TrendForce’s investigations finds that LG manufactured merely 30.6 million smartphones last year, which represented a 2.4% market share. The Korean company took ninth place in the global ranking of smartphone brands by production volume in 2020. At the start of this year, LG began to consider either selling or shuttering its mobile phone unit.

Around that same time, it also suspended the R&D of new smartphone models. On April 5, LG announced the decision to fold up the mobile phone unit as it was ultimately unable to offset consecutive years of financial losses it suffered in the smartphone market. Based on the company’s current plan, the mobile phone unit will wind down its operation by the end of July, while its smartphone manufacturing operations will cease by the end of 2Q21.

TrendForce therefore expects LG to occupy a lower than 1% share in the smartphone market this year. Incidentally, the conditions for survival for smartphone brands have further deteriorated on account of the increasingly fierce market competition as well as the recent and continuing hike in component prices. Taken altogether, these developments will reinforce the trend of the dominant brands having more and more market share in the future at the expense of the smaller brands.

Regarding LG’s performance in the smartphone market during the recent years, the company spared no effort in high-end R&D, with such results as the LG Wing with a rotating screen and the LG Rollable, which, as the name suggests, features a side-rolling display. The latter model remained a concept and did not enter mass production.

Despite its efforts, LG however continued to lag behind in sales when compared with the other major brands, such as Samsung and Apple. LG had a relatively weak position in the high-end segment of the smartphone market. As for the mid-range and entry-level segments, LG could not match Chinese brands in terms of pricing. To optimize its cost structure, LG expanded the share of device production going to ODMs. Nevertheless, this action was too late to turn things around.

Samsung, Lenovo, and Xiaomi are likely to benefit from LG’s exit from the North and Latin American markets

LG’s smartphone business has become unprofitable since 2Q15; and its financial losses were further exacerbated after it made a gradual exit from the Chinese market in 2016. As of 4Q20, LG’s smartphone business suffered 23 consecutive quarters of financial losses, which totaled about 5 trillion KRW. Despite LG’s limited market share, however, its exit from the various regional smartphone markets will still benefit its competitors in those markets, in particular, the mid-range segment in North America and Latin America.

With regards to North America, LG’s market share there will be split among its Android-based competitors, including Samsung, Lenovo (Motorola), and other in-house, private brands owned by domestic telecom operators. With regards to Latin America, on the other hand, LG’s exit will more noticeably benefit Lenovo (Motorola) and Xiaomi.

Looking ahead to the rest of 2021, as vaccinations begin to take place around the world, TrendForce expects the smartphone industry, which fulfills a basic living necessity, to make a gradual recovery as well. Thanks to the general public’s cyclical replacement demand, as well as growing demand from emerging markets, total smartphone production remains unaffected by LG’s exit. As a result, TrendForce maintains its smartphone production forecast of 1.36 billion units for 2021, a 9% increase YoY.

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

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