August Sees TV Demand Fluctuations

Entering August, the TV brand demands echo with noise. Despite 7% Q3 growth, a noticeable dip from last month’s projections appears. Yet, panel makers hold steady, adjusting production and raising TV panel prices due to unclear trends for larger sizes. Expect strong TV panel prices in August, up by USD 2~8. Notably, 75-inch panels could surge around USD 8.

Monitor Panels in August: Steady Outlook

In August, as consumer model demands saturate and commercial model needs to stay low, brands approach price hikes cautiously. Despite this, panel manufacturers aim to increase prices. Expect minor upticks in monitor panel prices for August. Open Cell panels could see a convergence of price increases, around USD 0.1. Projections include USD 0.1 hikes for 21.5-inch, 23.8-inch, and 27-inch panels.

Laptop Panel in August: Cautious Price Adjustments

Looking at August laptop panel prices, constrained growth in Q3 demand from top-tier brands leads to a cautious stance on broad price increases. Most brands accept minor adjustments for low-end HD TN models. Meanwhile, specific manufacturers slightly raise prices for mid-to-high-end FHD IPS models to select customers, while mainstream prices remain restrained. Anticipate a USD 0.1 uptick for HD TN models and stable prices for FHD IPS models in August.

According to Taiwan’s Economic Daily, the consumer market is experiencing starkly low demand, causing IC design firms primarily relying on mature processes, such as those in driver ICs, power management ICs, CMOS image sensors (CIS), and microcontrollers (MCUs), to adopt a notably cautious approach in placing orders. Some manufacturers are hesitating to place orders due to persistently high inventory levels.

The industry consensus is that IC design companies are expected to increase their orders in mature processes, with the earliest effects possibly emerging by 2024, implying that the mature process market conditions might not improve significantly until the end of this year.

The consumer market entered a period of economic downturn in the latter half of last year, which in turn affected industries such as PCs, smartphones, and networking. This not only led to a surge in inventory levels for IC design firms but also significantly curtailed the momentum for chip tape-out. Looking ahead to the second half of this year, while inventory levels across various sectors have largely returned to normal, chip tape-out for Q3 have notably declined compared to Q2.

In particular, demand for high-speed I/O in the PC sector and Board Management Controller for data centers remains notably weak. The supply chain indicates that PC demand for the second quarter, driven by advanced stocking, has dampened the typical peak season effect for the latter half of the year. This trend is evident across desktop PCs, laptops, and Chromebooks.”

As for the smartphone sector, after various research institutions revised down this year’s smartphone market size, the supply chain’s chip tape-out momentum has cooled down significantly. Only Qualcomm has increased its tape-out momentum to semiconductor foundries in the first half of the year, while MediaTek continues to adhere to a conservative strategy as of now.

(Photo credit: SMIC)

At an online investor meeting, Foxconn Group’s Chairman Young Liu shared insights on the company’s current endeavors. He disclosed that the group is in discussions with over 10 clients on 20 electric vehicle (EV) collaboration projects. Out of these, two projects are already in production, and five more are likely to result in contracts. Additionally, Foxconn’s electric vehicle platform, Model C, is on track for mass production in Taiwan in the fourth quarter. Analyzing the information released during the meeting, TrendForce offers the following insights:

• Foxconn’s Electric Vehicle Platform Outsourcing Model Builds a Self-Sufficient Ecosystem

Electrified vehicle platform manufacturing enables various components to be categorized into several platform types based on vehicle segments, avoiding the chaotic scenario of each car having unique specifications. This modular approach enhances the utilization of interior space and promotes advancements in battery life and future advanced driving control designs. Consequently, various automakers are introducing new energy vehicle platforms.

However, initial investments in platform development can be burdensome for automakers. Moreover, integrating new EV technologies into platforms poses potential risks. Foxconn’s EV platform, by adopting an ‘outsourced’ manufacturing concept, reduces initial resource expenditures for automakers and accelerates market entry for EV models.

Foxconn also presents the concept of MIH, a membership-based industry cluster, which gathers around 2,400 suppliers spanning battery, motor, and control systems, building a comprehensive EV platform ecosystem.

• Correct Market Approach Yet Missing a Vital Catalyst

Foxconn, not opting for a fully proprietary brand, draws lessons from Taiwan’s automotive brand history. Building on years of contract manufacturing, the company ventures into the EV market, positioning itself ahead of the curve.

However, with the rapid global development of electric vehicles, the early advantages Foxconn established face challenges. The Volkswagen MEB platform successfully produced the Ford Explorer, hinting at potential collaborations through platform sharing. Audi is reportedly considering direct acquisition of a Chinese new energy vehicle platform. The common theme here is that traditional automakers seem inclined to collaborate with proven counterparts, showcasing the cautious approach toward platforms. At this stage, while Foxconn’s promising achievements might attract certain startups, their stability and market scale might not fully align with Foxconn’s EV market expectations.

Foxconn is well-prepared but awaits a catalyst. The company currently lacks the support of established automakers like GM, BMW, and Stellantis. If the projects mentioned during the investor meeting involve collaborations with such established players and secure manufacturing contracts, Foxconn’s model will foster a more diversified evolution in future EV platform collaborations.

(Photo credit: Foxconn)

According to Taiwan’s Commercial Times, TSMC continues to face challenges from ongoing price undercutting and competitive bidding in mature semiconductor manufacturing processes. Concerns arise about the company’s ability to offset these challenges with AI-related orders. Reports from the market suggest that on July 20th, TSMC revised down its fiscal forecast for the year for the second time, slashing its annual revenue target (in USD) from an anticipated decline of 1% to 6% to a significant reduction of 10%. However, given the persistent sluggish economic conditions of late, there is speculation of a potential third adjustment that could lead to a year-on-year revenue decline of 12%.

In the current investment landscape, artificial intelligence has become a focal point this year. Additionally, the strong demand for CoWoS packaging has contributed to a positive outlook for TSMC. However, it’s important to note that AI’s contribution to TSMC’s overall revenue is not substantial.

Using the popular H100 model from NVIDIA as an example, it only impacts TSMC’s performance in the N4 manufacturing process. This limited contribution falls short of countering the downward trend in consumer product demand utilizing the N3 and N7 manufacturing processes.

Market Speculations Emerge About TSMC’s Performance and Challenges

Market sources indicate that TSMC’s performance in mature processes (7nm and above) accounted for 47% of its output in the second quarter. While prices managed to hold steady in the first half of the year, ongoing softness in end-user demand has prompted Chinese manufacturers to engage in aggressive expansion, price reduction, and competition for orders, which inevitably impacts TSMC. There are even reports circulating about a potential loosening of 7nm production capacity.

In response, TSMC stated that its perspective and outlook on market demand align with the contents of its July press conference. As of now, no new updates are available. Furthermore, TSMC refrains from commenting on market speculations or shifts in customer business dynamics.

(Photo credit: TSMC)

In just a short span of six months, AI has evolved from generating text, images, music, and code to automating tasks and producing agents, showcasing astonishing capabilities. TrendForce has issued a new report titled “Surge in AIGC Applications to Drive Long-Term Demand for AI Servers.” Beyond highlighting the latest developments in AI, the report also delves into strategies adopted by governments and industries to ensure the positive trajectory of AI’s development. It analyzes the projected timeline for the widespread implementation of AIGC applications and their impact on the demand for AI servers.

• AIGC Application Wave Expected to Arrive by 2025 Once Rules are Set

While the AIGC application frenzy in the first half of 2023 has raised concerns, it has also prompted governments and industries to actively address potential risks and issues stemming from AIGC applications, along with devising corresponding solutions. Currently, both the government and industries have strategies in place to regulate AIGC applications in terms of legal oversight, privacy protection, identity establishment, reliability enhancement, security augmentation, and copyright maintenance.

Considering the time required for governments to draft legislation and industries to enhance AI’s reliability, security, and copyright protection, it is estimated that the rules of the AIGC application will gradually solidify by late 2024 to early 2025, paving the way for the AIGC application surge around 2025.

Beyond the five major categories of AIGC applications—text generation, image generation, music generation, video generation, and code generation—AIGC technology-based applications like AI customer service, personalized AI assistants, AI search, and AI productivity tools are also gaining prominence. In the realm of gaming, whether in VR or open-world games, AIGC technology is set to significantly enhance immersion and freedom, ushering in revolutionary experiences.

• Long-Term Demand for AI Servers to Benefit Server Brands and ODMs

To secure a dominant position in the AI technology industry and embrace the upcoming AIGC application wave, application service providers, tech giants, national institutions, and startups are competing to bolster their AI computing resources. As core computing components experience increased shipments, the shipment volume of AI servers, which serve as foundational computing units, is also expected to surge.

In the proactive year of 2023, where institutions and enterprises are aggressively building computing resources, the AI server shipment volume is projected to grow substantially. Given the limited upstream semiconductor capacity, this momentum is likely to extend into 2024.

By 2025, propelled by the AIGC application frenzy, AI server shipments are poised for further stimulation. Consequently, due to institutions and businesses preemptively establishing computing resources and the projected timeline for large-scale AIGC application implementation, the AI server market is anticipated to witness a sustained demand surge. Given the intricate manufacturing of AI servers and their higher degree of customization, their profitability exceeds that of general servers. With the continual growth in AI server shipments, relevant server brands and ODM manufacturers are poised to reap significant benefits.