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Many enterprises transitioned their CAPEX in server procurement to OPEX in managed cloud services in 1H20 in the face of economic and other uncertainties from the COVID-19 pandemic, according to TrendForce’s latest investigations. These enterprises have subsequently slowed down their server procurement orders, in turn resulting in enterprise server suppliers, led by Dell and HPE, to revise down their yearly shipment targets starting in 3Q20. TrendForce has thereby also revised the forecasted 0.8% QoQ decline in 3Q20 server shipment down to 4.9%.
The border restrictions and national lockdowns instituted by various governments due to the COVID-19 pandemic’s impact in 1Q20 resulted in low inventory levels for clients of packaging and testing (OSAT, outsourced semiconductor assembly and test) companies and for distribution channels as well, according to TrendForce’s latest investigations. As the supply chain gradually recovered in 2Q20, governments began instituting fiscal policies to stimulate the economy. These factors, combined with the rise of the stay-at-home economy, led to an increased restocking demand from downstream clients, in turn providing a boost to OSAT revenue, which reached US$6.325 billion in 2Q20, a 26.6% increase YoY.
After spot prices have been falling for some time, the NAND Flash market is formally seeing a general decline in contract prices starting from 3Q20, according to TrendForce’s latest investigations. Looking at the extent of the price decline by product type, SSDs have experienced a relatively smaller drop because there is still decent demand for these products. In contrast, NAND Flash wafers have suffered a noticeably larger decrease because this type of product is under the mounting pressure to drive sales by cutting prices.
According to the latest investigations by TrendForce, Apple officially unveiled its self-designed Mac SoC processors based on the ARM architecture in June, with the market release of the first Mac device with Apple Silicon (which broadly refers to chips designed by Apple) scheduled to take place by the end of this year. The first Mac SoC, projected to cost under US$100, will be mass produced with TSMC’s 5nm process technology. The low cost of the Mac SoC makes it an extremely cost-competitive option.
The U.S. Department of Commerce announced on June 29 that the newly instituted Hong Kong national security law by the Chinese government will increase “the risk that sensitive U.S. technology will be diverted to [the Chinese government]”; the Department therefore put a temporary stop to the preferential treatment the U.S. had afforded to Hong Kong. TrendForce indicates that, as Hong Kong is a major site of chip warehousing for manufacturers and distributors worldwide, the U.S. government’s withdrawal of preferential treatment is meant to directly curtail the risk that companies may export products that contain sensitive information, through Hong Kong, to China. This action is thus expected to drastically change the current geographical concentration of semiconductor products and the production strategy of chip manufacturers.
