Enterprise demand for cloud services has been rising steady in the past two years owing to the rapidly changing global markets and uncertainties brought about by the COVID-19 pandemic. TrendForce’s investigations find that most enterprises have been prioritizing cloud service adoption across applications ranging from AI to other emerging technologies as cloud services have relatively flexible costs. Case in point, demand from clients in the hyperscale data center segment constituted more than 40% of total demand for servers in 4Q20, while this figure may potentially approach 45% for 2021. For 2021, TrendForce expects global server shipment to increase by more than 5% YoY and ODM Direct server shipment to increase by more than 15% YoY.

Global server shipment for 2Q21 is expected to increase by 20% QoQ and remain unaffected by material shortage

Thanks to the accelerating pace of enterprise cloud migration and the long queue of unfulfilled server orders last year as a result of the pandemic, server ODMs will likely receive an increasing number of client orders throughout each quarter this year. For instance, ODM vendors saw a 1% QoQ growth in L6 server barebones orders from their clients in 1Q21, but this growth is expected to reach 15-18% in 2Q21. TrendForce’s analysis indicates that apart from server ODMs maintaining a strong momentum, server OEMs (or server brands) will also be able to significantly raise their unit shipments in 2Q21.

The quarterly total shipments from server OEMs for 2Q21 is currently projected to increase by 20% compared with 1Q21 that was the traditional off-season. The COVID-19 pandemic is a major contributor to shipment growth because it has caused a paradigm shift in corporate work practices and spurred companies to accelerate their cloud migrations. The effects of the pandemic have also provided a window of opportunity for the traditional server OEMs, including HPE and Dell, to develop new business models such as hybrid cloud solutions or colocation services that allow their customers to pay as they go, in addition to their existing sales of whole servers.

It should be pointed out that, not only is the shortage of materials within the server supply chain as yet unresolved, but the long lead times for certain key components are also showing no signs of abating. However, in response to the pandemic’s impact on the industry last year, server manufacturers have now transitioned to a more flexible procurement strategy by sourcing from two or three suppliers instead of a single supplier for a single component, as this diversification allows server manufacturers to mitigate the risk of potential supply chain disruptions. TrendForce therefore believes that the current supply of key components including BMCs and PMICs is sufficient for server manufacturers, without any noticeable risk of supply chain disruptions in the short run.

Huawei and Inspur maintain brisk server shipments due to favorable domestic governmental policies and demand from cloud service providers

China’s server demand, which accounted for about 27.2% of the global total in 1Q21, continues to grow annually. Favorable policies and support from domestic cloud service providers are the main demand drivers in the country. Shipments from domestic server OEMs have remained fairly robust in China on account of the build-out of the hyperscale data centers across the country. Another reason is that Chinese telecom companies procure servers mostly from domestic manufacturers. Taken together, these aforementioned factors directly contributed to the server shipments of Inspur and Huawei in 1Q21.

Huawei’s server shipments are relatively unaffected by the US-China dispute, even though the sanctions enforced by the US government constrained Huawei’s component supply. The demand for Huawei servers has been boosted by telecom tenders and procurement from domestic enterprise clients. A QoQ growth rate of roughly 10% is projected for 2Q21 on account of a new round of government tenders. As for the whole 2021, Huawei’s annual shipments are still forecasted to register a YoY growth rate of about 5%.

Thanks to infrastructure programs and rising orders from data centers, Inspur is expected to capture around 30% of China’s total server demand in 2021. On the matter of product strategy, Inspur already has a sizable ODM business with tier-1 Chinese cloud service providers (i.e., Baidu, ByteDance, Alibaba, and Tencent). The volume of incoming orders for the first half of this year will also be quite massive because tier-2 cloud service providers and e-commerce platforms such as JD.com, Kuaishou, and Meituan will be injecting significant demand.

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 onset of the COVID-19 pandemic in turn generated a high demand for notebook computers. While demand began ramping up in 2Q20, subsequently resulting in a shortage in 3Q20 and 4Q20, the shortage in the notebook market has yet to be resolved even now, according to TrendForce’s latest investigations. The high demand for notebooks is estimated to propel the quarterly shipment of notebook panels to a historical high of 65.3 million units in 1Q21, which is a 3.5% increase QoQ and a 46.5% increase YoY.

With regards to supply and demand, TrendForce believes that the current shortage of notebook panels can primarily be attributed to the soaring market demand for notebooks. In terms of supply, notebook panel shipment underwent YoY increases of more than 20% during each quarter from 2Q20 to 4Q20. At the moment, panel orders from notebook manufacturers still exceed the order fulfillment capacity of panel suppliers by about 30-50%, as panel suppliers are bottlenecked by the shortage of certain semiconductor components, such as DDICs and T-cons.

Given the extremely tight supply of panels relative to demand, notebook panel prices have skyrocketed accordingly. Case in point, quotes for 11.6-inch panels, which are among the mainstream and are widely used for Chromebooks, are now closing in on quotes for 14-inch and 15.6-inch panels. As such, the high profitability of notebook panels have led panel suppliers to set more aggressive shipment targets this year.

In particular, after CEC-Panda sold its Nanjing-based Gen 8.5 fab and Chengdu-based Gen 8.6 fab last year, the company currently possesses a sole remaining Gen 6 fab in Nanjing. While this fab has never manufactured notebook panels in the past, plans for manufacturing 11.6-inch panels are now underway, with mass production expected to start in 2Q21, owing to the extremely high market demand for notebook panels. It should also be pointed out that HKC has been mass producing 11.6-inch panels since February 2021. The company is expected to start mass producing 14-inch panels in 2Q21 and 15.6-inch as well as 13.3-inch panels in 2H21. HKC aims to ship about 10 million notebook panels this year.

TrendForce indicates that the current demand for notebook panels will likely persist through 3Q21. However, as the shortage situation has persisted for more than three quarters since it surfaced in 2Q20, some notebook manufacturers may begin overbooking panel orders due to the expectation of further shortages. Therefore, if the actual market demand were met ahead of expectations, panel suppliers may potentially slow down their panel shipments in 2H21. Even so, the new normal brought about by the pandemic will continue to power the global digital transformation. For instance, in response to the digitization of distance learning, the education sector is expected to generate recurrent demand for Chromebooks. As a result, TrendForce has a positive outlook on the annual shipment volume of notebook panels for 2021, which is expected to reach 249 million units, a 10.5% increase YoY.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at vivieliu@trendforce.com

The emergence of the COVID-19 pandemic in 1H20 seemed at first poised to devastate the IC design industry. However, as WFH and distance education became the norm, TrendForce finds that the demand for notebook computers and networking products also spiked in response, in turn driving manufacturers to massively ramp up their procurement activities for components. Fabless IC design companies that supply such components therefore benefitted greatly from manufacturers’ procurement demand, and the IC design industry underwent tremendous growth in 2020. In particular, the top three IC design companies (Qualcomm, Broadcom, and Nvidia) all posted YoY increases in their revenues, with Nvidia registering the most impressive growth, at a staggering 52.2% increase YoY, the highest among the top 10 companies.

According to TrendForce’s latest investigations, Qualcomm was able to overtake Broadcom for the leading position in the top 10 list primarily due to two reasons: First, the sudden demand surge for network devices; and second, Apple’s decision to once again adopt Qualcomm’s baseband processors. Incidentally, US sanctions against Huawei also prompted other smartphone brands to ramp up their production volumes in an attempt to seize additional market shares. Taken together, these factors collectively drove up Qualcomm’s revenue last year. Likewise, although the US-China trade war hampered Broadcom’s performances in 1H20, its smartphone RF front-end became a crucial part of Apple’s supply chain in 2H20. Even so, Broadcom fell to second place in the rankings, since its revenue growth was relatively minor. The Mellanox acquisition substantially bolstered the depth and breadth of Nvidia’s data center solutions, which generated nearly US$6.4 billion in revenue, a 121.2% increase YoY. Owing to its data center solutions and gaming graphics cards, which performed well in the market, Nvidia posted the highest YoY revenue growth among the top 10 companies, at 52.2% as previously mentioned.

The three Taiwanese companies delivered remarkable performances as well. In particular, MediaTek’s revenue underwent a 37.3% YoY increase in 2020, an overwhelming improvement over the 1% YoY increase in 2019. MediaTek’s growth last year took place due to several reasons, including the skyrocketing demand for notebooks and networking products, the success of MediaTek’s 5G smartphone processors, and improved specs as well as cost optimizations for MediaTek’s networking products. Novatek’s revenue grew by 30.1% YoY, as the US-China trade war and the stay-at-home economy brought about by the pandemic resulted in strong sales of its driver ICs and TV SoCs. Finally, Realtek benefitted from the high demand for its various offerings, most notably networking products and notebooks, although sales of its audio products and Bluetooth chips were also respectable. Realtek’s revenue increased by 34.1% YoY.

Capitalizing on the capacity limitations of Intel’s 10nm process, AMD made significant inroads in the notebook, desktop, and server CPU markets, resulting in a $9.7 billion revenue, a remarkable 45% increase YoY. Although Xilinx’s revenue declined by 5.6% YoY in the wake of the US-China trade war, recent QoQ changes in Xilinx’s revenue show that the company is well on its way to recovery going forward.

Although vaccines are being administered across the globe at the moment, the pandemic has yet to show any signs of slowdown in 1Q21. While device manufacturers remain active in procuring components, the shortage of foundry capacities is expected to persist throughout the year. IC design companies are likely to raise IC quotes given the need to ensure sufficient foundry capacities allocated to IC products, in turn propelling IC design revenue to new heights in 2021.

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 COVID-19 pandemic heavily impacted the global auto market and in turn damaged the automotive LED industry in 1H20, according to TrendForce’s latest investigations. In 2H20, however, the gradual recovery of vehicle sales as well as the development of NEVs provided some upward momentum for the automotive LED industry, whose revenue for the year reached US$2.572 billion, a 3.7% decline YoY. Automotive LED revenue for 2021 is projected to reach $2.926 billion, a 13.7% growth YoY, thanks to the increasing demand for automotive headlights and display panels. As automakers continue to incorporate LED lighting solutions into new car models, the penetration rate of automotive LED will continue to undergo a corresponding increase as well.

TrendForce analyst Joanne Wu indicates that, in the automotive LED player revenue ranking of 2020, OSRAM Opto Semiconductors, Nichia, and Lumileds remained the top three largest automotive LED suppliers, respectively, with a combined market share of 71.9%. In particular, European and American automakers favored OSRAM’s solutions for their high-end vehicle models and NEVs due to the high quality of OSRAM products. Adoption by these automakers subsequently became the main revenue driver of OSRAM’s automotive LED business.

On the other hand, the pandemic caused Japanese automakers to suspend their operations and therefore had a direct impact on the revenues and market shares of Japanese LED suppliers, such as Nichia and Stanley, in 2020. Nichia and Stanley saw their revenues decline by 9.8% YoY and 7% YoY, respectively, and were the two suppliers among the top 10 last year to have shown relatively noticeable declines. Seoul Semiconductor’s nPola and Wicop LED products were adopted by Chinese automakers, including CCAG, SAIC-GM, and NIO, due to these products’ high brightness and compact sizes. Seoul Semiconductor’s market share reached 5.1% in 2020. Finally, not only did other suppliers, including Samsung LED and CREE, deliver consistent performances in the automotive aftermarket (AM) and performance market (PM) segments, but they also gradually began entering the automotive Original Equipment Manufacturer (OEM) lighting market. Samsung LED and CREE each took seventh and ninth place on the 2020 ranking with a 2.8% and 1.1% market share, respectively.

On the whole, TrendForce finds that automotive demand has been recovering since 4Q20. Accordingly, LED suppliers indicate that their booking orders appear bullish throughout 2021, meaning most LED suppliers now need to extend their product lead times in response. At the same time, LED players indicated that double booking might happen in the near future. Thereby, they will make decisions in light of the actual booking order quantity to see the possibility of increasing prices.

(Cover image source: OSARM)

For more information on reports and market data from TrendForce’s Department of Optoelectronics Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com

Owing to demand generated by the persistent stay-at-home economy last year and from the emerging markets in certain developing countries, global TV shipment for 2021 is expected to reach 223 million units, a 3.1% growth YoY, according to TrendForce’s latest investigations. The delay of UEFA Euro 2020 and the Tokyo Olympics until this summer will likely also play a role in driving up TV demand, regardless of whether live attendance will be allowed at the events. However, prices have increased repeatedly and considerably for not only IC components (used in TV set assembly), which are in shortage due to tight foundry capacities, but also TV panels. The price hike of TV panels has persisted since last June, with 32-inch panels, which are indicative of the rest of the TV panel market, reaching a massive 134% price hike for the period.

TrendForce’s investigations also show that the increase in panel prices has made it difficult for white-label manufacturers and tier 2/3 brands, which have traditionally relied on aggressive pricing to achieve their sales performances, to procure sufficient panels. Case in point, TV shipment from these companies has been gradually declining since last year. Conversely, suppliers have been giving major TV brands top priority ahead of the aforementioned companies to procure both panels and components because major TV brands generally place orders regularly and in large quantities. For the first time ever, the combined market shares of the top five brands, which are Samsung, LG, TCL, Hisense, and Xiaomi, surpassed 60% last year. This figure is expected to further increase to 62% in 2021, representing the fact that the TV market is progressively becoming an oligopoly.

As brands begin to favor large-sized products, 60-inch and larger TVs are expected to account for 17.7% of total TV shipment for the first time ever

With regards to various TV sizes, 32-inch panels have more than doubled in price since the start of the upturn last June. In response, TV brands have been transitioning their product lines to TVs that are at least 55 inches in size. More specifically, 55-inch TVs and ultra-large-sized TVs (60-inch and above) will account for 20% and 17.7% of the total TV shipment this year, respectively. Whereas the 20% shipment share of 55-inch TVs remained the same as last year, the 17.7% shipment share of ultra-large-sized TVs is 3.3% higher than last year’s figure. With regards to the annual shipment of ultra-large-sized TVs, 2021 marks a year of considerable growth compared to previous years, which generally saw YoY increases of 1-2%. This growth reflects the necessity for TV manufacturers to quickly leverage the consumer demand for large-sized TVs in order to maintain a stable growth in the industry, given the substantial price hike of TV panels.

As the difference between OLED and LCD panel prices narrows, TV brands are compelled to accelerate their OLED TV strategies

In response to the massive price hike of LCD panels, TV brands have begun to slightly raise the retail prices of TVs across various segments in order to keep up their bottom lines. However, if brands were to at once completely offload the increase in panel prices to the retail end, consumer demand would plummet as a result. A slow and gradual price hike is therefore expected to take place instead. Incidentally, it should be pointed out that the price hike of TV panels would be unlikely to stop in the short run even if the current panel shortage were alleviated in the future. As such, TV brands are expected to have limited room for profit growth in 2Q21.

The OLED panel market, on the other hand, has taken an opposite turn compared to the LCD market. For instance, prices of 55-inch UHD OLED panels were four times the prices of equivalent LCD offerings at the start of 2020, 2.9 times at the end of 2020, and 2.2 times in 1Q21, while prices of LCD panels underwent monthly increases. In addition to the narrowing gap between OLED and LCD panel prices, the panel industry’s production capacity for OLED panels saw a major boost thanks to the capacity expansion of LGD’s Gen 8.5 fab in Guangzhou. TrendForce expects OLED TV shipment for 2021 to reach 6.76 million units, a staggering 72% increase YoY, as OLED offerings become the top strategic priorities of TV brands in the high-end TV market this year.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at vivieliu@trendforce.com