Thanks to favorable policies by governments worldwide as well as massive adoption of horticultural LED lighting products in the medical and recreational marijuana markets in North America, horticultural lighting LED revenue saw an explosive growth in 2020, reaching US$301 million, a 57% YoY increase, according to TrendForce’s 2021 Global LED Lighting Market Outlook – Light LED and LED Lighting Market Trend report. This growth is expected to maintain its momentum throughout 2021, during which the market is expected to reach US$399 million in revenue, a 33% YoY increase.

However, it should be pointed out that horticultural red light LED chips, especially high-end ones, will likely suffer a shortage in 3Q21, as suppliers’ production capacities for these chips are constrained by other products, including automotive and infrared LED products. At the same time, demand for horticultural LED lighting products cannot be fully met due to the ongoing shortage of PMICs. Furthermore, delayed ocean freight schedules and North American governments’ crackdown on illegal indoor marijuana cultivations have also impacted the shipment of these end-products, thereby leading certain horticultural LED lighting suppliers to slow down their production plans and component procurement activities. Even so, LED suppliers are still optimistic towards the current market. Although changes in the global environment are expected to hinder market demand in the short run, LED suppliers believe that such hindrance will likely be ameliorated by the end of 3Q21.

TrendForce’s investigations indicate that horticultural lighting LED package suppliers include ams-OSRAM, Samsung LED, CREE LED, Seoul Semiconductor, Lumileds, Everlight, LITEON, and lightning. On the other hand, horticultural LED chip suppliers include Epistar, San’an, HC Semitek, HPO, and Epileds. The vast majority of the aforementioned companies were able to benefit from the horticultural lighting market and posted remarkable earnings performances in 1H21.

Looking ahead, the demand on food safety will bring about a shortened food supply chain via such developments as indoor farming and build-outs of vertical farms, with a corresponding rise in the global horticultural lighting LED market. In addition, TrendForce believes that, as operators of greenhouses or emerging vertical farms continue to adopt LED lighting equipment in the long run, and LED lighting costs continue to decline, more and more indoor farmers will be convinced to replace their traditional lighting equipment with LED lighting equipment. The replacement demand from these operators will, in turn, become the key driver of the horticultural lighting LED market’s future growth.

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

（Cover image source: Pixabay）

In the global satellite market, LEO (low earth orbit) satellites currently hold the most significant advantage in terms of developmental potential due to their closer proximity with earth and their relatively lower latency, radiation, and cost compared to HEO (high earth orbit) and MEO (medium earth orbit) satellites, according to TrendForce‘s latest investigations. Furthermore, not only do LEO satellites not require base stations, but they can also receive signals in difficult-to-reach and rural areas. As their signal coverage is not constrained by such geographical features as mountainous regions, oceans, and deserts, LEO satellites can synergize with 5G mobile communications by reaching areas that lack 5G coverage. After SpaceX generated much attention for LEO satellites, an increasing number of satellite operators have, in succession, applied to launch their own satellites. TrendForce expects annual satellite revenue for 2022 to reach US$295 billion, a 3.3% YoY increase.

With Europe, the US, China, Japan, and Korea participating in LEO satellite and 5G development, challenges still remain with respect to costs and long-term prospects

Regarding the deployment of LEO satellites by country, Asian countries, including China, differ from other major countries in terms of primary applications. Whereas non-Asian countries generally adopt LEO satellites for commercial purposes, Asian countries primary gear their deployment toward “national security” purposes. Some of the major developments in national security applications include AviChina’s Hong Yun project and CASC’s Hongyan constellation, both of which are expected to complete periodic missions in 2022. While policies relevant to the Chinese satellite industry are set by the Ministry of Industry and Information Technology, the industry itself is regulated by the Radio Association of China. In Japan, NTT DoCoMo oversees the development of 6G communication, with an emphasis on NTN technology, which works in tandem with LEO satellites. Finally, Korea’s MSIT recently unveiled its “6G R&D implementation plan”, which includes the launch of 14 LEO satellites by 2031.

Between LEO satellites and 5G telecommunications, the European and US markets are prioritizing ground-based 5G telecommunications first and finalizing the release of all frequency ranges in the 5G spectrum. While the number of ground stations and residents located in regions with 24.75-25.25GHz frequency bands are limited, LEO satellites shoulder the responsibility of preventing signal disruption. On the other hand, certain European organizations, such as the ESA and the European Commission, have established the SaT5G (Satellite and Terrestrial Network for 5G) consortium in order to drive forward the application of and integration between satellite and 5G communications.

In the industry’s current infancy, major satellite operators have launched more than a thousand small LEO satellites. In consideration of these satellites’ less-than-five years’ lifespans, operators will most likely focus on low-cost manufacturing and launching solutions in order to minimize CAPEX, in turn accelerating the pace of satellite adoption and lowering the overall cost of satellites. More specifically, not only have SpaceX and Amazon respectively engaged in vertical integration and streamlined their corporate structures, but they are also aligned with the demands of clients ranging from enterprises, governments, and consumers. As a result of these efforts, SpaceX and Amazon have effectively lowered the costs involved with collaborating with other suppliers.

Satellite recycling and space materials are two major sources of revenue auxiliary to the LEO satellite industry

The 3GPP recently announced that it will finalize Release 17, which for the first time will include NTN (non-terrestrial networks), in 2022. Prior to this, mobile communications and satellite communications had been two separate, independently developing industries. That is why companies working across the two industries in the upstream, midstream, and downstream supply were generally different as well. After 3GPP includes NTN in its upcoming release, the two industries are likely to generate more opportunities for collaboration. At the moment, Tesla subsidiary SpaceX has applied to launch the most satellites among all satellite operators, which include Amazon, Britain-based OneWeb, and Canada-based Telesat, among others. Notably, US operators have launched more than 1,000 satellites, which represent more than 50% of the global total.

Signal transmission and reception between satellites and ground stations are relatively limited. As such, four major satellite technologies, including collision prevention, management, communications, and ground base-satellite transmission, represent four major areas in which potential suppliers can participate. However, given the intense competition among satellite operators, once LEO satellite deployment reaches a global scale in the future, issues such as light pollution may begin to adversely affect planetary and other astronomy research. TrendForce therefore believes that companies capable of supplying materials that can lower satellite reflectivity are likely to experience considerable growth going forward. In addition, small LEO satellites’ lifespan of less than five years will also result in space debris issues. Hence, effectively recycling satellites back to earth is yet another potential commercial opportunity in the space industry.

Starlink is partnering with Taiwanese telecom companies for the first time and is expected to expand these companies’ services areas starting from ground stations

At the moment, one of the pain points associated with LEO satellites is the difficulty for ground stations’ antennas to track satellite signals. Hence, Taiwanese companies that primarily specialize in base station building are therefore likely to benefit from potential partnerships with LEO satellite operators. Although satellite-related companies in Taiwan traditionally focused on manufacturing equipment and components for MEO and HEO satellites, the rise of the LEO market has now persuaded these companies (including MTI, WNC, Kinpo, UMT, Tong Hsing, GPI, WIN, Chicony, EMC, Compeq, and Shenmao) to become suppliers for SpaceX’s Starlink satellite internet system.

Having taken notice of Taiwan’s strategic position that connects northern Asia with Southeast Asia, US-based SpaceX has reached out to Taiwan’s National Communications Commission (NCC) and Chunghwa Telecom, with the latter subsequently confirming its partnership with SpaceX. Chunghwa Telecom is now looking to extend this partnership to a comprehensive business relationship that goes beyond base stations. As the Starlink internet service is expected to be available in Taiwan next year, Chunghwa Telecom will become the sole distributor of Starlink in Taiwan. Now that SpaceX has launched more than 1,800 satellites, Chunghwa Telecom will likely facilitate increased internet connection speed for Starlink via its 18,000 base stations located throughout Taiwan, which synergize with the satellites for better, more comprehensive coverage.

（Covcer image source: Pixabay）

Despite the intensifying COVID-19 pandemic that swept Taiwan in 2Q21, the domestic OSAT (outsourced semiconductor assembly and test) industry remained largely intact, according to TrendForce’s latest investigations. Global sales of large-sized TVs were brisk thanks to major sporting events such as the Tokyo Olympics and UEFA Euro 2020. Likewise, the proliferation of WFH and distance learning applications propelled the demand for IT products, while the automotive semiconductor and data center markets also showed upward trajectories. Taking into account the above factors, OSAT companies raised their quotes in response, resulting in a 26.4% YoY increase in the top 10 OSAT companies’ revenue to US$7.88 billion for 2Q21.

TrendForce indicates that, in light of the ongoing global chip shortage and the growing production capacities of foundries/IDMs in the upstream semiconductor supply chain, OSAT companies gradually increased their CAPEX and expanded their fabs and equipment in order to meet the persistently growing client demand. However, the OSAT industry still faces an uncertain future in 2H21 due to the Delta variant’s global surge and the health crisis taking place in Southeast Asia, home to a significant number of OSAT facilities.

Regarding the performances of individual OSAT companies in 2Q21, market leader ASE and Amkor each recorded revenues of US$1.86 billion and US$1.41 billion, which represented YoY growths of 35.1% and 19.9%, respectively, for the quarter. Both companies benefitted from strong demand for 5G smartphones, notebook computers, automotive chips, and networking chips. In particular, ASE allocated some of its capacities to KYEC (which suffered a drop in its IC testing capacity due to the pandemic) and therefore experienced a surge in its revenue. Also posting a revenue growth in 2Q21 was Amkor, which took second place on the top 10 list owing to the high demand for automotive chips, HPC chips, and 5G handsets released by Apple and other smartphone brands.

SPIL’s revenue for 2Q21 reached US$931 million, a modest 2.3% YoY increase. The company’s relatively muted growth can be attributed to the fact that smartphone IC packaging demand from Huawei, one of SPIL’s major clients, had plunged, while other smartphone brands did not place orders sufficient for making up for this plunge. As previously mentioned, some of KYEC’s testing capacities were adversely affected by the COVID-19 pandemic, resulting in a 6.8% YoY increase in KYEC’s revenue to a mere US$274 million for 2Q21. PTI gradually recovered from difficulties resulting from the closure of its Japanese and Singaporean subsidiaries. For 2Q21, PTI’s revenue reached US$742 million, a 14.3% YoY increase.

Regarding Chinese OSAT companies, JCET and Hua Tian both expanded their capacities in order to meet the massive demand from the domestic 5G telecom, base station, consumer electronics, and automotive markets. While JCET and Hua Tian continue to operate in accordance with China’s goal of achieving domestic semiconductor substitutes, the two companies’ revenues for 2Q21 reached US$1.1 billion and US$467 million, which represented YoY growths of 25% and 64.7%, respectively. It should be pointed out that TFME also benefitted from the aforementioned market demand. TFME’s revenue reached US$591 million, a 68.3% YoY increase, which was the highest increase among the top 10 OSAT companies in 2Q21. TFME’s impressive growth took place primarily because the company is the main OSAT provider for AMD. As AMD captured some of Intel’s market share, both AMD and, by extension, TFME, experienced a resultant revenue growth.

Finally, ChipMOS and Chipbond, which specialize in panel driver IC packaging and testing, benefitted from major sporting events such as the Tokyo Olympics and UEFA Euro 2020. Given the skyrocketing demand for display panels, IC testing demand for driver ICs, including TDDI and DDI, also underwent a corresponding rise. Notably, due to a shortage of packaging materials, ChipMOS raised the price of its packaging services for memory products and subsequently registered a spike in both revenue and gross profits. While both companies’ revenues reached US$251 million, ChipMOS and Chipbond each registered revenue growths of 38.4% YoY and 49.6% YoY, respectively.

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

Demand for telecom base stations, converters, and charging stations has seen considerable growth this year as a result of ongoing developments in 5G telecommunication, consumer electronics, industrial energy conversion, and new energy vehicles (NEV), according to TrendForce’s latest investigations. While this demand generated a corresponding surge in demand for components and devices powered by third-generation semiconductors GaN and SiC, the GaN power devices market is expected to undergo the highest magnitude of growth. TrendForce expects GaN power devices revenue for 2021 to reach US$83 million, an impressive 73% YoY increase.

According to TrendForce’s investigations, GaN power devices are primarily used in consumer electronics; annual GaN power devices revenue is expected to grow at a 78% CAGR and reach US$850 million in 2025. Regarding applications, consumer electronics, NEVs, and telecom/data centers, in order, comprise the three largest sources of GaN power devices consumption, at 60%, 20%, and 15%, respectively. TrendForce finds that about 10 smartphone OEMs have released more than 18 models of smartphones equipped with fast charging capability, while notebook manufacturers are also indicating a willingness to adopt fast charging for notebook computers.

Annual SiC revenue, on the other hand, is expected to grow at a 38% CAGR and reach US$3.39 billion in 2025, with NEVs, solar power generation/storage, and charging stations representing the top three largest source of SiC power device consumption, at 61%, 13%, and 9%, respectively. For the NEV industry, in particular, SiC power devices are most widely used in powertrain inverters, OBCs (on board chargers), and DC-DC converters.

Major IDMs from Europe, the US, and Japan still control the vast majority of substrate supply

Due to their relative difficulty in epitaxial growth and the fact that the industry is moving from 6-inch towards 8-inch substrates as the mainstream, third-generation semiconductor GaN and SiC substrates are 5-20 times more expensive to manufacture compared to traditional 8-inch and 12-inch Si substrates. It should be noted that most substrate materials are, at the moment, controlled by such major IDMs as US-based Cree and II-VI, Japan-based Rohm, and Europe-based STMicroelectronics. In response to this oligopoly, certain Chinese suppliers, including SICC and Tankeblue, have successively entered the substrate market with the support of China’s 14th five-year plan. Their participation will likely accelerate China’s goal of semiconductor self-sufficiency.

Although substrate suppliers from Europe, the US, and Japan enjoy an early presence in the market and possess relatively mature process technologies, TrendForce believes that Taiwanese suppliers still hold certain competitive advantages. For instance, not only do Taiwanese companies have vast experiences in silicon development, but Taiwan is also home to a comprehensive upstream/downstream silicon supply chain. In addition to these aforementioned advantages, Taiwan is further aided by policies that promote domestic material supply, design, and technological development. Taiwan is therefore well on its way to achieving its goal of becoming a center of advanced semiconductor fabrication that derives its strength from a gradually maturing front-end substrate and epitaxy industry chain, as well as mid- and back-end competencies in chip design, manufacturing, and packaging. Currently, two major strategic alliances, led by Hermes-Epitek (with subsidiaries EPI and EPISIL), and SAS (with subsidiaries GW, AWSC, CWT, and ATC) are attempting to maximize their efforts in Taiwan’s lacking substrate industry. Furthermore, TAISIC, jointly funded by KENMEC and TAINERGY, has submitted 4-inch SiC substrates for qualification and is actively investing in 6-inch SiC substrate R&D.

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

At Gamescom 2021, Microsoft announced that it will extend its game streaming service (Xbox Cloud Gaming) from PC and mobile devices to game consoles starting on Christmas Day this year. In addition to supporting the new consoles Xbox Series X/S, Xbox Cloud Gaming will also be compatible with the Xbox One models. TrendForce’s investigations indicate that the Nintendo Switch remains the mainstream option in the consumer market and is expected to reach 30.13 million units in annual sales for 2021. The PlayStation 5 consoles, which have been in severe shortage since its release, will take second place with annual sales of 17.61 million units, while the Xbox Series X/S will take third place with 8.66 million units sold this year.

Xbox One owners will comprise the majority of Xbox Cloud Gaming users on game console platforms

Microsoft has been making long-term efforts to promote cloud-based game streaming services. One such example includes the improvements that it made to its web browser to better support Xbox Cloud Gaming and permit the service to run on PC and mobile devices, with official PC and iOS releases taking place in June 2021. Microsoft’s announcement of game console compatibility with Xbox Cloud Gaming represents yet another step taken by the company towards its goal of extending game streaming services to all platforms.

As previously mentioned, Xbox Cloud Gaming supports not only the latest Xbox Series X and S consoles, but also the previous-gen Xbox One models. This wide compatibility can primarily be attributed to the fact that game streaming services have relatively low hardware requirements, thereby making it compatible across virtually all console hardware. The other reason is Microsoft’s aim to quickly expand the user base of Xbox Cloud Gaming. After all, very few people currently possess Xbox Series X/S consoles because these consoles have only been recently released, and their sale volumes have been constrained by the severe shortage of electronic components. Hence, the ability to quickly expand Xbox Cloud Gaming’s user base is contingent on adoption by current owners of Xbox One consoles, whose total cumulative sales are relatively high by now.

Going forward, Microsoft is expected to leverage the attraction of Xbox Cloud Gaming to draw consumers to purchase the Xbox Series X/S through the Xbox All Access installment payment plans. This is also why Microsoft is aggressively collaborating with and acquiring game developers, as having more games playable through Xbox Cloud Gaming will make the service more attractive to consumers.

Xbox Cloud Gaming will likely reduce the willingness of existing Xbox One owners to buy new consoles

Microsoft’s core strategy revolves around its platform and service. By attracting consumers through service first, Microsoft will then be able to raise the sales of its hardware. Put another way, increased hardware sales result in an expanded user base, which will further result in increased earnings through both platform and service.

Hence, the initial sales performances of the Xbox Series X/S are not a point of focus for Microsoft. If the company is able to expand its user base, Microsoft does not even necessarily need to ensure the popularity of the Xbox Series X/S. It can instead potentially release other modified models that are better suited for game streaming services or even simpler, dedicated game streaming boxes. However, in consideration of other services such as Xbox Live Gold, as well as earnings from players that do not subscribe to game streaming services, Microsoft must still maintain a range of game consoles that can compete with the PS5 in terms of specs.

Although Microsoft’s core strategy is in alignment with its software services for the PC market, such as Office and Windows, the heavy push for Xbox Cloud Gaming will inadvertently lower the console replacement demand of existing Xbox One owners. Furthermore, the difference in hardware specifications between the Xbox Series X and Xbox Series S will also complicate the software development process for game developers, in turn reducing the willingness of developers to create games for the latest Xbox consoles and affecting the sales performances of the Xbox Series X/S.

Therefore, it makes sense that despite the similar specs between the Xbox Series X and the PS5, their sales numbers differ wildly. At any rate, the Switch will remain the sales leader in the game console market in 2021, with the PS5 experiencing a gradual sales growth and the latest Xbox consoles lagging behind.

（Cover image source: Pixabay）