Some of the advantages of third-generation semiconductors SiC and GaN include their ability to operate under high voltages, high temperatures （for SiC）, and high frequencies（for GaN）. Not only do these advantages allow manufacturers to significantly reduce the physical sizes of chips, but peripheral circuit designs can also be simplified as a result, thereby further reducing the sizes of modules, peripheral components, and cooling systems. That is why SiC and GaN have become important strategic focuses of the global semiconductor industry.

As part of its ongoing goal of semiconductor independence, China has been accelerating the development of third-generation semiconductors in recent years

From the perspective of substrate development, countries find it difficult to procure SiC substrates due to the lack of production capacities worldwide. Hence, the ability to control the supply of SiC substrates equals having more influence in the semiconductor industry. The current ranking of geographical regions that control the supply of SiC substrates is, in order, the US （Cree and II-VI）, Japan （Rohm）, and Europe （STM）.

It should be pointed out that China’s overall standing in the third-generation semiconductor industry is hindered by its insufficient supply of substrates. Hence, Chinese companies are slightly lagging behind other global companies in this industry. At the moment, both TankeBlue and Shanxi Shuoke have successfully developed 8-inch SiC wafers, though their scale of mass production is yet to catch up to global leader Cree.

Despite the vast majority of GaN substrate suppliers being Japanese and European companies, Chinese companies have been making an aggressive push to enter this market. Regarding substrates, Nanowin, Sino Nitride, and Eta Research are all currently investing in R&D and mass production, though their current focuses are limited to 2-inch and 4-inch wafers. Regarding epitaxy, Enkris, GLC, and Genettice have been similarly making progress on R&D and mass production.

Furthermore, Chinese companies are farther ahead in the development and manufacturing strategies for GaN substrates compared to SiC substrates. For the GaN RF segment, Chinese companies span the entire supply chain, including IDM（CETC, Aofengyuan, Chengchang, Dynax, Innoscience, Bofang Jiaxin）, foundries（HiWafer and San’an）, and fabless IC design companies（GaXtrem）.

（Cover image source: TSMC）

In recent years, China has been aggressively pursuing the build-out of an independent semiconductor supply chain as it attempts to eschew dependence on foreign suppliers. The key to China’s success is whether it can establish domestic suppliers of semiconductor equipment.

Looking at the current state of China’s semiconductor independence, it should be pointed out that Chinese suppliers of semiconductor equipment have been making the greatest progress on the CMP, etching, and cleaning fronts, while lagging behind in terms of deposition, ion implantation, and photolithography.

CMP equipment is used for polishing silicon wafers and metallic/non-metallic thin films. TrendForce estimates that about 26% of all such equipment procured by Chinese foundries in 2020 was sourced from domestic companies. CMP equipment manufactured by Chinese brands can support process technologies as advanced as the 14nm node, which is sufficient for meeting the current demand of Chinese foundries.

An indispensable aspect of silicon or dielectric etch applications, about 24% of all etching equipment procured by Chinese foundries in 2020 was sourced from domestic companies. Chinese-manufactured etching equipment can currently support process technologies as advanced as the 5nm node.

Used for cleaning wafers after the deposition process, CMP process, etching process, and ion implantation process, about 23% of all cleaning equipment procured by Chinese foundries in 2020 was sourced from domestic companies.

Cleaning equipment manufactured by Chinese brands can support process technologies as advanced as the 14nm node. Remarkably, more Chinese companies have been entering this market segment compared to other semiconductor equipment, while some Chinese suppliers are already able to compete with major foreign suppliers in terms of market shares.

Used for PVD, CVD, and ALD processes, about 10% of all deposition equipment procured by Chinese foundries in 2020 was domestically sourced. Chinese-manufactured deposition equipment can support process technologies as advanced as the 14nm node. However, as the technological barrier for manufacturing these products is relatively high, Chinese suppliers are still in the process of catching up to their global competitors in terms of technology. Hence, it remains difficult for Chinese suppliers to continue raising their market shares in the short run.

Likewise, as the technological barrier for manufacturing ion implantation and photolithography equipment is relatively high, equipment from Chinese suppliers is unlikely to support advanced process technologies in the short run despite these suppliers’ aggressive R&D efforts. In terms of self-sufficiency, about 5% and 1% of all ion implantation equipment and photolithography equipment, respectively, procured by Chinese foundries in 2020 was domestically manufactured.

（Cover image source: Unsplash）

In response to the increasing demands of mobile applications, manufacturers are now placing a priority on extending the battery life of such devices like smartphones and notebook computers. However, due to the inherent limitations of physical space in these devices, the quest for ever-greater battery capacity has seemingly reached a bottleneck, forcing them to look elsewhere for solutions, hence the development of fast charging technology. As such, fast chargers equipped with GaN (Gallium nitride, which is a third-generation semiconductor) chips have are now expected to introduce the next chapter for the fast charging market.

According to TrendForce’s latest investigations, as smartphone brands including Xiaomi, OPPO, and Vivo have successively been releasing fast chargers since 2018, the market demand for GaN power devices has undergone a corresponding growth as well. Given the continued upward trajectory of the market, GaN power device revenue for 2021 is expected to reach US$61 million, a 90.6% YoY increase.

Due to their low portability and tendency to overheat, traditional fast chargers are increasingly unable to meet consumer demand

In the past, fast chargers were generally based on Si (Silicon) chips. However, as these chargers increase in wattage, their mass and physical dimension increased as well, meaning they suffered from low portability and a tendency to overheat when fast charging. On the other hand, as battery capacities expanded past the 4000mAh mark, traditional Si chargers began to see a drop in charging efficiency. In light of this, after certain breakthroughs in GaN manufacturing technologies were achieved, next-gen GaN chargers are likely to completely transform most consumers’ preexisting impressions of fast chargers.

Nonetheless, the manufacturing costs of GaN chargers are still 80%-120% higher compared with Si chargers at the moment. That is why very few devices bundle GaN chargers as a standard accessory included with the purchase and why GaN chargers are consequently sold separately instead. TrendForce expects the market for GaN chargers to experience rapid growth in 2021, with about 57 million units shipped for the year.

IC design company Navitas is the biggest winner in the GaN charger supply chain

The GaN charger supply chain encompasses virtually all major companies in various industries, and companies for which GaN businesses account for a larger share of their sales or technologies are more likely to benefit from the booming GaN charging market as well. As the largest supplier of GaN charger chips at the moment, Navitas has a clientele consisting of such major brands as Xiaomi, OPPO, Lenovo, Asus-Adol, and Dell. TrendForce’s investigations find that Navitas’ share in the GaN charger chip market surpassed 50% as of last year.

Navitas’ chips are currently fabricated with TSMC’s GaN on Si technology on 6-inch wafers, while TSMC is planning to increase its GaN production capacities by outsourcing its epitaxial processes to Ennostar subsidiary Unikorn. As Navitas expands its shipment volume going forward, TSMC and Ennostar are expected to benefit as well.

（Cover image source: Unsplash）

While foundry capacities remained tight, prompting IC design companies to compete over limited foundry capacities in order to fulfill rising demand for various end devices, the top 10 IC designe (fabless) companies posted remarkable revenues in 1Q21, according to TrendForce’s latest investigations. In particular, thanks to the global mining craze brought about by the cryptocurrency market, Nvidia was able to surpass Broadcom in revenue and take the second spot among the top 10. On the other hand, fifth-ranked AMD scored a staggering YoY growth of 92.9%, which is the highest % increase on the top 10 list.

Market leader Qualcomm saw growths in its smartphone, RF front end, IoT, and automotive departments in 1Q21, during which it posted a revenue of US$6.28 billion, a 53.2% increase YoY, placing Qualcomm firmly in the number one spot. Coming in second place is Nvidia, which overtook Broadcom with $5.17 billion in revenue. Nvidia’s revenue performance can primarily be attributed to massive gaming graphics card demand generated by the cryptocurrency market and the stay-at-home economy. In addition, Nvidia’s Cloud & Data Center business also saw positive growths in 1Q21, thereby contributing to its revenue for the quarter as well.

Broadcom, ranked third on the top 10 list, posted a $4.49 billion revenue in 1Q21. Broadcom’s performance took place on the back of the bullish broadband telecom market, with growths in passive fiber optics and wired networking for data transmission. AMD, on the other hand, continued to benefit from the stay-at-home economy and other such market demands, in addition to its growing foothold in the server market. The company experienced increasing market shares and led its competitors with an impressive 92.9% YoY increase in revenue, the highest on the top 10 list. It should be pointed out that the extreme volatility of the cryptocurrency market, as well as the strict surveillance policies imposed on cryptocurrency trading by several countries, may introduce uncertainties in the future of gaming graphics card revenue for both Nvidia and AMD.

Regarding the performance of Taiwanese IC design companies, MediaTek’s smartphone business unit registered a remarkable 149% YoY growth in revenue mainly on account of high demand from Chinese smartphone brands, which were particularly aggressive in seizing Huawei’s former market share. Furthermore, as Qualcomm’s recent performance in the entry-level and mid-range smartphone markets remained relatively lackluster, MediaTek therefore aimed to fulfill demand from its smartphone clients as its chief goal on a macro level. As a result, MediaTek’s revenue for 1Q21 reached about $3.81 billion, an 88.4% YoY increase, placing the company in the fourth spot.

Novatek derived its performance from high component demand from manufacturers of IT products, TVs, and smartphones. In view of the current shortage of foundry capacity and rising prices of foundry services, Novatek has been able to maintain a stable supply of components via increased prices due to its longstanding, stable, and flexible strategic relationships with Taiwanese foundries (UMC, VIS, and TSMC), China-based Nexchip, and Korea-based Samsung LSI. Hence, Novatek leapfrogged both Marvell and Xilinx for the sixth place while increasing its revenue for 1Q21 by 59.4% YoY.

On the whole, the second wave of the COVID-19 pandemic in India, which has resulted in decreased production targets for Chinese smartphone brands, is not expected to drastically affect IC design companies’ component demand in 3Q21 because of the following factors: First, price hikes of foundry services have already been reflected in chip prices; secondly, market demand for devices remains high; and finally, Chinese smartphone brands still need to maintain a safe level component inventory, as they have yet to resolve the discrepancies among their various materials’ sufficiency levels.

Incidentally, although some expect that the recent spread of COVID-19 among KYEC employees may impact the procurement activities of IC designers that are part of KYEC’s clientele, TrendForce’s investigations of financial reports from various companies in April and May indicate that infections in KYEC facilities will unlikely result in major impacts on the revenues of IC designers in 2Q21.

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

TrendForce’s latest investigations find considerable discrepancy between prices for graphics DRAM products in the contract market and in the spot market. Quotes for graphics DRAM products continue to rise in the contract market as the severe undersupply situation persists. Furthermore, the supply fulfillment rates for orders from some medium- and small-size clients have been hovering around 30%. This undersupply situation is expected to persist through 3Q21, during which graphics DRAM contract prices are expected to rise by 8-13% QoQ. Regarding the spot market, on the other hand, the value of ETH experienced continued uptrend from the start of 2021 until May, thereby driving up the demand for graphics cards, regardless of them belonging to the newer or older series. At the height of the graphics card boom, spot prices of graphics DRAM products were up to 200% higher than contract prices. Demand from miners for graphics cards are expected to be relatively muted before cryptocurrencies return to their previous bullish trends, and the gap between the spot and contract prices of graphics DRAM products will likely narrow in 3Q21 as a result.

TrendForce expects four key factors to continue driving up graphics DRAM prices in the contract market. First of all, demand in the PC market remains high, particularly for gaming products. Secondly, DRAM suppliers’ production capacities allocated to most clients are constrained by the fact that Nvidia bundles its GPUs with graphics DRAM, meaning DRAM suppliers have prioritized capacity allocation to Nvidia as opposed to smaller clients. Thirdly, both the Xbox Series X and PS5 are equipped with GDDR6 16Gb chips, which is different from GDDR6 8Gb chips. As the two chips are non-interchangeable, once DRAM suppliers commit their production capacities for one, they can no longer produce the other using the same batch of wafers. Finally, since there has been a resurgence of server DRAM orders, DRAM suppliers are still prioritizing the production of these products as they are a mainstream market product. As various products each compete over limited DRAM production capacities, graphics DRAM contract prices are expected to undergo an increase going forward. In particular, medium- and small-size OEMs/ODMs may likely face double-digit percentages increases.

Sharp drop in values of cryptocurrencies has caused spot prices of GDDR5 and GDDR6 products to fall

Regarding the spot market, although spot prices for GDDR6 products has been undergoing a slight drop since May, they are still nearly 100% higher than the average contract prices. Conversely, there is almost no difference between spot and contract prices for GDDR5 products. Looking at the reasons behind the slide in spot prices of graphics DRAM products, a sharp drop in the values of cryptocurrencies is the most significant contributor apart from the excessively large difference between spot and contract prices. The recent bearish movement of cryptocurrencies has resulted in a sharp drop in incentives for miners. In turn, this has led to a corresponding drop for older graphics (such as the Nvidia GTX 1660, which features GDDR5 DRAM), which have no other sources of demand. GDDR5 prices hence entered a significant decline. With regards to newer graphics cards, however, there is still a baseline level of demand for them thanks to purchases by gamers. Furthermore, these newer graphics cards, much like the new generation of game consoles, feature GDDR6 DRAM. Therefore, due to the current demand for GDDR6 products, their price drop in the spot market is lower compared to GDDR5 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