As the COVID-19 pandemic wreaked havoc on the global electronics supply chain, the packaging and testing operations of mid-range and high-end chips were subsequently confronted with prolonged lead times. This can primarily be attributed to the fact that IC substrate suppliers were unable to raise output or expand their production capacities in the short run in order to meet the skyrocketing volume of client orders. Hence, products that are packaged using BGA (Ball Grid Array), Flip Chip, or SiP technologies, all of which require the use of IC substrates, had their lead times lengthened. Certain IC design companies are therefore considering the feasibility of packaging technologies that do not require substrates.

Regarding the trend of advanced packaging development, technologies such as 2.5D/3D IC, SiP, and FOPLP (Fan-out Panel Level Packaging) remain the current mainstream R&D targets. Given the ongoing shortage of semiconductor components, including IC substrates, FOPLP, in particular, has garnered the most attention among the aforementioned three packaging technologies as it can be operated without substrates. At present, most OSAT companies and other chipmakers have successively invested in FOPLP-related technological and manufacturing development in order to capitalize on potential new commercial opportunities.

Despite FOPLP’s advantage of packaging chips across large areas, technological development remains problematic

Regarding the history of FOPLP development as well as the technology’s evolution going forward, its earliest roots can be traced to existing packaging applications including Flip Chip and BGA. As end-products continued to experience performance upgrades, leading to the number of I/O pins being insufficient for meeting the increase in performance demand, new types of wafer-level packaging technologies such as Fan-in and Fan-out subsequently emerged to fulfill the packaging demands of mid-range chips, high-end chips, and other emergent applications.

Although Fan-in and Fan-out packaging technologies are able to effectively raise the number of I/O pins, they also result in a substantial increase in manufacturing costs compared to previous-generation technologies such as Flip Chip and BGA. For both 8-inch wafers and 12-inch wafers, packaging costs have only been on a very slight downtrend. That is why the packaging industry has placed a top priority on simultaneously lowering production costs while raising the number of chips packaged at once. Hence, FOPLP technology has emerged in response to this demand for large-area packaging technology.

Regarding the actual implementation of FOPLP, a potential solution may be found in wafer-level packaging RDL (Redistribution Layer) designs, such as chip first or chip last. It should be noted that chip first FOWLP or chip last FOWLP processes do in fact serve as feasible concepts for FOPLP development. However, the FOPLP process involves stacking massive amounts of packaging materials and chips together, and their combined weight may lead to such issues as panel warpage. In addition, it remains difficult to maintain a consistent uniformity and yield rate during the FOPLP process, meaning further collaborations and optimizations on the parts of OSAT companies and semiconductor equipment suppliers are necessary for FOPLP to succeed going forward.

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Various MLCC suppliers’ book-to-bill ratios as well as quarterly shipments for 4Q21 now show signs of decline, according to TrendForce’s latest investigations. Not only has the demand for consumer electronics slowed, but ODMs’ clients have also eased their procurement activities due to issues including the global chip shortage, mismatched component availabilities, and China’s power rationing. Demand in the automotive market, on the other hand, has remained strong since 3Q21. Automotive applications have therefore become an important point of focus in MLCC suppliers’ latest product planning and capacity expansion efforts. Thanks to these in-demand applications, annual MLCC demand from the automotive market for 2021 is expected to reach 449 billion pcs, a 20% YoY increase.

TrendForce further indicates that the growth of the EV market and improvements in ADAS specifications have resulted in a twofold increase in automotive MLCC consumption. While EVs’ electrified drivetrain and high safety requirements represent a high barrier to entry for MLCC suppliers, these hurdles have also in turn raised MLCC products’ ASP and profitability. Hence, the automotive electronics industry has been increasing its annual MLCC demand by double-digits in recent years. In particular, an analysis of different vehicles and their respective MLCC consumption reveals the following: a conventional EV requires 2.2 times the MLCC usage of a conventional gasoline vehicle, an ADAS-equipped EV requires 2.7 times, and an autonomous EV requires as much as 3.3 times.

Regarding MLCC suppliers, Japanese companies including Murata, TDK, and Taiyo Yuden continue to dominate the automotive MLCC market. These suppliers will expand their production capacities for automotive applications in overseas facilities in China, Philippines, and Malaysia next year, with powertrains, ADAS, and connected systems being among the most significant of the aforementioned applications. Korea-based Samsung, on the other hand, specializes in powertrain applications by leveraging its MLCC offerings’ small form factor, high capacitance, and high voltage. Finally, Taiwanese suppliers, such as Yageo and Walsin, are actively invested in developing automotive products and High-Q products for RF applications in an effort to increase their presence in the infotainment system market and EV charging station market.

Looking ahead to 2022, TrendForce expects annual automotive MLCC demand to reach 562 billion pcs, a 25% YoY increase, primarily attributed to the continued electrification of vehicles. While the global implementation of carbon-neutral policies and excellent sales performances of Tesla vehicles bring about widespread adoption of EVs, various countries have successively set concrete dates for the termination of gasoline vehicle sales. Hence, EVs are gradually becoming not only the mainstream option in the automotive market, but also the primary driving force behind the future growth of the MLCC industry.

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

Despite the forecasted 18.6% YoY growth in total DRAM bit supply next year, the global DRAM market is still expected to shift from a shortage situation to an oversupply, according to TrendForce’s latest investigations. This shift can primarily be attributed to the fact that, not only are most buyers now carrying a relatively high level of DRAM inventory, but DRAM bit demand is also expected to increase by only 17.1% YoY in 2022. On the price front, the oversupply situation will result in a drop in DRAM ASP in 2022 but not a major decline in annual DRAM revenue, thanks to the oligopolistic nature of the DRAM industry. Annual DRAM revenue for 2022 is expected to reach US$91.54 billion, which represents a slight YoY increase of 0.3%.

Based on an analysis of DRAM sufficiency ratio (which refers to the surplus of supply in comparison with demand) for each quarter in 2022, TrendForce forecasts a 15% YoY decrease in DRAM ASP for 2022, with prices undergoing the more noticeable declines during the first half of the year. Heading into 2H22, however, owing to the rise in DDR5 penetration rate, as well as the arrival of peak seasonal demand, the decline in DRAM ASP will likely narrow. TrendForce does not rule out the possibility that DRAM ASP may even hold flat or undergo an increase in 2H22.

Annual NAND Flash revenue is expected to experience yet another increase next year by 7.4% YoY while numerous suppliers compete in higher-layer NAND Flash market segment

Turning to the NAND Flash market, TrendForce forecasts a 31.8% increase in total bit supply for 2022 and a 30.8% increase in total bit demand. Hence, NAND Flash ASP will likely experience a downtrend next year as a result of the oversupply situation. In addition, due to the perfect competition in the NAND Flash market, the decline in NAND Flash ASP next year will be more noticeable than the decline in DRAM ASP. However, NAND Flash suppliers continues to make progress in the stacking of NAND Flash layers, so the growth in NAND Flash bit supply next year will therefore remain above 30%. TrendForce thus expects NAND Flash revenue to have more room for growth and reach US$74.19 billion in 2022, a 7.4% YoY increase.

TrendForce’s forecast based on an analysis of NAND Flash sufficiency ratios for each quarter in 2022 similarly points to an 18.0% YoY decline in NAND Flash ASP next year. Much like DRAM, NAND Flash prices will undergo the more noticeable declines during 1H22. Arrival of peak seasonal demand in 2H22 will potentially result in a narrowing of price drops and a potential for quarterly prices to hold flat.

On the whole, the revenue performance of the DRAM industry and that of the NAND Flash industry over the years show that the annual total DRAM revenue is growing at more stable pace. Again, this has to do with the oligopolistic structure of the DRAM market. Since the DRAM market has a different competitive landscape, the fluctuations in the overall DRAM ASP have been relatively modest over the long run. However, the development of the DRAM manufacturing technology is approaching a physical bottleneck as process nodes shrink below the 20nm level. This means that the bit growth derived from the deployment of a more advanced process is becoming more and more limited over the years. On the other hand, not only are NAND Flash suppliers relatively more unstable in their capacity expansion plans compared to the DRAM industry, but further improvements in NAND Flash layer-stacking technology also remains feasible. Hence, the fluctuations in the overall NAND Flash ASP have been relatively more volatile over the long run. On account of these factors, the DRAM industry generally has smaller YoY revenue growth rates compared with the NAND Flash industry, although the DRAM industry continues to surpass the NAND Flash industry in terms of profitability.

Profitability of suppliers may be constrained if total revenue fails to keep pace with continuously rising CAPEX

Regarding the CAPEX (capital expenditures) of DRAM suppliers, there has been a gradual increase in these suppliers’ CAPEX to sales ratio in recent years, for two reasons. First, the development of the DRAM manufacturing technology is approaching a physical bottleneck. Die improvements have become more and more limited after process nodes have shrunk below the 20nm level. Micron’s 1alpha nm process can offer an almost 30% increase in bits per wafer, but the 1Xnm-to-1Ynm migrations and the subsequent 1Ynm-to-1Znm migrations that the major suppliers have undertaken in the recent period have yielded increases of no more than 15% in bits per wafer. Looking at future technological developments, Samsung and SK hynix have already integrated EUV lithography into their most advanced process technologies. However, orders for EUV lithography tools have a much longer lead time, and the costs of these tools are also high. Hence, the three dominant suppliers have allocated a large chunk of capital expenditure in advance to place orders for EUV lithography tools ahead of time.

Secondly, the oligopolistic structure of the DRAM market has also helped establish a regime where there is a very low chance of a supplier’s ASP dipping under its fully-loaded cost despite the recurrence of the cyclical price downturn. Moreover, DRAM suppliers have accumulated a substantial amount of profit from their products. In view of the difficulties in die shrinking, suppliers ranging from the three dominant suppliers to others with less market share (such as Nanya Tech and Winbond) have developed tangible plans for capacity expansions. These plans have, in turn, become the other main driver behind the ongoing increase in the CAPEX to sales ratio.

The CAPEX to sales ratio of NAND Flash suppliers have likewise risen substantially following the transition to 3D NAND technology in 2017. Notably, the average CAPEX to sales ratio fell within the 25-30% range prior to 2017, but it has since climbed to nearly 40% as of now. This growth can primarily be attributed to the fact that, as the number of 3D NAND layers increases, there is a corresponding increase in the lead times of NAND Flash products and in the degree of precision as well as difficulty involved in the etching process. While the mainstream layer count of NAND Flash products approaches 1YY layers, suppliers are currently planning to move forward with the development of products with 2XX layers, which place an ever-increasing demand on etch depth. The CAPEX of NAND Flash suppliers will continue to grow alongside increases in layer count and revenue.

TrendForce indicates that NAND Flash layer-stacking technology will continue to progress, meaning suppliers will continue to pursue the stacking of additional layers as a way to lower their manufacturing cost per GB. As such, the NAND Flash industry’s CAPEX will have additional potential for growth going forward, with a CAPEX to sales ratio of close to 40% or above. It should be noted, however, that if total NAND Flash revenue fails to keep pace with the growth in CAPEX in the next few years, NAND Flash suppliers’ CAPEX to sales ratio may potentially undergo an excessive increase, thereby constraining the profitability of suppliers.

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

While the global electronics supply chain experienced a chip shortage, the corresponding shortage of foundry capacities also led various foundries to raise their quotes, resulting in an over 20% YoY increase in the total annual revenues of the top 10 foundries for both 2020 and 2021, according to TrendForce’s latest investigations. The top 10 foundries’ annual revenue for 2021 is now expected to surpass US$100 billion. As TSMC leads yet another round of price hikes across the industry, annual foundry revenue for 2022 will likely reach US$117.69 billion, a 13.3% YoY increase.

Foundries will gradually kick off production with newly added capacities in 2H22 in response to the ongoing chip shortage

TrendForce indicates that the combined CAPEX of the top 10 foundries surpassed US$50 billion in 2021, a 43% YoY increase. As new fab constructions and equipment move-ins gradually conclude next year, their combined CAPEX for 2022 is expected to undergo a 15% YoY increase and fall within the US$50-60 billion range. In addition, now that TSMC has officially announced the establishment of a new fab in Japan, total foundry CAPEX will likely increase further next year. TrendForce expects the foundry industry’s total 8-inch and 12-inch wafer capacities to increase by 6% YoY and 14% YoY next year, respectively.

Although the manufacturing costs of 8-inch and 12-inch wafer fabrication equipment are roughly equal, the ASP of 8-inch wafers falls short compared with 12-inch wafers, meaning it is generally less cost-effective for foundries to expand their 8-inch wafer capacities. That is why the increase in 8-inch capacity is also expected to fall short of the increase in 12-inch capacity next year. Regarding 12-inch wafer foundry services, the 1Xnm and more mature nodes, which currently represent the most severe shortage among all manufacturing process technologies, will account for more than 50% of the newly added wafer capacities next year. On the other hand, while Chinese foundries, such as Hua Hong Wuxi and Nexchip, account for most of the newly added 12-inch wafer capacities this year, TSMC and UMC will comprise the majority of 12-inch wafer capacity expansions in 2022. These two foundries will primarily focus on expanding the production capacities allocated to the 40nm and 28nm nodes, both of which are currently in extreme shortage. As a result, the ongoing chip shortage will likely be alleviated somewhat in 2022.

Chip shortages will show signs of easing, but component gaps will continue to impact the production of some end products

Application segments such as consumer electronics (such as notebook computers), automotive electronics, and most connected digital appliances are now being impacted by the shortages of peripheral components made with the 28nm and more mature nodes. The undersupply of the said components will probably begin to moderate somewhat in 2H22 if foundries proceed to activate their newly added production capacity. However, just as there will be signs indicating an easing of capacity crunch for the 40nm and 28nm nodes, the tightening of production capacity for 8-inch wafers and 1Xnm nodes is going to be an important development that warrants close attention in 2022.

Regarding 8-inch wafer foundry services, the overall production capacity growth has been limited while the demand related to PMICs has increased multiple folds. The growth of this particular application has to do with the increasing market penetration of 5G smartphones and electric vehicles. Under this circumstance, PMICs continue to take up the available production capacity of 8-inch wafers, and wafer production lines that deploy ≦0.18µm nodes are now expected to operate at fully-loaded capacity to the end of 2022. Hence, the capacity crunch for 8-inch wafers will not ease in the short term.

As for 1Xnm nodes, the number of foundries that are offering these more advanced process technologies is gradually shrinking. The reason is that following the migration to FinFET in the general development of semiconductor manufacturing, the costs associated with R&D and capacity expansions have risen higher and higher. TSMC, Samsung, and GlobalFoundries are now the only three foundries in the world that possess 1Xnm technologies. Also, GlobalFoundries is the only one among these three to undertake a marginal capacity expansion for its 1Xnm node next year. The other two currently have no plan to raise 1Xnm production capacity in 2022.

In the aspect of demand, the kinds of chips that are made with 1Xnm nodes include the following: 4G SoCs, 5G RF transceivers, and Wi-Fi SoCs equipped in smartphones, as well as TV SoCs, chips for Wi-Fi routers, and FPGAs/ASICs. Due to the increasing market penetration of 5G smartphones, 5G RF transceivers will take up a massive portion of the overall 1Xnm production capacity. This will, in turn, significantly limit the available wafer capacity allocated to other products. Furthermore, demand has been rising over the years for smartphones that are equipped with 1Xnm Wi-Fi SoCs and Wi-Fi routers that contain 1Xnm chips. The supply of these components is already very limited at this moment and will get tighter in 2022 because the overall 1Xnm production capacity will not be raised by a significant amount.

In sum, there are several takeaways from this focus on the potential developments in the foundry market next year. First, the major foundries have now announced capacity expansions with the emphasis on addressing the capacity crunch for the 40nm and 28nm nodes. Their newly added production capacity is expected to enter operation next year, following two consecutive years of chip shortages. This will bring some relief to the undersupply situation, which is already very severe at this moment. However, the actual chip output contribution from the newly added production capacity will mainly take place no earlier than 2H22, or during the middle of the traditional peak season. With stock-up activities across the supply chain expected to reach a higher level of intensity at that time because of preparations for holiday sales, the easing of the capacity crunch in the foundry market will not be especially noticeable.

Second, it is worth pointing out that even though supply will loosen slightly for some 40/28nm chips, the lack of production capacity for 0.1Xµm chips on 8-inch wafers and 1Xnm chips on 12-inch wafers will likely remain a serious bottleneck in the supply chain. Currently, production capacity is already quite insufficient for 0.1Xµm 8-inch wafers and 1Xnm 12-inch wafers. Next year, the related capacity growth is also expected to be fairly limited. In sum, TrendForce believes that the foundry market will continue to experience some tightness in production capacity during 2022. Although the undersupply situation will moderate for some components, the persistent issue of component gaps will also continue to adversely affect the production of certain end products.

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

Apple recently unveiled its 140W MagSafe charger for the new MacBook Pro, marking the first time that Apple is adopting GaN technology. As such, 100+ watt fast charge products have thus entered a period of growth, in turn accelerating the adoption of third-generation semiconductor devices in consumer applications, according to TrendForce’s latest investigations. While GaN power transistor prices have dropped to nearly US$1 as of now, and GaN fast charge technologies continue to mature, TrendForce expects GaN solutions to reach a 52% penetration rate in the fast charge market in 2025.

TrendForce also indicates that the vast majority of GaN fast chargers’ peak power fell within the 55W-65W range in 2020. GaN fast chargers with 55W-65W of peak power accounted for 72% of all GaN fast charger sales last year, with 65W being the mainstream, whereas GaN fast chargers with 100W and more in peak power accounted for only 8%. Even so, the outlook for these high-power fast chargers appears relatively promising, as more and more companies release their own high-power fast chargers in response to consumers’ increasing energy consumption demand. Fast chargers with a peak power of 140W are the most powerful solution currently available.

Within the 100+ watt product category, GaN fast chargers have reached a penetration rate of 62%. These chargers are primarily supplied by Navitas and Innoscience. With a market share of more than 70%, Navitas’ GaN chips are used in products from Baseus, Lenovo, and Sharge, among others. On the other hand, PFC+LLC combo controllers have become the mainstream solution for 100+ watt fast chargers as these controllers allow for higher efficiency and smaller physical dimensions. The combination of SiC diodes and GaN switches results in increased PFC (power factor correction) frequency. As such, major manufacturers have quickly adopted the GaN+SiC wide bandgap semiconductor combo for their fast chargers.

For instance, Baseus released the world’s first ever 120W GaN (supplied by Navitas) + SiC (supplied by APS) fast charger in 2020 and saw excellent reception from the market. SiC power device suppliers, including Global Power Technology, Maplesemi, and onsemi, have also been ramping up their shipments to PD (power delivery) fast charger manufacturers. It should be pointed out that the fast charge interface has gradually become a standard feature in cars. In light of the rise of the high-power in-car charging market, the power consumption and maximum battery capacity of electronic products will propel the widespread application of third-generation semiconductors, including GaN and SiC, going forward.

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