The semicondustor market in 3Q21 is red hot with total revenue of the global top 10 IC design (fabless) companies reaching US$33.7 billion or 45% growth YoY, according to TrendForce’s latest investigations. In addition to the Taiwanese companies MediaTek, Novatek, and Realtek already on the list, Himax comes in at number ten, bringing the total number of Taiwanese companies on the top 10 list to 4.

Qualcomm has been buoyed by continuing robust demand for 5G mobile phones form major mobile phone manufacturers with further revenue growth from its processor and radio frequency front end (RFFE) departments. Qualcomm’s IoT department benefited from strong demand in the consumer electronics, edge networking, and industrial sectors, posting revenue growth of 66% YoY, highest among Qualcomm departments. In turn, this drove Qualcomm’s total 3Q21 revenue to US$7.7 billion, 56% growth YoY, and ranking first in the world.

Second ranked NVidia, is still benefiting from gaming graphics card and data center revenue as the annual revenue growth for these two primary product departments reached 53% and 48%, respectively. In addition, professional design visualization solutions only accounted for 8% of total revenue. However, due to enduringly strong demand for mining and customers actively deploying the RTX series of high-performance graphics cards, NVidia’s product department revenue grew 148% YoY with overall revenue increasing by 55% to US$6.6 billion.

Third ranked Broadcom’s main revenue stream came from their network chip, broadband communication chip and storage and bridge chip businesses. Driven by post-COVID hybrid working models, companies are accelerating migration to the cloud, increasing demand for Broadcom chips, and driving revenue growth to US$5.4 billion or 17% YoY. AMD’s Ryzen, Radeon, and EPYC series of products in the fields of games, data centers, and servers performed well, driving total revenue to US$4.3 billion, 54% growth YoY, and fifth place overall.

In terms of Taiwanese companies, MediaTek continues to expand its global 5G rollout and, benefiting from optimization of product portfolio composition, product line specification enhancement, increase in sales volume, increases in pricing, and other factors, revenue of MediaTek’s mobile phone product line increased 72% YoY. Annual revenue of other product lines also posted double digit growth with total revenue in the 3Q21 reaching US$4.7 billion or 43% YoY, a fourth place ranking. Novatek continues to focus on its two primary product lines of system-on-chip and panel driver chips. The proportion of its OLED panel driver chip shipments has increased, product ASP has risen, and shipments have been smooth with 3Q21 revenue reaching US$1.4 billion or 84% YoY. In addition, Realtek’s revenue surpassed Xilinx to take the eighth position due to higher priced Netcom chips in 3Q21. Himax also saw significant growth in its three main product lines of TVs, monitors, and notebooks due to large-size driver chips. Revenue from large-size driver chips increased 111% YoY, driving total revenue to exceed the US$400 million mark, a 75% increase, and enough to squeeze onto this year’s ranking.

Overall, 3Q21 revenue for major IC design (fabless) companies has generally reached historic levels. Rankings for the top 7 companies remained the same as in 2Q21 with change coming in ranks 8 to 10. Looking forward to 4Q21, TrendForce believes Taiwanese IC design (fabless) companies will generally lean conservative. In addition to the electronics industry moving into the traditional off-season, a slowing of demand for consumer applications and customer-end materials supply issues reducing procurement will make continued revenue growth a challenge. In addition to consumer electronic products, global industry leaders are focused on the positive development of server and data center products to maintain an expected revenue growth trend.

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 light of rapid advancements in 5G, AI, cloud computing, and cloud services, TrendForce has observed that, since 2012, the widespread adoption of smartphones has brought about the emergence of certain new applications such as smartphone apps that leverage backend server support. Furthermore, enterprise cloud migration has noticeably accelerated after digital transformation activities began taking place in 2016. As a result, widespread data center deployments took center stage as the industry mainstream prior to 2020.

Moving into 2021, however, one of the many impacts of 5G commercialization on the market has to do with the regional deployment of infrastructures (i.e., small-scale data centers). This trend towards local deployment can be primarily attributed to the increasing stringency of personal data protection laws by governments worldwide that emphasize both the residency and the sovereignty of consumer data. Major public cloud companies are now beginning to establish cloud deployments closer to regions that represent sources of data generation, in order to deliver faster data analysis that is still in accordance with the law.

TrendForce’s observations on the build-out of data centers can be divided into the individual and enterprise aspects. With regards to the former, as connected devices become increasingly widespread and emerging content services more popular in the post-pandemic stay-at-home economy, consumer spending on streaming videos and online shopping began to experience a rapid spike, thereby contributing to a gradual increase in server build-outs for cloud services. Enterprises, on the other hand, have been seeking and deploying more flexible infrastructures in response to pandemic-induced uncertainties. Hence, certainly subscription services and hybrid cloud services have also been gaining momentum in the ongoing trend of cloud migration.

It should be noted that, due to recent geopolitical tensions, which intimately dictate the development of various countries’ industries and supply chains, global enterprises also face rapidly changing market needs as well as a high degree of uncertainties stemming from the pandemic. In turn, enterprise demand for cloud services has also seen a continued rise in the past two years. With respect to the adoption of AI and other emerging technologies, most enterprises prefer cloud services due to such services’ flexible cost structures. TrendForce’s latest investigations indicate that flexible pricing strategies and diverse services offered by data centers have directly propelled the demand from enterprises for cloud applications in the past two years. From the perspective of the server supply chain, these shifts have facilitated a gradual shift of the predominant business model in the server market from traditional server brands to ODM Direct.

In addition, data center-related technologies have also progressed significantly. As the way people work and live transforms, accompanied by the emergence of e-commerce and streaming media, enterprises have also become increasingly well-versed in cloud services and increasingly able to leverage related technologies. As such, the primary sources of competition in the cloud market will include not only infrastructures responsible for computing, storage, and networking, but also emerging technologies such as edge computing and software/hardware integration of related services by major operators. In particular, as 5G services successively kick into gear worldwide, the concept of “cloud-edge-local network” will begin to replace the current “cloud only” framework on a massive scale, thereby extending the relevant commercial opportunities from cloud services to hardware vendors. That is to say, in the future, cloud services will no longer be limited to the software front, as in-house hardware brands from CSPs are set to become the next battlefield while these companies compete to offer comprehensive services.

All of this raises the question of whether the build-out of data centers will involve more challenges and opportunities going forward. TrendForce believes that, in addition to factors such as telecommuting and e-commerce, data center demand from biomedical applications (for instance, the ramp-up of vaccinations) will also experience substantial growth, with the caveat that regulations governing the protection and collection of medical data will be even more stringent than those driving various countries’ data sovereignty endeavors. Hence, privacy and security pertaining to medical data will likely become not only a global pursuit, but also a significant challenge facing the application of data centers.

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Demand for NAND Flash products will undergo a noticeable and cyclical downward correction in 1Q22 as major smartphone brands wind down their procurement activities for the peak season and ODMs prepare for the New Year holidays, according to TrendForce’s latest investigations. As such, the NAND Flash market will remain in an oversupply situation, with prices continuing to undergo downward corrections accordingly. However, PC OEMs have been reinstating certain orders for client SSDs since early November in response to improvements in the supply of upstream semiconductor materials. By fulfilling these orders, suppliers are able to keep their inventory level relatively low, meaning they are not under as much pressure as previously expected to reduce inventory by lowering prices. Taking these factors into account, TrendForce expects NAND Flash ASP to undergo a 10-15% QoQ decline in 1Q22, during which NAND Flash prices will experience the most noticeable declines compared to the other quarters in 2022.

Regarding the price trend of NAND Flash products across the whole 2021, TrendForce further indicates that suppliers have actively transitioned their output to higher-layer technologies, resulting in a bit supply growth that noticeably outpaces demand, though the tight supply of components such as controller ICs and PMICs has constrained the production of NAND Flash end-products. Hence, the decline in contract prices of NAND Flash products has not been as severe as previously expected. Moving ahead to 2022, however, the supply of relevant components is expected to gradually improve, so the market for various NAND Flash products will also likely shift towards a noticeable oversupply. As a result, prices of NAND Flash products will steadily decline before the arrival of the peak season in 3Q22.

Client SSD prices will maintain a downward trajectory in 1Q22, by about 5-10% QoQ

While PC OEMs aggressively push out shipments in 4Q21, demand also remains strong for commercial notebooks, in turn propelling the overall volume of notebook production for 4Q21 to 3Q21 levels, surpassing prior expectations. Moving into 1Q22, however, notebook demand from the consumer segment and education segment is expected to moderate, and client SSD buyers’ procurement activities for the quarter will therefore become more conservative. Suppliers, on the other hand, continue to shift the bulk of their client SSD output to 128L and higher layer products as they release the next generation of client SSDs to both capture market share and increase the consumption of these higher-layer products. The average storage capacity of client SSDs will expand to 567GB next year, with WD releasing QLC products alongside existing QLC manufacturers Intel and Micron, in turn intensifying suppliers’ pricing competition. TrendForce therefore expects contract prices of client SSDs to maintain their existing downward trajectory and undergo a 5-10% QoQ decline in 1Q22.

Prices will decrease by about 3-8% QoQ for PCIe enterprise SSDs but hold flat for SATA enterprise SSDs

North American hyperscalers saw their inventory levels rising throughout the fourth quarter as their production capacities for servers were negatively affected by component gaps. In addition, some of these issues are expected to persist in 1Q22, so server shipment for the 4Q21-1Q22 period will experience continued declines, thus putting downward pressure on the growth of enterprise SSD bit demand. As for the supply side, not only has the issue of insufficient PMIC production capacity become gradually alleviated, but hyperscalers have also cut down on their enterprise SSD orders somewhat due to their focus on inventory reduction. Hence, the production capacities for enterprise SSDs with PCIe interface have slowly returned to normal, and room for price negotiations with suppliers is also beginning to surface. Regarding enterprise SSDs with SATA interface, their supply has become relatively tight because manufacturers prioritize the production of high-density PCIe SSDs over SATA SSDs, which feature an older interface and lower density. As such, contract prices of SATA SSDs are unlikely to drop. For 1Q22, TrendForce forecasts an overall 3-8% QoQ decline in enterprise SSD prices, with contract prices of SATA enterprise SSDs mostly holding flat and prices of PCIe products declining by 3-8% QoQ.

eMMC prices will decrease by 5-10% QoQ

TVs, Chromebooks, and other categories of consumer products that carry eMMC solutions have been experiencing sluggish demand in the second half of this year as related subsidies and tenders in the US wind down. The seasonal fluctuations of the demand for consumer products will return to the pre-pandemic pattern next year. Chromebook production is forecasted to show a small rebound in 1Q22 and climb to the year’s peak in 2Q22 in accordance with the traditional seasonal pattern. Even so, the annual total Chromebook production for 2022 will still register a significant decline from the previous year. Turning to TV production, a QoQ decline is projected for 1Q22. Taking account of these demand-related projections, TrendForce expects the demand for eMMC solutions to be fairly weak in 1Q22. The overall production capacity for low-density 2D NAND Flash products has remained relatively constant. Some suppliers continue to scale back 2D NAND Flash production capacity, but they have slowed down the pace of reduction. Regarding the price trend of eMMC solutions, it is now adjusting downward to a stable level after the surge in 2Q21. TrendForce forecasts that contract prices of eMMC solutions will drop again by 5-10% QoQ for 1Q22.

UFS prices will decrease by 8-13% QoQ due to rising supply and falling demand

Component gaps in the upstream sections of the supply chain are still a serious issue affecting smartphone brands’ device production. Despite the contribution from the traditional peak shipment season in the second half of the year, the YoY growth rate of the total smartphone production in 2021 is expected to once again fall short of earlier projections. Looking ahead to 1Q22, Apple is expected to scale back its smartphone-related demand due to seasonality. This, in turn, will negatively affect NAND Flash suppliers’ bit shipments and further weaken mobile storage demand as a whole. The latest examination of product shipments from NAND Flash suppliers indicates that 1XX-L technologies are now mainstream, and 1YY-L technologies will gradually be adopted during 1H22. Micron has skipped 128L in its stacking technology migration and thereby advanced from 96L directly to 176L. To lower production cost and raise bit output, suppliers continue to increase the layer number of their 3D NAND technologies. This means that supply growth will further outstrip demand growth in 1Q22 as the off-season sets in. Hence, TrendForce forecasts that prices of UFS solutions will also register steeper QoQ declines of 8-13% for 1Q22.

NAND Flash wafer prices will decrease by 10-15% QoQ as oversupply becomes more severe

Sales of retail storage products such as UFDs and memory cards have been weak through this entire year. The promotional activities initiated by e-commerce companies for the special events and festivals near the end of the year have generated only a marginal amount of demand. Looking ahead to the early part of 2022, the demand for retail storage products is not expected to gain noticeable momentum before the arrival of Lunar New Year holiday. Additionally, the cryptocurrency market has been energetic, so the demand for graphics cards from cryptocurrency miners has been outpacing supply for the most part. This development has been impacting shipments of DIY PCs and thereby suppressing the demand for retail client SSDs during 2021. In sum, the aforementioned factors have significantly impeded the consumption of NAND Flash wafers. In view of the demand situation in the different application segments, NAND Flash suppliers will likely ramp up wafer shipments to prevent excess inventory. Moving into 1Q22, even if there is sustained demand for storage components in the PC and server segments, smartphone-related demand will shrink further and exacerbate the oversupply situation of the NAND Flash wafer market. TrendForce forecasts that contract prices of 3D NAND Flash wafers will fall by 10-15% QoQ. Among the various NAND Flash products, 3D NAND Flash wafers will suffer the sharpest price drop. It is worth noting that the growing gap between supply and demand is already exerting considerable pressure on some suppliers, so there is a possibility that suppliers could begin dumping products earlier than expected at the end of this year. Such development could help moderate the magnitude of the price downtrend in 1Q22.

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

Regarding the shipment of various end products in 4Q21, the quarterly shipment of notebook computers is expected to remain about the same as 3Q21 figures, as prior component gaps were partially resolved during the quarter, according to TrendForce’s latest investigations. As such, since PC OEMs’ DRAM inventory has lowered by several weeks, TrendForce has also further reduced its forecast of DRAM price drops for 1Q22. Even so, the overall demand for DRAM will still enter a cyclical downturn in 1Q22, during which DRAM ASP will also maintain a downward trajectory with an 8-13% QoQ decline. Whether this price drop will subside going forward will depend on how well suppliers manage their inventory pressure and how DRAM purchasers anticipate further price changes.

Decline in PC DRAM prices will narrow somewhat as PC OEMs reduce inventory

Whereas demand for Chromebooks has noticeably slowed down, demand for consumer and commercial notebooks remains strong. Furthermore, certain components which were previously in shortage are starting to experience improved lead times. Hence, quarterly shipment of notebook computers for 4Q21 will likely surpass earlier projections. Looking ahead to 1Q22, not only will the demand side undergo a cyclical downturn, but the sufficiency ratio of PC DRAM will also surpass 3.0% following 4Q21’s high base period for comparison. These factors will result in DRAM prices undergoing a noticeable decline, although PC OEMs will carry a lower inventory of DRAM in 1Q22 compared with 11-13 weeks of inventory in the previous quarter, thereby helping to curb the price drop of PC DRAM products. On the other hand, as mobile DRAM prices begin to drop, certain DRAM suppliers have begun reallocating some of their production capacities from mobile DRAM to PC DRAM. As a result, PC DRAM bit supply will likely undergo a corresponding increase in the short run. In sum, although the above factors are able to provide some upside momentum that narrows the price drop of PC DRAM products, they are not enough to result in an upturn. In particular, DDR4 and DDR5 PC DRAM will experience QoQ declines of 5-10% and 3-8%, respectively, for 1Q22, although the latter product will not noticeably impact the overall PC DRAM ASP, as its penetration rate is still relatively low.

Server DRAM prices will decrease by about 8-13% QoQ due to slowdown in procurement activities

At the moment, CSPs and enterprise clients are carrying about 6-9 weeks and 8-10 weeks of server DRAM inventory, respectively. Although these levels represent a slight decline compared to the end of 3Q21, this decline will not substantially contribute to an increase in demand. Hence, server DRAM buyers will remain relatively conservative with regards to procurement activities before server DRAM prices reach a level that these buyers consider to be rock bottom. DRAM suppliers’ inventory of server DRAM, on the other hand, has been gradually rising in 1H21 owing to decreased demand. Furthermore, certain suppliers have ramped up their wafer input for server DRAM products, leading to an increased production. In addition, while both buyers and sellers have reached a consensus on the falling prices of server DRAM, supply chain-related component gap issues have become gradually resolved, meaning Tier 1 clients will lessen their server DRAM procurement in the upcoming off-season. As a result, suppliers will then be able to fulfill orders that were placed by Tier 2 clients but previously deferred because suppliers prioritized orders from Tier 1 clients. These Tier 2 client orders will provide some upside demand for server DRAM, which is a component that is in relative surplus compared to other components. TrendForce therefore expects server DRAM prices to decrease by 8-13% QoQ in 1Q22, during which server DRAM prices will experience the most severe declines compared to the other quarters in 2022.

Mobile DRAM prices will decline by about 8-13% QoQ in light of intensifying oversupply

Thanks to mobile DRAM suppliers’ aggressive sell-offs in 4Q21, smartphone brands still carry a high level of mobile DRAM inventory as of the end of 2021. Looking ahead to 1Q22, not only will the market welcome the arrival of the traditional off-season, but other issues with the supply of processor chip bundles and the impact of the COVID-19 pandemic will also result in a 10% QoQ drop in smartphone production for the quarter. Smartphone brands will become even more careful with respect to their procurement activities so as to avoid continually accumulating inventory. As smartphone brands revise down their production targets, market demand for mobile DRAM has therefore become weaker now than it was in 1H21, in turn exacerbating the oversupply situation, which is reflected in the persistently rising mobile DRAM inventory of DRAM suppliers. On the whole, the aforementioned issues of high inventory levels and oversupply situation will lead smartphone brands to further conservatize their production and procurement plans in 1Q22. Given that suppliers have suggested a sales strategy of negotiating for 4Q21 and 1Q22 prices collectively, and both buying and selling sides are confronted with inventory pressure, TrendForce thus forecasts an 8-13% QoQ decline in mobile DRAM prices for 1Q22.

Graphics DRAM prices will hold flat while demand improves and spot prices rises ahead of time

The application demand for graphics DRAM has been recovering noticeably in the recent period. Even so, it is worth pointing out that the graphics DRAM market is subject to a very high degree of fluctuations, and this situation is exacerbated by the introduction of the application demand from cryptocurrency mining in recent years. Because the values of cryptocurrencies can swing dramatically, GPU manufacturers such as NVIDIA and AMD have to constantly adjust their sales strategies and switch between bundling and de-bundling. In so doing, they are contributing to the rapid rise and fall of graphics DRAM demand. The graphics DRAM products that the three dominant suppliers are now producing belong to the GDDR6 series. The latest distribution of graphics DRAM output by chip type shows that suppliers are also gradually shifting their focus from 8Gb to 16Gb. Micron, in particular, is the most proactive in this transition. On the other hand, the mainstream graphics cards are still using 8Gb chips at this moment, so the demand for 8Gb graphics DRAM chips has actually increased. In addition, spot prices of both GDDR5 8Gb and GDDR6 8Gb chips have experienced huge price hikes. Due to this uptrend in spot prices, the difference between spot and contract prices is now negligible for graphics DRAM. Some spot transactions even reveal prices that are higher than contract prices. This latest development reflects the situation where buyers are more proactive in price negotiations. Prices of graphics DRAM products on the whole will be fairly constrained from declining further due to the rise in spot prices, the aforementioned demand turnaround, and Micron’s decision to scale back production for 8Gb chips. Taking these factors into account, TrendForce expects that the overall price trend will stay mostly flat.

DDR3 Consumer DRAM prices will drop by about 3-8% QoQ despite reduced supply

The demand for consumer (specialty) DRAM is expected to be relatively weak in 1Q22 due to the effect of the traditional off-season for consumer electronics. Also, demand will stay fairly depressed for TVs, which represent the leading source of in-home entertainment spending. This is because countries around the world will continue in their attempts to lift their pandemic-related restrictions. In addition to these factors, component gaps in the supply chain will still be a serious challenge for device manufacturers. As DRAM components are in excess supply relative to non-memory components, device manufacturers will be less willing to stock up on the former. Suppliers have been slow to scale back production for DDR3 products this year because prices of DDR3 products surged during the first half of the year. However, the downward pressure on prices has now become much more significant, so the two leading South Korean suppliers have taken the initiative to revise their product mix strategies. Hence, they will again transfer more of their mature wafer processing capacity from DDR3 products to CMOS image sensors or logic ICs. Turning to price trend, TrendForce points to the strong correlation between DDR4 consumer DRAM products and PC DRAM products. The latter were the first to experience a weakening of demand, and their prices have already made a downward turn in 4Q21. Looking ahead to 1Q22, contract prices of PC DRAM products will keep falling because of their significant difference with spot prices. This means that DDR4 consumer DRAM products will also suffer sliding prices for 1Q22 with QoQ declines reaching 5-10%. Looking at DDR3 consumer DRAM products, their prices will also drop even as their supply is shrinking. Contract prices of DDR3 2Gb chips are projected fall by 3-8% QoQ on average for 1Q22, whereas DDR3 4Gb chips are projected to register larger declines.

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

Due to material shortages caused by insufficient semiconductor supply, to date, power management IC (PMIC) prices remain on an upward trend, according to TrendForce’s latest investigations. Average selling price (ASP) for 1H22 is forecast to increase by nearly 10%, reaching a record six year high.

In terms of the global supply chain, in addition to the production capacity of major IDM manufacturers including TI, Infineon, ADI, STMicroelectronics, NXP, ON Semiconductor, Renesas, Microchip, ROHM (Maxim has been acquired by ADI and Dialog by Renesas), IC design houses such as Qualcomm and MediaTek (MTK) have obtained a certain level of production capacity from foundries. Of these, TI is in a leadership position and the aforementioned companies possess a combined market share of over 80%.

In terms of product structure, unrelenting demand from the consumer electronics, telecommunications, industrial control systems, and automotive end-user sectors and product innovation driven by industrial transformation will push a dramatic increase in global market demand for PMICs. The largest application for PMICs is consumer electronic products and there are near term rumblings in demand for notebooks, Chromebooks, smartphones, and televisions. In addition, restocking impetus for a small number of structurally simple items such as low drop-out regulators (LDO) has encountered a real slowdown. However, since the demand placed on PMICs by electronic products is a structural increase, certain models are still experiencing shortages. Qualcomm and MTK are limited by a shortage of mature production capacity on the foundry end, even resulting in a tightening of inventory for PMICs earmarked for self-use.

Furthermore, recovery in the automotive market and rapid growth in electric vehicles, automotive electronics, and advanced driver-assistance systems (ADAS) have increased demand in power source control and management and charging technology. In addition, automotive-use ICs are required to pass a number of inspections and must guarantee consistency and a zero failure rate. Currently, IDM companies’ automotive IC order backlog stretches until the end of 2022. Due to factors such as production running at full capacity and a shortage of raw materials, PMIC suppliers have currently announced longer lead times with consumer electronic IC lead times increasing to 12~26 weeks, automotive IC lead times reaching 40~52 weeks, and a cessation of orders for certain exclusive production models.

TrendForce expects 4Q21 demand for PMICs to remain strong with shortages in overall production capacity. Led by IDM companies, PMIC pricing will remain high. Despite variables related to the pandemic and the difficulties of greatly increasing 8 inch wafer production capacity, TI’s new fab RFAB2 will begin mass production in 2H22. In addition, due to the plans of foundries to carry forward a portion of 8 inch wafer PMIC manufacturing to 12 inch, there is a high likelihood of a moderation in PMIC shortages. However, close attention must still be paid to changes in future market supply.

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