million units in 2020 to 84 million units in 2021.

At the same time, the rising popularity of autonomous, connected, and electric vehicles is likely to lead to a massive consumption of various semiconductor components. Even so, since most manufacturers in the automotive supply chain currently possess a relatively low inventory, due to their sluggish procurement activities last year in light of weak demand, the discrepancies in the inventory levels of various automotive components, along with the resultant manufacturing bottleneck, have substantially impaired automakers’ capacity utilization rates and, subsequently, vehicle shipments.

The recent shortage situation in the IC supply chain has gradually extended from consumer electronics and ICT products to the industrial and automotive markets. In the past, manufacturers in the automotive semiconductor industry were primarily based on IDM or fab-lite business models, such as NXP, Infineon, STMicroelectronics, Renesas, ON Semiconductor, Broadcom, TI, etc. As automotive ICs generally operate in wide temperature and high voltage circumstances, have relatively long product lifecycle, and place a heavy demand on reliability as well as longevity support, it is more difficult for the industry to alternatively transition its production lines and supply chains elsewhere.

Automotive semiconductor remains in shortage as production capacities remain fully loaded across the global foundry industry

Nevertheless, given the current shortage of production capacities across the foundry industry, wafer capacities allocated to automotive semiconductor components have been noticeably crowded out by other products. Some of these examples include automotive MCU and CIS manufactured in 12-inch fabs, as well as MEMS, Discrete, PMIC, and DDI products manufactured in 8-inch fabs. TrendForce indicates that automotive semiconductor products manufactured at the 28nm, 45nm, and 65nm nodes in 12-inch fabs are suffering the most severe shortage at the moment, while production capacities at 0.18µm and above nodes in 8-inch fabs have also been in long queue by other products.

As in-house IDM fabrications have relatively high CAPEX, R&D expense, and operating overhead, automotive IC vendors have in recent years outsourced some of their products to TSMC, GlobalFoundries, UMC, Samsung, VIS, Win Semiconductor and so on. In particular, TSMC specifically indicated during its 4Q20 earnings conference that wafer starts for automotive semiconductors reached rock bottom in 3Q20, while additional orders began arriving in 4Q20. As such, the company is currently considering allocating some of its production capacities from logic ICs to specialty foundry, in order to meet sudden demand from its long-term customer relationship.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

As various TV manufacturers such as Samsung, LG, and TCL announced their new models equipped with Mini LED backlights at CES 2021, TrendForce’s 2021 Mini LED New Backlight Display Trend Analysis report shows that total Mini LED chip revenue from Mini LED backlight TVs to potentially reach US$270 million in 2021, as manufacturers gradually overcome technological bottlenecks and lower their overall manufacturing costs, according to TrendForce’s latest investigations.

Mini LED backlight TVs possess a highly cost-effective competitive advantage, as Mini LED backlight costs for the entry-level segment are only 50% higher than traditional LCD equivalents

TrendForce further indicates that, with regards to TV backlight technologies, the cost of Mini LED solutions is about two to three times lower than that of white OLED and entry-level, direct-lit LCD solutions. This cost difference therefore serves as Mini LED technology’s competitive advantage over its competitors in display backlight adoption. At the moment, high-end TVs contain about 16,000 Mini LED chips per TV, divided into 2,000 local dimming zones.

In this market segment, PM (passive matrix) Mini LED TV panels with BLU (backlight unit) still cost about 15% less than OLED TV panels and therefore hold a cost advantage. On the other hand, in the mid-range TV segment, each TV contains about 10,000-12,000 Mini LED chips and 500 local dimming zones, meaning the cost of Mini LED backlight integration in this market segment is about a mere 50% more than entry-level, direct-lit LCD backlight units, making Mini LED a viable alternative to traditional LCD solutions in this segment too. Given the high cost-effectiveness of Mini LED backlight units, TV manufacturers are therefore likely to adopt them as a viable technology and initiate an industry-wide competition over Mini LED TV specs this year.

HDR and 8K resolution will be the two mainstream features of high-end TVs this year. With regards to Korean brands, Samsung’s Neo QLED Mini LED TV and LG’s QNED Mini LED TV, both unveiled at CES this year, are equipped with Mini LED backlights as a performance-enhancing technical feature. These TVs feature not only 8K resolution, but also Mini LED backlight units, which require more than 20,000 Mini LED chips (divided across more than 1,000 local dimming zones, with more than 1,000 nits in peak brightness), in addition to passive matrix FALD technology, which allows for contrast ratios of 1,000,000:1, a significant improvement that puts these TVs on almost equal footing with OLED TVs in terms of image quality. At the same time, China-based TCL is also set to release its OD Zero Mini LED TV, which has comparable specs with Korean offerings and is also equipped with Mini LED backlight units. Going forward, more and more TV manufacturers, such as Hisense and Xiaomi, are expected to participate in the burgeoning Mini LED backlight TV market.

The pace of optimizing Mini LED chips, backplanes, and driver ICs will be key to the Mini LED industry’s rapid expansion

As various manufacturers successively release their Mini LED backlight TVs this year, related companies in the supply chain are expected to benefit as a result. Currently, there are multiple major suppliers of Mini LED components on the market: Chip suppliers include Taiwanese (Epistar and Lextar), Chinese (San’an and HC SemiTek), and Korean (Seoul Semiconductor) companies. Testing and sorting companies include FitTech, Saultech, and YTEC. SMT companies include Taiwan-based Lextar and China-based Hongli Zhihui. Driver IC suppliers include Taiwanese (Macroblock, Elan, Parade, Himax, and Novatek) and Chinese (Chipone) companies. Backplane suppliers include Tawanese (Apex and Zhen Ding Tech) and Korean (Young Poong Group) companies. Panel suppliers include SDC, LGD, AUO, Innolux, BOE, and CSOT.

TrendForce believes that Mini LED backlight displays currently possess a competitive advantage over OLED displays due to the former’s 15% comparatively lower cost. Ultimately, the future development and profitability of the Mini LED backlight market in the long run will depend on the continued optimization of components that account for a relatively higher allocation of backlight costs, including Mini LED chips, Mini LED backplanes, and driver ICs.

For more information on reports and market data from TrendForce’s Department of Optoelectronics Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com

Owing to the impact of the COVID-19 pandemic, global smartphone production reached a mere 1.25 billion units in 2020, a record-breaking 11% YoY decrease, according to TrendForce’s latest investigations. The top six smartphone brands ranked by production volume for 2020, in order, are Samsung, Apple, Huawei, Xiaomi, OPPO, and Vivo. The most glaring change from the previous year is Huawei’s market share.

TrendForce indicates that Honor will formally separate from Huawei and operate as an independent smartphone maker at the start of 2021. The aim behind this spin-off is to ensure the survival of Honor, which has become a major brand in the global smartphone market after years of labor. However, it remains to be seen whether the “new” Honor can capture consumers’ attention without the support from Huawei. Also, Huawei and the new Honor will be directly competing against each other in the future, especially if the former is somehow freed from the U.S. trade sanctions at a later time. With the new Honor seeking to ramp up production, Huawei will have more difficulty in regaining market share for smartphones.

Looking ahead to the rest of 2021, TrendForce believes that the global smartphone market will gradually recover as people become accustomed to the “new normal” resulting from the pandemic. Moreover, this year will likely see a relatively strong wave of device replacement demand as well as demand growth in the emerging markets. Assuming that these conditions will materialize, the annual global smartphone production for 2021 is forecasted to increase by 9% to 1.36 billion units. Regarding the annual global ranking of smartphone brands for 2021, Huawei will experience a further and significant decline in its device production. This is because of the effects of the U.S. export restrictions and the spin-off of Honor as a separate entity operating in the smartphone market. Huawei is currently projected to tumble from third place in 2020 to seventh place in 2021. The top six for 2021, in order, will be Samsung, Apple, Xiaomi, OPPO, Vivo, and Transsion. Together, they will account for almost 80% of the global smartphone market. Nevertheless, the pandemic will remain the central variable (or the biggest uncertainty) in the production projection because it will continue to exert significant influence on the global economy. Besides the pandemic, the performance of smartphone brands during 2021 could also be affected by geopolitical instabilities and the lack of available production capacity in the semiconductor foundry market.

Penetration rate of 5G smartphones is likely to rise to 37% in 2021, while production will still be constrained by limited foundry capacities

Thanks to the Chinese government’s aggressive push for 5G commercialization in 2020, global 5G smartphone production for the year reached about 240 million units, a 19% penetration rate, with Chinese brands accounting for almost a 60% market share. While 5G will remain a major topic in the smartphone market this year, various countries will also resume their 5G infrastructure build-out, and mobile processor manufacturers will continue to release entry-level and mid-range 5G chips. As such, the penetration rate of 5G smartphones is expected to undergo a rapid increase to 37% in 2021, for a yearly production of about 500 million units.

It should be noted that, under the optimistic assumption that the pandemic can be resolved within the year, shipment for various end-products, including servers, smartphones, and notebook computers, will undergo a YoY increase compared to 2020. Case in point, the number of PMICs and CIS (CMOS image sensors) contained per handset will each double in order to meet increased smartphone specifications. On the other hand, major Chinese foundry SMIC has recently been added to the Entity List once again. This is expected to exacerbate the foundry industry’s already-strained production capacity.

TrendForce indicates that smartphone brands’ recent bullish outlook towards the 2021 market and their attempt to secure more semiconductor supplies by increasing their smartphone production targets can potentially lead these brands to overbook certain components at foundries. However, smartphone brands may adjust their component inventories from 2Q21 to 3Q21 and reduce their semiconductor procurement activities if actual sales performances fall short of expectations, or if component bottlenecks remain unresolved, leading to a widening inventory gap between bottlenecked and non-bottlenecked parts. Even so, TrendForce still forecasts an above-90% capacity utilization rate for foundries in 2021.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com