Given the high demand for display panels, a tight supply situation for DDI has begun to surface in 2H20, according to TrendForce’s latest investigations. As prices of foundry services rose due to the tight supply of foundry capacity, IC suppliers’ DDI quotes to panel makers in turn also began rising in 3Q20. This uptrend in DDI quotes will potentially continue in 4Q20.
Demand from WFH and distance education applications generated by the COVID-19 pandemic has benefitted the IT panel market and especially the NB panel segment, leading to a rising demand for DDI. On the other hand, new electronic product applications have taken up an increasing allocation of 8-inch foundry capacities in the past year. In particular, 5G smartphones require double or even triple the number of PMICs used in 4G smartphones. As foundry capacity for DDI becomes more and more constricted, DDI suppliers have resorted to accepting the higher quotes from foundries in order to ensure a sufficient level of wafer capacity as other products are also competing for foundries’ limited capacities.
High demand for entry-level and mid-range phones led to HD TDDI shortage in 3Q20
TDDI IC for small-sized displays also went into a shortage in 3Q20, primarily because of the massive increase in demand for entry-level and mid-range HD smartphones. Because the HD smartphone segment is highly cost-sensitive, these smartphones place a high demand for foundries’ 12-inch 80nm production capacities. However, some foundries are in the midst of transitioning some of their wafer capacities from the 80nm node to the 55nm node, leading to a severe shortage in the supply of 80nm TDDI and subsequently driving up IC prices.
Tablet TDDI demand results in further shortage of wafer capacity for DDI
On the other hand, as tablet panels began integrating TDDI In-Cell solutions on a massive scale this year, the demand for TDDI IC used exclusively for tablet panels has gradually risen as well, occupying some of the 80nm production capacities at foundries. Since the TDDI IC ASP of tablet panels is higher than that of smartphone panels, wafer input for the former product is further exacerbating the foundry capacity shortage situation for the latter product.
Production capacity made available due to Huawei sanctions is insufficient to reverse the tight capacity supply situation
The recently expanded sanctions against Huawei by the U.S. government will have dire ramifications on Huawei’s smartphone manufacturing next year. TrendForce believes that, although Huawei’s inability to order wafer starts can indirectly alleviate the tight wafer capacity of some foundries, 8-inch and 12-inch wafer capacities on the whole are expected to remain tight despite the extra foundry capacity made available in Huawei’s absence. This shortage in 8-inch and 12-inch wafer capacity can mostly be attributed to the growing demand for 5G smartphone components.
With regards to the supply of large-sized DDI, in the short run, IC suppliers will have to accept the price hike of foundry services, while this increased price will be transferred to panel makers as well. At the same time, IC suppliers will also investigate the possibility of transitioning the manufacturing process for NB panel DDI from the 8-inch 0.1xµm process node to the 12-inch 90nm node. In terms of small-sized TDDI, however, as the supply of 12-inch 80nm capacity remains tight going forward, FHD TDDI manufacturing will transition to the 12-inch 55nm node instead. Finally, the lack of 80nm capacity means IC suppliers must transition their HD TDDI to the 12-inch 55nm node in order to maintain the supply of HD TDDI.