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Press Releases
Taiwan’s Chip Maker Speeds Up Production of Key Components to Meet Urgent Orders for Medical Devices Used in the Fight Against COVID-19, Reports TrendForce

2020/04/10

Semiconductors

UMC shortens lead time for certain semiconductor components in order to boost the production of medical ventilators that are now in high demand worldwide Market intelligence firm TrendForce reports that the ongoing campaigns to suppress the spread of COVID-19 in many countries have rapidly exhausted the global supply of critical medical equipment and materials Currently, the shortages of protective gears including face masks, face shields, and protective suits are starting to ease a bit as production of these items goes into high gear due to manufacturers’ efforts and cross-industry collaboration However, there is still a sizable supply gap for electronic devices deployed in the monitoring and caring of coronavirus patients Since these devices contain a multitude of semiconductor components that are made using high-precision manufacturing processes, medical device suppliers are depending on chip makers to ramp up production Going forward, shortening the lead time for the key components will be a significant factor in overcoming the supply bottleneck for the essential medical equipment TrendForce points out that Taiwan’s semiconductor foundry UMC is doing its part in the battle against the coronavirus pandemic by adopting super hot run (SHR) in fulfilling urgent orders from IC design house Phison for components used in medical ventilators This move will help cut the lead time from the usual two months to just slightly over a month The various semiconductor components inside a medical ventilator work together to continuously and accurately adjust the air flow that supports a patient’s breathing In the management of the electronics supply chain, semiconductor chips have a longer lead time (calculated in months) compared with most other types of components Also, the chip demand from medical devices has been relatively small compared with the chip demand from other mainstream applications IC design houses that offer solutions for medical devices have kept a limited quantity of these products on stock and rarely make significant changes to the inventory level In short, the supply side was not prepared for the arrival of the urgent orders for ventilators UMC in giving precedence to the fight against COVID-19 has thus taken the necessary step to meet Phison’s orders through SHR To maximize the efficiency of wafer processing lines, foundries have to adjust the sequence of dispatching wafer lots to different tools based on the cycle time of each processing stage The three levels of priority for sequencing the wafer dispatch are super hot run (SHR), hot run (HR), and normal run (NR) SHR is the highest priority with the shortest cycle time and rules out any possibility of production delays with the exception of specific events HR ranks second in priority with a longer cycle time compared with SHR NR is the standard mode for processing wafers and is applied to most orders SHR is used in certain scenarios, such as clients wanting to quickly validate the results of their important samples or requests concerning the development of a new process node The frequency of its adoption in mass production is relatively low By pulling up the priority of Phison’s orders, UMC shows itself as being very proactive in addressing the immediate needs of its clients UMC’s action also highlights the vital role that foundries have in the production of semiconductor components used in medical devices Their efforts can influence the supply situation for ventilators and other kinds of electronic medical equipment It is also worth mentioning that chips based on 8-inch wafers are included in the urgent orders received by UMC The foundry therefore will be under more strain in managing the progress of production given the tightness of its processing capacity for 8-inch wafers Nevertheless, the adoption of SHR for Phison’s orders can be viewed as a considerable contribution to the global fight against COVID-19 Hopefully, the foundry industry as a whole will take similar approach to accelerate the production of chips used in medical devices so as to bridge the supply gap

Press Releases
TrendForce Presents Latest Analysis (Updated March 2020) of COVID-19 Pandemic’s Impact on Global High-Tech Industries

2020/03/30

Semiconductors / Display / LED / Energy / Consumer Electronics / Telecommunications / Emerging Technologies

As the COVID-19 pandemic continues to accelerate and cause damage to the global economy and consumers’ purchasing power, TrendForce has compiled its latest report on the statuses of key electronics component and downstream industries, with data last updated on March 26, 2020 The report provides a deep dive into the pandemic’s influences on several high-tech industries Semiconductors Most clients of the global IC design companies placed orders ahead of time, with some of the orders having been fulfilled and shipped already As such, IC design revenue is not expected to decrease by a considerable amount in 1Q20 despite being somewhat affected by the pandemic The expanding pandemic has, however, lowered device manufacturers’ demand for IC design More specifically, IC designers for smartphones and other consumer electronics have felt the greatest impact These companies will potentially see the diminished demand reflected in their 2Q20 revenues As well, the US government has not changed its stance on the entity list policy Against the twin hindrances of the pandemic and the entity list, the IC design industry is unlikely to return to a state of growth in 2020 Wafer suppliers such as foundries and IDMs are able to maintain their manufacturing operations due to their high degree of industrial automation In addition, their major expansion plans are projected to take place after making some strategic adjustments But as the pandemic persists, regions such as Taiwan, South Korea, Europe, the US, and Japan are attempting to curb the spread by restricting border entry or adopting telework arrangements These efforts, along with the health of the European, American, and Japanese supply chains of key equipment and raw materials, will be factors determining foundry operations in the future With regards to the demand side, foundries are able to maintain their capacity utilization rate by fulfilling orders from 4Q19 and by their clients’ restocking demands In contrast with the IC design or OSAT industries, the foundry industry’s revenue in 1Q20 has felt less impact from the pandemic But the rapid global spread of the pandemic is projected to affect not only the global economy, but also personal and corporate purchasing power, to be potentially reflected in foundry revenue performances from 2Q20 onwards The packaging and testing, or outsourced semiconductor assembly and test (OSAT), industry previously suffered major declines due to the China-US trade war; the pandemic’s current effect on the industry thus appears relatively minor in comparison TrendForce expects OSAT revenue in 1Q20 to trend either flat or upwards YoY, while the industry’s performance in 2Q20 and later will depend on client demand Memory Products Despite the apparent slowdown of the pandemic in China, the virus is now rapidly multiplying across major economies, which poses dire, system-wide risks for the global economy The memory market may take a turn for the worse and go into a slump earlier than expected Regarding market demand, the pandemic’s rapid proliferation will severely diminish consumer purchasing power Smartphone production in particular will undergo the greatest magnitude of cutbacks, since smartphones account for the greatest share of consumer purchases compared to other memory products Waning purchasing power will lead to lowered demand for electronic products and subsequently impact the demand for upstream memory products Given the 13% and 32% YoY growth in DRAM and NAND Flash bit supply for 2020, in addition to the mostly low inventory levels maintained by DRAM and NAND Flash clients in early-2020, TrendForce initially forecasted a probable constant growth for DRAM and NAND Flash prices up to the end of the year Nevertheless, as structural changes occur in the supply and demand of memory products, DRAM and NAND Flash clients will exhibit weakened purchasing demand, reflecting a similar weakened demand in the end-product markets There is now a greater likelihood in 2020 for memory product ASP to increase to a lesser degree than previously expected or even undergo a price drop, especially for NAND Flash, since the shortage of NAND Flash memory was not a significant amount Panels In terms of the COVID-19 pandemic’s effect on the production of large-size panels, the pandemic has hurt back-end module shipment far more than it did to that of highly-automated front-end manufacturing With regards to the February shipment performance of TV panels, which are generally shipped in open cell format, the gap between the actual and forecasted shipments was only 98% In comparison, monitor and notebook computer panels were usually shipped out in module formats Also in February, the gaps between actual and forecasted shipments for monitors and notebook panels were as much as 255% and 299%, respectively Thus, the COVID-19 pandemic has diminished the shipment of IT panels far more than it did to that of TV panels As the pandemic has seemingly slowed down in China, panel supply has seen a gradual ramp-up Actual panel supply is projected to reach above 85% of previously planned levels in March and exceed 90% in April In terms of yearly shipment, as TV panel prices steadily rebound, manufacturers will become more and more willing to produce TV panels in 2020 However, Korean panel manufacturers are continuing to reduce their production capacities Thus, TV panel shipment in 2020 is expected to decline by 4% YoY As IT panel supply gradually recovers, the industry’s supply chain (including OEMs) in 2Q20 and 3Q20 is expected to aggressively make up for the shipment gap caused by the COVID-19 pandemic in 1Q20 In 2020, monitor panel shipment and notebook panel shipment are each projected to grow by 34% and 04% YoY, respectively Communications In terms of optical fibers and fiber-optic cables, over 50% of the global R&D and supply is located in Wuhan, China Products related to optical fibers include optical communication components, optical transceivers, and 5G components Given that most key component suppliers of 5G base stations are located in Hubei (whose capital is Wuhan), the pandemic’s impact on the optical communications industry is likely to have serious repercussions for the development of 5G infrastructure and the rollout of 5G services in 1H20 The construction of 5G base stations places a high demand on the quality and quantity of fiber-optic cables For instance, the deployment of UDN, or ultra-dense networks, has galvanized a corresponding demand on fiber-optic cables The 5G transition requires more than double the total of fiber-optic cables used in today’s 4G infrastructure Aside from the sheer quantity of fiber-optic cables required, the transition will also bring about other changes, such as increased bandwidth demand, adoption of flat networks, and network connections between data centers All of the aforementioned changes will challenge the resilience of the internet backbone Communications companies such as Fiberhome, YOFC, and HTGD are making a proactive effort at work resumption and manufacturing resumption However, transportation and logistics remain key aspects of optical communications equipment production With many interprovincial and intercity roads still blocked and international flights canceled, the industry is seeing greatly reduced logistical capacity and therefore shipment Should the pandemic manifest uncontained in 2Q20, it will greatly hinder the infrastructure build-out of global 5G networks and data centers On the other hand, given the pandemic’s influence on the global economy, which in turn sees weakened consumer confidence and demand for end-devices, deferred 5G infrastructure construction and constricted smartphone replacement demand will lead to a slowdown in 5G smartphone sales in 2020 LED LED chip manufacturers did not stop operations across the board during the Lunar New Year; some personnel still remained at the factories, which manufactured small batches Therefore, their work resumption has been relatively smooth However, due to concerns about possible shortage of upstream raw materials, especially the sapphire substrate, manufacturers have raised their capacity utilization rate of LED epitaxy process in March to above 70%, so as to increase their inventory in response to the impact of price hikes In contrast, the work resumption rate of LED chip segment has been relatively low, mainly because the current LED chip inventory level is high, and the demand from clients has not increased significantly Currently, in addition to the slight increase in prices of a small number of low-end LED chips, the rest of the LED chip prices remain unchanged The LED packaging industry places a high demand on manpower Although the Chinese government has issued a request for manufacturing sites to fully resume work, many people in the affected areas are currently unable to return to the factories Even workers returning from areas unaffected by the pandemic need to be quarantined for a period of time before they may enter production lines, once these people have arrived at the factories Thus, work resumption rate in March has been sitting at about 50-60% However, due to the weak demand for end products, LED suppliers have enough inventory to supply market needs, with a few exceptions, which are applications requiring precise specifications In terms of the peripheral materials, sapphire substrate factories place a high demand on manpower, so they are also facing the issue of work resumption Thus, the current supply of sapphire substrate is slightly tight Because long-term sapphire substrate prices have been sluggish, many suppliers hope to take advantage of the tight supply by increasing prices In terms of chemical gases and liquids, the biggest challenge facing LED manufacturers is the delivery of chemical materials needed for manufacturing However, transportation problems have been gradually resolved, at the Chinese government’s strong insistence on work resumption Photovoltaics The initial concerns about supply chain disruptions and shortages are gradually subsiding as an increasing number of employees are returning to work in China The work resumption rate of the overall supply chain has increased from 30% in February to 50% in March, which was well on its way to normalcy The logistics efficiency has also started to improve Nevertheless, it has yet to return to normal Other regional markets, on the other hand, have implemented city- or nationwide shutdown, which will impact the markets with grid-connection deadlines to a certain extent Some markets, including Taiwan, have announced the extensions of grid connection deadlines However, the demand that is supposed to emerge in the first half of 2020 will largely arise only in the second half of the year It is currently estimated that the total demand for the whole year has not changed much It is estimated to range from 110 to 130 GW End Products 1 TV The COVID-19 pandemic damaged the TV industry starting from the Chinese market China began to put cities under lockdown, disallowed some stores to open, postponed work resumption schedules, and limited transportation by land, air, and water from February These measurements reduced TV set demand in China, and indirectly caused labor and material shortages in the TV supply chain in China Although the pandemic has seen signs of gradual containment in China in March, its spread is accelerating in Europe and the US Outside of China, more cities or countries are steadily put under lockdown In addition, the stock market crash in many countries have taken a heavy toll on the financial markets while impairing consumer confidence The TV industry currently faces pressure on both the production side and demand side TrendForce has reduced its projection of global TV shipment for 1Q20 to 446 million units, down by 86% from the pre-COVID-19 prediction of 488 million units A similar drop is expected in 2Q20, from the pre-pandemic forecast of 476 million units to 441 million units, a 73% decrease Moreover, both UEFA EURO 2020 and 2020 Tokyo Olympic Games have been postponed to 2021, in turn further weakening the demand for TVs TrendForce has therefore lowered 2020 TV shipment forecast to 2052 million units, a 58% decrease YoY This figure is also 67% lower than TrendForce’s pre-pandemic forecast With the possibility of the pandemic escalating in North America and emerging Asian regions, TrendForce may decrease the TV shipment forecast even further in the future 2 Notebook Computers Due to the pandemic, the top six notebook OEMs, most of which are based in China, suffered damages to their production capacity in February Hence, TrendForce has decreased its projected 1Q20 notebook shipment from the pre-pandemic level of 35 million units to 279 million units, down by 203% After China saw a stabilization in the spread of the pandemic, OEMs aggressively pursued labor and materials, while ramping up their capacity utilization rate to 70% within one month Meanwhile, upstream material manufacturers are expected to return to normal supply levels before May Although demand stemming from educational-use ChromeBook bids and work-from-home commercial notebooks surfaced in late-March, the pandemic began to accelerate in March in Europe and the US, markets accounting for more than 50% of notebook sales The pandemic's blow to consumer confidence is unlikely to be erased in the short-term Not only is demand sluggish in the short term, the weakened willingness to purchase may persist well into the Thanksgiving and Christmas holidays in 2H20 Considering the uncertainty of future demand, TrendForce has reduced its 2020 notebook shipment forecast from pre-pandemic levels of 1624 million units to 1567 million units, down by 35% 3 Smartphones With the global economy being battered by the coronavirus pandemic, the overall demand for consumer electronics is expected to decline sharply as well Currently, the impact of the pandemic on the smartphone market is mainly on the demand side Consumers worldwide will most likely defer purchasing new smartphones this year, thereby lengthening the device replacement cycle and pushing down the overall ASP Furthermore, rising costs across the supply chain (such as labor cost, cost in connection to a change in the exchange rate, etc) will weaken the profitability of smartphone brands Dramatic shifts in performances among brands could also lead to a reshuffling of the industry in terms of market share Considering that the scale of the pandemic continues to grow, the forecast of this year’s smartphone production has again been revised The total worldwide smartphone production volume in 2020 is now projected to reach 129 billion units, a drop of 78% from 2019 The downward correction is attributed to the recession that follows the pandemic as well as the downgrade in shipments (sell-ins) in Europe and North America, which are now the most hard-hit regions of the world The current financial crisis that accompanies the pandemic has produced a lot of uncertainties and could surpass the Financial Crisis of 2007-2008 in scale Hence, the general economic outlook for 2H20 could become even gloomier as the pandemic is not expected to be brought under control in the short term TrendForce is not discounting the possibility of further contractions in smartphone demand 4 Automobiles The pandemic has now caused further damages to the auto industry Previously, it primarily affected non-China markets by causing material shortages Case in point, several factories in South Korea, Japan, and Europe halted operations due to a lack of materials More recently, the pandemic has rapidly spread throughout Europe and North America after work resumption gradually took place in China The rapid spread of the pandemic has brought about a corresponding spread of material shortages – along with plant shutdowns and similar large-scale impacts – for automobile suppliers globally As Italy and Spain went into lockdown, other European countries and the US have begun to follow suit, with many auto manufacturers closing factory operations in Europe and North America starting from March 16 Most of these shutdowns are one to two weeks long, during which manufacturers will decide on future developments Owing to the pandemic’s impact and the recent stock market crash triggered by the Russia-Saudi Arabia oil price war, characteristics peculiar to the automobile industry, namely the need for customers to make purchase in person and the high retail price of automobiles, are expected to result in deferred or even eliminated market demand As such, global auto sales in 1Q20 are expected to decline by 24% YoY Because many countries other than China are still experiencing peak pandemic activity, their auto markets will likely face considerable impact from the pandemic as well, in turn deferring most of the market demand to 2H20

Press Releases
Owing to Growing Impact of COVID-19 Pandemic, NAND Flash ASP May Tumble in 2H20 Ahead of Expectations, Says TrendForce

2020/03/26

Semiconductors / Consumer Electronics

2Q20 NAND Flash ASP is still projected to rise by 5% QoQ, supported primarily by strong enterprise SSD demand According to the latest investigations by the DRAMeXchange research division of TrendForce, the continued spread of the COVID-19 pandemic has resulted in considerably weakened shipment for most end products in 1Q20 However, the major NAND Flash suppliers already scaled back their CAPEX for this year, and the total bit output of the NAND Flash industry is expected to grow by only about 30% YoY in 2020, resulting in a 5% QoQ increase in NAND Flash ASP for the 1Q20 period despite the headwinds of the off-season Looking ahead to 2Q20, the supply crunch situation is the most severe for enterprise SSDs, among the various kinds of NAND Flash products, owing to the continued aggressive purchasing efforts from cloud service providers in North America and China Given enterprise SSDs’ rapidly growing share of the overall bit consumption in the NAND Flash market, their soaring prices will help push up the overall NAND Flash ASP by at least 5% QoQ in 2Q20 Based on TrendForce’s observations, OEMs of various end products have clearly demonstrated that they want to build up a safe level of inventory as early as possible Their sense of urgency is further fueled by the fear of the coronavirus outbreak interfering with the operation of the major NAND Flash manufacturing sites in South Korea and China, leading to their increasing NAND Flash purchases in 2Q20 Given this circumstance, vigorous price negotiations that are taking place in the contract market for NAND Flash products are an indication that OEMs have double-booked some orders In spot and channel markets, prices are starting to drop for some branded SSD products due to waning demand However, contract prices of wafer products are still on the rise due to undersupply Currently, the stock-up drive in the enterprise SSD market is expected to prop up the overall NAND Flash demand during 2Q20 Hence, price increases will be relatively smaller for other kinds of NAND Flash products The market dynamics could shift dramatically in 2H20 because the outbreak, which is now a pandemic, has expanded faster than anyone could imagine While NAND Flash contract prices are expected to continue their rise during the first half of this year, there is now the possibility that their trajectory will curve downward in 2H20, or even 3Q20 at the earliest Contract prices of client SSD will likely keep climbing due to tight supply, while orders for eMMC/UFS have yet to see a decline Supply is tight for client SSDs because most NAND Flash suppliers have adjusted their product mixes to increase production for enterprise SSDs, which offer higher margins In terms of demand, notebook computer shipment has fallen sharply in 1Q20 owing to the pandemic’s influence, but PC OEMs have kept up their procurement of client SSDs during the quarter because they anticipate future price hikes They could even raise their demand for 2Q20 in order to maintain a safe inventory level for the rest of the year Therefore, there is a high possibility for client SSD prices to continue rising in 2Q20, with an expected 5% increase at the very least In the eMMC/UFS market, despite the pandemic’s impact on the supply side for smartphones and various consumer products, server/datacenter demand for SSDs has seen no decline Furthermore, suppliers are holding healthy inventory levels, and are able to convert the wafers originally for the smartphone market to SSD production There are therefore no notable signs of oversupply as of yet For smartphone brands, low NAND flash inventory levels, as well as the anticipation of later price hikes and of the effects the epidemic may have on shipments stopped them from changing procurement plans However, the rapid, global spread of the pandemic already has suppliers and brands evaluating the possibility of demand decline for the second half of this year This might impact procurement in 2H20 On the other hand, although orders for consumer products related to mid and small density eMMCs, such as TVs and set-top boxes, are still in place now, their suppliers may be pressured to correct inventory levels in 2H20 eMMC prices are still expected to increase by more than 5% QoQ in 2Q20, although this growth may not survive past 3Q20 Despite short-term momentum, wafer prices may enter earlier-than-expected downturn by the end of 2Q20 In the NAND flash wafer market, the main reason for the price hike in 4Q19 has been the strong demand from servers/data centers, followed by the new demand coming from gaming consoles using SSDs The strong demand for these products has led to a further decrease in the suppliers’ willingness to supply the wafer market Seeing that the demand from datacenters has yet to fall and the new gaming console’s release date has maintained the same schedule at the current stage, TrendForce forecasts that the wafer market will still be riding on short-term momentum in March and April But since demand for servers, data centers, and gaming consoles is feared to be impacted by the epidemic in 2H20, it is possible that pricing in the wafer market will begin to see a downturn at the end of 2Q20

Press Releases
Under COVID-19 Pandemic’s Influence, February LCD TV Panel Shipment Declined by 10.2% Compared to Previous Shipment Target, Says TrendForce

2020/03/24

Display / Consumer Electronics

According to the latest investigations by the WitsView research division of TrendForce, despite the impact from the COVID-19 pandemic, February TV panel shipments were propped up by rising panel ASPs and panel manufacturers’ existing stock Monthly TV panel shipment decreased by 35% MoM in February, reaching 20073 million units This figure is a 102% decline from the shipment target set in 2019 but remains higher than previously projected decline of 18% Although TrendForce expects TV panel shipment in March to fall below the target set in 2019 by 61%, the pandemic’s effect on labor, logistics, and material supply remains a gradual process, meaning panel shipment in March may yet surpass February figures by about 14%, for a total of 229 million units As TV panel shipment ranking saw a major reshuffle, CSOT led the pack for the first time In terms of the top six panel manufacturer’s performances, CSOT was the first to resume operations and maintained a healthy component inventory level Not only did the company suffer the least damage from the pandemic, but it also took advantage of the twin surges in panel price and demand by aggressively escalating its shipment CSOT registered February shipment of 3726 million units, a 02% MoM increase, and gained pole position for the first time by overtaking BOE Although second-ranked BOE, which manufactures multiple product lines, obtained a special government permit to bypass lockdown and stay open after the outbreak, the company operated various fabs located throughout China; the scattered nature of these facilities meant BOE was more affected by the labor shortage issues than other panel manufacturers were As well, BOE suffered from the shortage of upstream components, such as polarizing films and PCBs All of the aforementioned factors resulted in an MoM reduction of 141% in BOE’s February shipment, which registered 346 million units, the company’s worst performance since June 2017 Despite issues with material shortage, HKC fulfilled its deferred January shipment in February, in turn scoring a considerable MoM increase of 647% by shipping 2605 million units The company leapfrogged to reach third place in monthly shipment performance and became the dark horse of the month In addition to delayed work resumption at its back-end IC bonding fab, fourth-ranked Innolux also faced labor and material shortages, leading to a massive 152% MoM shipment decline, down to 2511 million units In comparison, Korean panel manufacturers suffered relatively limited losses from the pandemic Despite temporary labor shortages at its Suzhou-based IC bonding fab in February, fifth-ranked SDC was able to increase the capacity utilization rate of its Korean fabs due to panel price hikes in early 2020 SDC shipped 2055 million panels in February, a 14% MoM increase LGD did not face major shortages in raw materials, but owing to the fewer available workdays in February and the impact on shipment performance from the company’s decision in 2H19 to slash its Korean fabs’ LCD TV production capacity, LGD posted a MoM shipment decrease of 44% in February, shipping 1983 million units and ranking sixth on the list, while setting a historical low in single-month shipment TV panel shipment in 1Q20 is projected to be 56% lower than shipment target set in 2019 Given poor fulfilment rates in February and March, TrendForce projects a cutback in 1Q20 TV panel shipment, down to 63782 million units, a 127% QoQ and 89% YoY drop This figure is 56% lower than last year’s shipment target for 1Q20 On the other hand, the sudden reduction in panel supply galvanized a higher-than-expected rise in 1Q20 TV panel ASP In 2Q20, as panel demand becomes partially deferred, and manufacturers skyrocket panel shipments in a bid to destock their front-end liquid crystal cells, TV panel shipment is expected to potentially increase by 71% QoQ However, the global pandemic will take a heavy toll on the overall economy, with rising unemployment and plummeting global GDP in turn diminishing consumers’ purchasing power As the upstream/downstream panel supply chain gradually makes a full recovery, the industry is expected to once again face the issue of supply and demand

Press Releases
Foundry Revenue Estimated to Grow by 30% YoY in 1Q20, while COVID-19 Pandemic May Hinder Future Market Demand, Says TrendForce

2020/03/19

Semiconductors / Consumer Electronics

The COVID-19 pandemic has caused a reduction in the demand for end-products; its impact on the foundry industry will likely surface in 2Q20 The latest investigations by TrendForce show that the foundry industry benefitted from the previous quarter’s order fulfillment and client stock-up demands, with overall projected revenue undergoing a slight 2% dip QoQ but about 30% growth YoY in 1Q20 due to the comparatively lower 1Q19 base period However, as the COVID-19 pandemic causes repercussions in global markets, and the economy enters a corresponding slowdown, the foundry industry now faces major uncertainties on the demand side, possibly slowing the industry’s future growth momentum Regarding the major foundries’ performances in 1Q20, TSMC ranks first in terms of revenue Some of its 7nm process node capacities have been booked in advance by its clients, therefore providing a steady influx of orders for TSMC Even with adjustments to some of its wafer starts, the demand from TSMC’s subsequent client orders is projected to fill the gaps in wafer starts, meaning the foundry will continue to maintain the maximum level of 7nm process node capacity utilization In terms of TSMC’s 12/16nm process nodes, although the possibility of potential adjustments in 12/16nm wafer starts may not be ruled out entirely, the magnitude of these changes is not expected to be significant, meaning the foundry may still maintain about 90% level of 12/16nm capacity utilization going forward On the other hand, TSMC’s production capacities of mature process nodes and special technology are currently fulfilling the demands for 5G, IoT, and automotive products, which contribute to its steady revenue stream Samsung is continuing to increase its production capacity for 5G SoC AP, high resolution CIS, OLED-DDIC, and HPC products, while at the same time expanding its range of EUV applications and promoting its 8nm process node capacities, in an attempt to raise the share of revenues from advanced process node products in its total foundry revenue However, the pandemic has made a serious impact on South Korea, whose domestic market demand may be diminished as a result This is projected to affect Samsung’s 1Q20 revenue performance GlobalFoundries has been expanding its 5G, MRAM, and automotive product lineups with 22FDX and 12nm LP+ process nodes The foundry has agreed to manufacture wafers at the New York fab it transferred to ON Semiconductor until the end of 2022, thus ensuring a steady revenue stream throughout the 2020-2022 period But the total divestment of its Singapore fab to VIS is expected to have a greater direct impact on its 1Q20 revenue Owing to growing orders for its 22/28nm process node products, in addition to the new clients and product mixes from its new Japan-based fab, UMC is expected to see quarterly gains in its capacity utilization rate, in turn registering a minor QoQ increase in 1Q20 revenue On the other hand, SMIC’s capacity utilization rate is sitting at near-maximum levels due to increasing demand in the domestic Chinese market for CIS, PMIC, fingerprint sensors, and embedded memory applications, subsequently contributing to the company’s 1Q20 revenue PSMC and VIS both profited from the increased demand for CIS and DDIC products and from their clients’ increased stock-up efforts Also, VIS’ revenues will include those generated from its Singapore-based Fab 3E, originally purchased from GlobalFoundries PSMC and VIS are expected to post increased YoY revenue in 1Q20 Owing to the pandemic’s impact, TowerJazz and Hua Hong Semiconductor may see lower client stock-up demands than previously expected The two companies’ revenue performances may appear relatively conservative in 1Q20 According to TrendForce, the foundry industry’s revenue in 1Q20 is estimated to increase by 30% YoY, which is meant to demonstrate an overall optimism for the semiconductor industry to make a recovery in 2020 However, as the pandemic multiplies across Europe and the United States, its effects will most certainly make a dent in the economy as well, in turn contracting the global market’s purchasing powers The economic implications of the pandemic on foundry revenue may be increasingly likely to surface in 2Q20, serving as a test for the industry’s strategic capabilities regarding product planning and risk assessment

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