The panel market has become imbalanced due to the continuous addition of new production capacities and a significant slowdown in demand post-pandemic In response, panel makers have effectively reduced inventory by lowering capacity utilization rates to below 70% in 2H22 A recent surge in demand for TV panels—coupled with increasing TV prices—is expected to push utilization rates for Gen 5+ LCD production lines (calculated by area) up to 77% in 2Q23 However, after LG Display scales down its P6, P7, and Guangzhou LCD production lines, total output will still be much lower than the same period last year, according to TrendForce latest research
TrendForce further emphasizes that the current uptick in utilization rates is driven by actual demand for orders Consequently, it is believed that a healthy supply-demand ratio in the LCD market will persist in 2Q23 with rising utilization rates Panel makers must continue to exercise caution and control and adopt quick response strategies throughout 2H23 in order to maintain market balance
TV panel inventory has reached a healthy level after more than half a year of adjusting production In 1Q23, Chinese brands started stocking up early for the 618 Shopping Festival, driving up demand and causing TV panel prices to rise ahead of schedule This upward trend is expected to continue into 2Q23 TrendForce reports that over 90% of Gen 10x production lines are being devoted to TV panels, and it’s predicted that their capacity utilization rates are expected to grow by more than 10 percentage points QoQ, reaching up to 832%
The pandemic led to surging demand for LCD monitors and notebook panels, forcing most panel makers to reallocate a portion of their TV production capacity to IT projects Despite a resurgence in demand for TV panels contributing to the growth of Gen 8x utilization rates, the absence of significant growth in demand for IT products limited the increase in utilization rates to 76 percentage points, resulting in a 794% rate when compared to 1Q23 For Gen 75 and older production lines, the utilization rate is projected to climb to 60% due to growing demand in the smartphone panel repair market and a slight increase in demand for IT panels compared to 1Q23 Nevertheless, TrendForce maintains a conservative outlook on growth
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Last October, the US Department of Commerce imposed semiconductor restrictions on Chinese imports of equipment for processes of 18nm and below SK hynix’s Wuxi fab was granted a one-year production license, but geopolitical risks and weak demand prompted the company to reduce wafer starts by about 30% per month in 2Q23, according to TrendForce's latest research
TrendForce reports that SK hynix had planned to transition its Wuxi fab’s mainstream process from 1Y nm to 1Z nm, decreasing the output of legacy processes However, due to limitations imposed by the US ban, the company instead opted to increase the share of its 21 nm production lines, focus-ing on DDR3 and DDR4 4Gb products SK hynix’s long-term strategy involves shifting its capacity expansion back to South Korea, while the Wuxi fab caters to domestic demand in China and the legacy-process consumer DRAM market
DDR3 and DDR4 4Gb chips account for less than 30% of SK hynix’s overall consumer DRAM shipments However, the company is extending its legacy production lines, which means the supply of low-density consumer DRAM will gradually increase An analysis of the Taiwanese supply chain reveals Nanya, Winbond, and PSMC (which assist IC design houses with DRAM production) all supply DDR3 4Gb; only Nanya provides large-scale shipments of DDR4 4Gb The three main suppliers and Nanya have process nodes of around 20 nm for DDR3 4Gb Samsung currently supplies both 20 nm and 1X nm process nodes for DDR4 4Gb and plans to transition to 1Z nm in the second half of 2023, taking the lead in the process structure Micron, however, does not provide this particular chip density, while both SK hynix and Nanya are around 20 nm In general, other Taiwanese manufacturers primarily focus on DDR3 products, and their product nodes remain at 25 nm Although Winbond and PSMC are developing 20 nm processes, they continue to lag behind their competitors when it comes to mass production
Demand for consumer DRAM remains unstable, and prices are expected to continue declining throughout 2Q23
Despite a slight uptick in demand due to earlier TV inventory digestion, which led to a modest increase in SoC orders, the market continues to face challenges Automotive demand has been relatively stable, but the market size is still limited, and the visibility of network communication demand remains low TrendForce asserts that although DRAM suppliers have cut back on consumer DRAM production, the current state of supply and de-mand is still leaning towards an oversupply when considering inventory levels Consequently, 2Q23 should see an average price drop of 10–15% In the long run, increased output from the Wuxi fab could put additional pressure on suppliers, making it even more difficult for consumer DRAM prices to rebound
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The global economy has faced increased inflation risks and downstream inventory corrections in 2H22, which have affected IC design houses faster than wafer foundries, as they are far more sensitive and responsive to market reversals TrendForce reports that adverse factors such as weak overall consumption, restrictions from China, and the slowdown of corporate IT spending and CSP demand have impacted the revenue performance of the world’s top 10 IC design houses in 4Q22, leading to a QoQ decline of 92%, or approximately US$3396 billion
TrendForce predicts that the revenue of these top 10 companies keep declining—though with a slight convergence—into 1Q23, owing to ongoing inventory corrections across the entire supply chain as well as Q1 being the traditional off-season for consumer demand Demand will continue to be weak despite new product launches and inventory replenishment in the supply chain
MediaTek was most impacted by weak terminal demand and inventory correction among the top 5 companies
Most IC design houses saw their revenue fall in 4Q22 due to a weak consumer market and customer inventory adjustments Qualcomm’s business revenue from smartphones and IoT fell 226% and 162%, respectively, resulting in the company’s revenue contracting to US$789 billion—a 203% QoQ decline Nevertheless, Qualcomm once again came out on top with Broadcom following close behind at US$71 billion—a 24% QoQ increase Broadcom’s revenue growth can be largely attributed to server storage connectivity, broadband, and wireless networks, which have offset the impact of inventory adjustments
NVIDIA’s Q4 revenue reached US$593 billion—a 27% QoQ decline, which indicates a slight convergence compared to the previous two quarters—largely due to an increase in revenue from gaming and automotive fields thanks to the launch of the company’s high-end RTX 40 series graphics cards and stable automotive demand, which offset the revenue decline from data centers and the professional visualization sector AMD’s revenue increased 06% due to higher adoption rates of EPYC CPUs by data centers and the acquisition of Xilinx, which helped drive the FPGA and DPU business, bringing overall revenue to US$56 billion MediaTek, whose main business revenue comes from smartphones and other consumer product chips, saw the greatest drop in revenue as all its product areas were affected; smartphone revenue experienced the greatest decrease at around 30% MediaTek’s Q4 revenue was only US$345 billion—a 262% QoQ decrease
Novatek made a significant leap in the rankings, surpassing Realtek to secure the seventh position The company’s Q4 revenue reached US$715 million—an 112% QoQ increase—representing the highest growth among all top IC design houses in 4Q22 These latest quarterly earnings have put an end to Novatek’s persistent revenue decline, reversing a trend that persisted for four consecutive quarters This development indicates that while the panel industry initiated inventory adjustments in 4Q21, by the end of 2022, inventory levels had reached a relatively lower level and suppliers are now in the process of restocking Novatek benefited from inventory replenishment of TV-related components such as TV SoC, Tcon, and LDDI, with revenue from SoC and driver IC business increasing by 21% and 161%, respectively Realtek, which fell to the eighth position, was impacted by weak demand for PCs and laptops, loss of Ethernet orders, and restrictions from China, resulting in a staggering, nearly 30% QoQ decline to US$694 million
It is worth noting that Apple, as Cirrus Logic’s major customer, accounts for over 80% of the company’s revenue, and even 90% during the peak season As a result, Cirrus Logic’s revenue grew by 93% in 4Q22, reaching US$591 million, primarily due to the release of new iPhone models However, this also implies that the company’s revenue growth or decline is heavily influenced by demand fluctuations for Apple’s smartphones This trend will become particularly noticeable in 1Q23, which is traditionally a slow season for smartphone shipments As the contribution from new iPhones diminishes, Cirrus Logic’s revenue could experience an even more substantial decline Finally, other companies, such as Marvell, reported a Q4 revenue of US$146 billion—a 48% QoQ decrease—primarily due to a significant decline in revenue from storage server applications On the other hand, Will Semiconductor benefited from inventory demand for some new Android devices, resulting in a 27% QoQ revenue increase, or approximately US$531 million
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TrendForce reports that mass production of new server platforms—such as Intel Sapphire Rapids and AMD Genoa—is imminent However, recent market reports have indicated a PMIC compatibility issue for server DDR5 RDIMMs; DRAM suppliers and PMIC vendors are working to address the problem TrendForce believes this will have two effects: First, DRAM suppliers will temporarily procure more PMICs from Monolithic Power Systems (MPS), which supplies PMICs without any issues Second, supply will inevitably be affected in the short term as current DDR5 server DRAM production still uses older processes, which will lead to a convergence in the price decline of DDR5 server DRAM in 2Q23—from the previously estimated 15~20% to 13~18%
As previously mentioned, PMIC issues and the production process relying on older processes are all having a short-term impact on the supply of DDR5 server DRAM SK hynix has gradually ramped up production and sales of 1α-nm, which, unlike 1y-nm, has yet to be fully verified by consumers Current production processes are still being dominated by Samsung and SK hynix’s 1y-nm and Micron’s 1z-nm; 1α and 1β-nm production is projected to increase in 2H23
TrendForce estimates that DDR5 server DRAM 32 GB prices are expected to decrease to US$80–90 during April and May, owing to lower fulfillment rates of DDR5 server DRAM in the short term However, this price estimate is slightly higher than the previous Q2 average estimate of US$75 In contrast, DDR4 prices are projected to fall by 18–23% in 2Q23, whereas DDR5 prices are expected to drop by 13–18% This indicates a larger quarterly price decline for DDR4 than DDR5, as the price gap between the two widens
AI indirectly helps drive up demand, 128 GB high-capacity modules see prices stop falling in April
The explosive popularity of ChatBOT has driven up demand for AI server shipments, leading to talks about HBM and boosting purchasing power for 128 GB server DDR5 RDIMM to accommodate ChatGPT 40 computing architecture This has led to an increase in demand for high-capacity RDIMMs in early 2Q23, primarily from US CSPs TrendForce reports that 128 GB RDIMMs require Through-silicon VIA (TSV) packaging, as the DDR5 mono die is mostly 16Gb However, main suppliers cannot increase their TSV production capacity in the short term, leading to further price increases for SK hynix’s high-capacity DDR5 modules this month This is in contrast to the current downward trend in the prices of DDR4 and other DDR5 products
Overall, compared to DDR4, DDR5 modules require PMIC components, which introduces the possibility of compatibility risks In the meanwhile, clients have also been delaying the mass production of new server platform models Even though DRAM suppliers have already been sending out samples to CPU vendors and buyers since early 2022, practical issues have only just begun to emerge as new server production ramps up TrendForce believes that the resulting changes in the price difference between DDR4 and DDR5 will be reflected in Q2 and Q3 of this year As the production of new products begins to ramp up, the price gap will converge
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TrendForce reports that since March, silicon producers have been striving to increase shipments in order to alleviate inventory pressure Unfortunately, their production capacity continues to expand, while silicon wafer makers struggle to absorb excess inventory This imbalance has led to a gradual and persistent decline in prices The lowest quoted price has already dipped to CNY 180/kg (US$2610), with average market transaction prices hovering around CNY 190/kg TrendForce predicts that silicon prices will continue to fall in April and May, driven by an expansion in silicon capacity in 2Q23
The recent fluctuations in wafer prices can be traced back to multiple consecutive weeks of falling silicon prices However, an influx of imported sand has temporarily mitigated concerns over quartz sand shortages, enabling silicon wafer enterprises to boost their operating rates As inventory levels rise, the overall transaction prices of silicon wafers are beginning to return to normal levels Still, despite the accelerated growth in production capacity and the ongoing decline in silicon prices, silicon wafer prices may fall The anticipated monthly decrease for M10 and G12 silicon wafers is projected to be 08% and 12%, respectively
The utilization rate of solar cells has consistently remained high in April, largely driven by growth in operation rate and the release of new production capacity The market supply and demand for 210 cells continue to be tight, resulting in higher prices compared to 182 cells Although production for N-type cells has recently come online, growth remains limited, causing a significant price difference when compared to P-type cells TrendForce anticipates that cell prices will start to decline towards the end of April, primarily due to several factors: a continuous decrease in polysilicon prices, the loosening of silicon wafer prices, and the efforts of module producers to cut costs
The profit margin for solar modules has been largely diverted to the silicon wafer and cell segments—despite the price of silicon falling below CNY 200/kg (US$29)—resulting in little change in the transaction price of solar modules at around CNY 175/watt (US$025) However, some suppliers have dropped prices to below CNY 17/watt in an effort to boost sales TrendForce anticipates solar module prices to return to normal levels by the third quarter at an estimated price of around CNY 16/watt
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