As the global economy enters the post-pandemic era, technologies including 5G, WiFi6/6E, and HPC (high-performance computing) have been advancing rapidly, in turn bringing about a fundamental, structural change in the semiconductor industry as well, according to TrendForce’s latest investigations. While the demand for certain devices such as notebook computers and TVs underwent a sharp uptick due to the onset of the stay-at-home economy, this demand will return to pre-pandemic levels once the pandemic has been brought under control as a result of the global vaccination drive.

Nevertheless, the worldwide shift to next-gen telecommunication standards has brought about a replacement demand for telecom and networking devices, and this demand will continue to propel the semiconductor industry, resulting in high capacity utilization rates across the major foundries. As certain foundries continue to expand their production capacities this year, TrendForce expects total foundry revenue to reach a historical high of US$94.6 billion this year, an 11% growth YoY.

TrendForce’s latest analysis also finds that shipments and production volumes of end products will continue to grow in the post-pandemic period. Regarding host computers, the total (or global) shipments of servers and workstations are forecasted to undergo a yearly growth mainly driven by applications that are enabled by 5G and HPC. As for various types of client (or end-user) devices, the annual total production volume of 5G smartphones, in particular, is forecasted to increase by around 113% YoY. The penetration rate of 5G models in the smartphone market is also forecasted to rise to 37% in the same year. Turning to notebook (or laptop) computers, their total shipments in 2021 will register a YoY growth rate of about 15% thanks to the proliferation of the stay-at-home economy.

Finally, the governments of many countries introduced consumption subsidies during the pandemic so as to stimulate the domestic economy. Video streaming services have also grown dramatically with respect to content and demand because of the pandemic. As a result, the TV market is seeing a wave of replacement demand as consumers want to purchase the latest models that offer higher resolutions (e.g., 4K and 8K) and network connectivity (i.e., smart TVs). The total shipments of digital TVs in 2021 are forecasted to undergo a YoY growth rate of around 3%.

The high demand for the aforementioned end devices has therefore resulted in a corresponding surging demand for various ICs used in these devices, including CIS, DDI, and PMICs. In addition, the increasing adoption of cloud services, including IaaS, PaaS, and SaaS, has also generated a massive demand for various high-end CPUs and memory products used in the HPC platforms that power said cloud services.

On the whole, TrendForce believes that, with demand maintaining a healthy growth momentum for many kinds of end products, semiconductor components that are manufactured with the same foundry nodes will be competing for production capacity. Some categories of ICs will therefore experience a more severe capacity crunch due to the product mix strategies of respective foundries. In the short term, no effective resolution is expected for the undersupply situation in the foundry market.

Certain foundries will continue to expand their production capacities in 2021 as the semiconductor industry undergoes a structural change

With regards to the expansion plans of various foundries this year, tier-one and tier-two foundries will prioritize the development of different process nodes. More specifically, tier-one foundries, including TSMC and Samsung, will focus on the R&D, fab build-out, and capacity expansion for the 5nm and below nodes in response to the growing chip demand for HPC-related applications. On the other hand, tier-two foundries, including SMIC, UMC, and GlobalFoundries will primarily focus on expanding their production capacities of the 14nm to 40nm mature process nodes in order to meet the massive demand for next-gen telecom technologies (such as 5G and WiFi6/6E) and other diverse applications (such as OLED DDI and CIS/ISP).

Incidentally, it should be pointed out that SMIC’s capacity expansion plans have been constrained after the US Department of Commerce added SMIC to the Entity List, which prohibited the company from procuring US semiconductor equipment. However, SMIC still possesses enough funds for procuring non-US equipment and building new fabs, as the company is not only actively expanding its existing 8-inch and 12-inch wafer capacities, but also proceeding with the construction of its new fab in Beijing.

Apart from the aforementioned companies, other foundries, including PSMC, Tower Semiconductor, Vanguard, and HHGrace, will prioritize the capacity expansion of their 8-inch wafers (which are used for the 55nm and above nodes) to meet the demand for large-sized DDI, TDDI, and PMICs. These foundries, in contrast with their larger competitors, are primarily focusing on 8-inch capacity expansion due to the relatively high cost of DUV immersion systems used for the 40/45nm and below processes. For these companies, it is much more economically feasible to instead undertake capacity expansions for the 55/65nm and above nodes.

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

A fire broke out at the 12-inch wafer production line of Renesas’s Naka Factory on March 19 due to an overcurrent in the plating equipment. Renesas said that the fire burned about 5% of the total area of the first floor. The Naka fab mainly manufactures MCUs and SoCs for automotive, industrial, and IoT-related applications. While Renesas officially aims to get the fab back to full operation within one month, TrendForce expects the immediate task of restoring the cleanroom and installing new equipment systems to take much longer than that. The repair of the production line will have to proceed meticulously so as to avoid the risks of manufacturing-related problems in the mass production of automotive chips later on. Three months is TrendForce’s conservative estimate for the fab to regain its former level of wafer-start capacity, meaning the tight supply of automotive MCUs will be further exacerbated going forward.

The Naka incident is not expected to result in additional orders for other foundries, given the current tight wafer-start capacity across the foundry industry

TrendForce indicates that the 12-inch Naka fab’s process technologies likely range from the 90nm node to the 40nm node. With regards to Renesas’s production lines for automotive chips, TrendForce expects the fire to impair the fab’s wafer-start capacities for products including automotive PMICs, certain V850 automotive MCUs, and first-generation R-Car SoCs. Other foundries, in particular TSMC, are able to support some of Renesas’s production, since 2/3 of their technologies are interoperable. However, it is exceedingly difficult for other foundries to allocate spare wafer-start capacities to make up for Renesas’s shortfall due to the existing wafer-start capacity crunch across the foundry industry.

Ranked third among automotive semiconductor suppliers in 2020, Renesas is also currently one of the top five largest automotive MCU suppliers at the moment. Other automotive MCU suppliers include STMicroelectronics, Infineon, NXP, TI, and Microchip. Although most of STMicroelectronics’ automotive MCUs are manufactured in-house, TrendForce believes that the Naka fire will not result in additional orders for Renesas’s competitors, including STMicroelectronics, since automotive semiconductors are currently in extreme shortage.

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

The Line S2 fab of Samsung in Austin, Texas sustained a power interruption, which has forced it to suspend operation since mid-February, under the impact from the winter storm. TrendForce’s latest investigations indicate that the capacity utilization rate for the entire fab is not expected to climb back to over 90% until the end of March. In particular, Samsung manufactures several products that are highly important for the production of smartphones, including the Qualcomm 5G RFIC, Samsung LSI OLED DDIC, and Samsung LSI CIS Logic IC. Supply-wise, the first two products sustained the brunt of the winter storm’s impact, and global smartphone production for 2Q21 is therefore expected to drop by about 5% as a result.

According to TrendForce’s investigations, Samsung was able to prepare for the power interruption ahead of time as the company had been forewarned by the local utility. Hence, the loss of WIP (work in progress) wafers caused by the incident was minimal. However, the delay in the resumption of full operation at the plant is expected to last more than two weeks, during which the fab will suspend its wafer input. The incident on the whole will have a definite impact on the global foundry industry that is already experiencing a serious capacity crunch. In terms of wafer input, the Qualcomm 5G RFIC, Samsung LSI OLED DDIC, and Samsung LSI CIS Logic IC account for 30%, 20%, and 15% of the Line S2’s monthly production capacity, respectively.

Of the three aforementioned products, the Qualcomm RFIC is primarily supplied to smartphone brands to be used in 5G handsets. This product is delivered to clients as part of either AP bundles or 5G modems. The winter storm’s impact on the production of the Qualcomm RFIC is expected to take place in 2Q21, resulting in a 30% decrease in 5G smartphone production for the quarter. However, TrendForce expects this incident to impair the 2Q21 production of all smartphones by only about 5%, given smartphone brands’ existing inventory of 5G AP bundles and 5G modems, in addition to the fact that smartphone brands are likely to keep up their quarterly smartphone production by increasing the production of 4G handsets to make up for the shortfall in 5G handsets. Furthermore, TrendForce expects the Line S2 fab to prioritize resuming the production of RF products ahead of other products, in turn further mitigating the winter storm’s impact on global smartphone production.

On the other hand, the Samsung LSI OLED DDIC is primarily used in Apple’s iPhone 12 series. The winter storm’s impact on these DDICs will similarly take place by the end of 2Q21. Even so, Apple likely possesses sufficient DDIC inventory, at least in the short term, since the period of peak DDIC demand for the company’s existing smartphone models has already passed. Moreover, the iPhone 12 mini may reach EOL earlier than expected due to disappointing sales. Should Apple decide to cut iPhone 12 mini production, the company will be able to further minimize the impact of OLED DDIC undersupply. Finally, as sales of the iPhone 11 (which is equipped with an LCD, instead of OLED, panel and therefore does not require OLED DDIC) have been resurging recently, Apple may increase the share of iPhone 11 in its total smartphone production in order to keep up its quarterly production volume. In light of these factors, TrendForce believes that the production volume of iPhones in 2Q21 will suffer only limited impact from OLED DDIC supply disruptions.

On the whole, although the production of 5G smartphones will face a relatively considerable challenge in 2Q21, smartphone brands will be able to keep up their quarterly production volume by raising the production share of 4G smartphones instead. TrendForce thus projects the winter storm to impair smartphone production for 2Q21 by no more than 5%, while maintaining the previous forecast of 1.36 billion units produced for 2021. However, TrendForce also does not rule out the possibility that the winter storm will lower the penetration rate of 5G smartphones in 2021 from 38%, as previously forecasted, to 36.5%.

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

The third-generation semiconductor industry was impaired by the US-China trade war and the COVID-19 pandemic successively from 2018 to 2020, according to TrendForce’s latest investigations. During this period, the semiconductor industry on the whole saw limited upward momentum, in turn leading to muted growth for the 3rd gen semiconductor segment as well. However, this segment is likely to enter a rapid upturn owing to high demand from automotive, industrial, and telecom applications. In particular, the GaN power device market will undergo the fastest growth, with a $61 million revenue, a 90.6% YoY increase, projected for 2021.

TrendForce expects three factors to drive the rapid growth of the GaN and SiC markets in 2021: First, widespread vaccinations are projected to drastically curb the spread of the pandemic, thereby galvanizing a stable increase in the demand for base station components, as well as for components used in industrial energy transition, such as power inverters and converters. Secondly, as Tesla began adopting SiC MOSFET designs for its in-house inverters used in Model 3 vehicles, the automotive industry has started to place increasing importance on 3rd gen semiconductors. Finally, China will invest enormous capital into its 14th five-year plan starting this year and expand its 3rd gen semiconductor production capacity to ultimately achieve semiconductor independence.

Resurging demand from EV, industrial, and telecom sectors will bring about a corresponding increase in 3rd gen semiconductor device revenue

Although certain foundries, such as TSMC and VIS, have been attempting to manufacture GaN devices with 8-inch wafers, 6-inch wafers are still the mainstream. As the pandemic shows signs of a slowdown, the demand for RF front end in 5G base stations, for smartphone chargers, and for automotive on-board chargers has now gradually risen. As such, total yearly revenue from GaN RF devices is projected to reach US$680 million, a 30.8% increase YoY, in 2021, whereas GaN power device revenue is projected to reach $61 million, which is a 90.6% increase YoY.

In particular, the remarkable increase in GaN power device revenue can primarily be attributed to the release of fast chargers from smartphone brands, such as Xiaomi, OPPO, and Vivo, starting in 2018. These chargers enjoyed excellent market reception thanks to their effective heat dissipation and small footprint. Some notebook computer manufacturers are currently looking to adopt fast charging technology for their notebook chargers as well. Going forward, TrendForce expects more smartphone and notebook chargers to feature GaN power devices, leading to a peak YoY increase in GaN power device revenue in 2022, after which there will be a noticeable slowdown in its upward trajectory as GaN power devices become widely adopted by charger manufacturers.

On the other hand, 6-inch wafer capacities for SiC devices have been in relative shortage, since SiC substrates are widely used in RF front end and power devices. TrendForce expects yearly SiC power device revenue to reach $680 million, a 32% increase YoY, in 2021. Major substrate suppliers, including Cree, II-VI, and STMicroelectronics, are planning to manufacture 8-inch SiC substrates, but the short supply of SiC substrates will unlikely be resolved until 2022.

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

The major suppliers of WFE (wafer fab equipment) in the US are progressing smoothly in the application for license from the US government for the exportation of equipment systems, equipment parts, and customer services for 14nm and above processes to Chinese foundry SMIC. The US-based equipment suppliers that are applying for the license include Applied Materials, Lam Research, KLA-Tencor, and Axcelis. TrendForce believes that as some support from US-based equipment suppliers is forthcoming, SMIC should be able to continue its efforts in the optimization of the mature process modules and overcoming production bottlenecks to avoid a scission in raw materials and spare parts, and predicts the company to sit at a global market share of 4.2% in 2021. Keeping SMIC in operation will provide a bit of relief to the capacity crunch in the global foundry market, however, the tightening of the available production capacity will remain a challenge that is difficult to resolve for the foundry industry as a whole. Also, the US government continues to prohibit SMIC from obtaining the equipment of the advanced nodes that are 10nm and below, and the particular restriction poses a potential risk for the long-term development of the Chinese foundry.

SMIC Continues to Expand Domestic Demand and Localization under China’s Explicit Direction in Long-Term Development of Semiconductor

As the fifth largest IC foundry in the world, SMIC obtains over 70% of revenue from China and Asia-Pacific. In terms of process node perspectives, 0.18um, 55nm, and 40nm contribute to the majority of revenue that totaled to over 80% from being applied on service platforms such as logic, BCD, eFlash, sensor, RF, and HV, and the coordination with the IC projects listed in the 13th and 14th Five-Year Plan of China will continue to enhance on the assimilation of localized WFE (wafer fab equipment) and raw materials.

The sanctions imposed by the US Department of Commerce that have affected the long-term planning in production capacity and development strategies of SMIC are expected to result in a YoY declination of 25% in the capital expenditure of 2021 for the Chinese foundry. SMIC intends to allocate the majority of its capital expenditure to capacity expansion for the mature nodes and the construction of a new joint-venture fab in Beijing, and is conservative towards investing in advanced process technology such as FinFET. TrendForce believes that geopolitical factors and uncertainties in the WFE section of the supply chain have compelled SMIC to scale back its capital expenditure and shift its development focus to the 55/40nm and 0.18um nodes.

A breakdown of SMIC’s revenue by region shows that more than 50% comes from China, though whether major global clients are willing to continue placing their orders with SMIC under the consideration of foundry selection and long-term cooperation amidst the unabated status in the semiconductor competition between China and the US will be a focus of observation going forward. Pertaining to the return on investment for technology scaling and mature node, the development planning in advanced processes for SMIC no longer succumb to immediacy in demand under restricted client conditions and constraints from subcontractors. On the other hand, the resources for chiplet and specialty IC that exert better functions for the operation of the company are focused on the existing 14nm and above matured processes to enhance on PDK (process design kits) for clients that may create a business model with prolonged profitability, as well as preserve R&D staffs and future growth dynamics.

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