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

As Samsung Display (SDC) decided to extend the manufacturing operations of its Korea-based Gen 8.5 LCD fab, and tier-two panel suppliers are still slow to reassign their production capacities from TV panels to IT panels, TrendForce expects total TV panel shipment for 2021 to reach 269 million units, which is relatively unchanged compared to 2020 levels. Panel suppliers will continue to focus on large-sized TV panels this year in response to several industry-wide developments, including M&A, reduced production capacities, improved manufacturing technologies, and increased panel demand. Furthermore, as the persistent price hike of TV panels continues to reduce the profit margins of TV sets, TV brands have started to gravitate towards larger, more profitable TV sizes. TrendForce therefore expects the average TV panel size this year to increase by 1.6 inches and move towards 50 inches.

TrendForce analyst Jeanette Chan indicates that the shift towards large-sized panels is an effective means of expending the production capacity of panel suppliers. Case in point, due to the limited production capacity for TV panels in 1H21, not only are TV panels currently in short supply, but TV panel prices are also on the rise. On the other hand, the demand for TV panels in 2H21 will depend on several key factors: first, whether the increased retail price of TV sets will hamper consumer demand; second, whether the pandemic will be effectively brought under control as more countries begin vaccinations; third, whether the impending global economic recovery will be a significant one. And finally, whether a market bubble will appear as a result of TV manufacturers’ overbooking panel orders in anticipation of potential hindrances including the price hike of materials in the upstream supply chain, the shortage of glass substrates due to such accidents as facility fires, the shortage of IC supply, and the extended shipping times.

Thanks to their persistently rising production capacity and successful acquisitions, China-based BOE and CSOT, the two largest panel suppliers in the world, are expected to collectively account for about 40% of total TV panel shipment this year. At the same time, BOE and CSOT are actively improving their technologies and making a push for high-end products, such as 8K, ZBD, and AM Mini LED. By leveraging their improved technologies and available funds, the two companies are likely to extend their operations upstream by systematically undertaking vertical integrations.

On the other hand, HKC, which is currently raising its production capacity, has garnered much attention in the market amidst the current shortage situation of TV panels. Along with its Changsha-based H5 fab, which is set to kick off mass production shortly, HKC possesses four Gen 8.6 fabs in total. By raising its production capacity and engaging in additional strategic partnerships with tier-one TV brands, HKC is expected to enter the top three ranking of panel suppliers by TV panel shipment for the first time ever, with a shipment of about 41.91 million units this year, a 33.7% increase YoY.

Taiwan-based AUO and Innolux are expected to experience YoY decreases in their shipments this year as their production capacities are relatively limited, although both companies’ efforts to optimize their products and engage in cross-industry partnerships have brought them certain competitive advantages. In particular, AUO is leading the panel industry in developing not only ultra-high-end products, such as 8K+ZBD, but also Micro LED displays, whereas Innolux holds competitive advantages in product diversity and in-house ODM services. It should be pointed out that these two Taiwanese companies are able to deal with the current IC shortage situation better than their competitors because their parent companies have longstanding business relationships with IC design companies.

With regards to Korean suppliers, although LGD and SDC have both prolonged their LCD manufacturing operations in Korea in order to satisfy the current bullish market demand, the two companies are primarily focusing on transitioning their offerings to new products. LGD will expand the OLED production capacity of its Guangzhou fab in 2Q21 as part of its effort to dominate the OLED market. As for SDC, the company has dropped out of the top six ranking this year as a result of its lowered production capacity. However, new TV sets featuring SDC’s QD-OLED panels are expected to officially hit the market in 4Q21, in turn driving SDC’s yearly TV panel shipment to 2 million units in 2022.

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

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

Owing to high sales of the iPhone 12 series as well as an aggressive device production strategy by Chinese smartphone brands in response to sanctions on Huawei, which has lost considerable market share as a result, global smartphone production for 1Q21 is likely to reach 342 million units, a YoY increase of 25% and a QoQ decline of just 6%, according to TrendForce’s latest investigations. Historically, smartphone production tends to experience a QoQ drop of around 20% for the first quarter as demand collapses from the peak-season level of the fourth quarter of the preceding year. However, the performance of the first quarter of this year is expected to defy seasonality.

Smartphone production for 4Q20 is estimated at 364 million units, while Apple ranked first in terms of production volume

Even though the share of high-end models in global smartphone sales shrank in 2020 due to the COVID-19 pandemic, Apple was able to push through the headwinds and capture market share by introducing 5G models and adopting an aggressive pricing strategy. Apple produced 77.6 million units of iPhones in 4Q20, an 85% increase QoQ, thereby overtaking Samsung and ranking first amongst all smartphone brands. It should also be pointed out that iPhone 12 devices accounted for about 90% of the iPhone production in 4Q20. For 1Q21, sales of iPhone 12 devices remain strong, and total iPhone production is expected to reach 54 million units, with iPhone 12 models again accounting for about 80% of this figure. Looking further ahead, Apple plans to launch four new flagship iPhone devices in 2H21 and is likely to adhere to its aggressive pricing strategy. Regarding hardware advances, Apple will upgrade its mobile SoC to the A15 bionic SoC. Other than that, it will optimize various existing functions of the iPhone device. On the whole, the four upcoming flagship models can be regarded as extensions to the iPhone 12 series.

Samsung posted a QoQ decline of 14% in its smartphone production to 67 million units for 4Q20, thereby taking second place in the quarterly ranking. Its performance was affected by the competition from the new iPhone devices and the end of stock-up activities that were related to the year-end holiday season in North America and Europe. Moving to 1Q21, Samsung has released the new lineup of its flagship Galaxy S21 series in advance so as to maintain its market share in the high-end segment. At the same time, Samsung has adopted promotional pricing to boost the sales of its latest devices. Samsung’s quarterly smartphone production volume will likely reach around 62 million units for 1Q21. For the whole 2021, TrendForce expects Samsung to top the annual ranking of brands by production. Nevertheless, retaining the leadership position will be increasingly challenging for Samsung as it has been losing market share to several Chinese brands that have risen rapidly over these past few years. Regarding product strategy, Samsung will likely combine the Galaxy Fold series, equipped with foldable displays, with the Galaxy Note series, which offer large-sized displays, into the same flagship lineup. The main focus of Samsung’s sales efforts will still be on the Galaxy A series that encompasses models across the high-end, mid-range, and low-end segments of the price spectrum. To effectively compete against Chinese brands that boast better price-performance ratio for their devices, Samsung will maintain high specifications and a price advantage for Galaxy A devices.

OPPO (including OPPO, OnePlus, Realme), Xiaomi, and Vivo produced 50 million, 47 million, and 31.5 million units of smartphones respectively in 4Q20, which placed them at third, fourth, and sixth places. Looking ahead to 1Q21, the three aforementioned smartphone brands are expected to maintain an aggressive production target and actively expand in both the overseas and domestic markets. Nonetheless, potential growths in their actual production volume will be limited by the current shortage of production capacities across the foundry industry. In terms of product strategies, the three Chinese brands will remain aggressive in their R&D activities for high-end models as they seek to take over Huawei’s previous position in this segment. In particular, Xiaomi and OPPO have been seizing market shares with the highly cost-effective Redmi and Realme series, respectively. Notably, Xiaomi is expected to achieve a better performance in terms of market share for the whole year due to its earlier expansion in the overseas markets.

In response to heightened China-U.S. tensions, Huawei maintained a high inventory of components, which allowed it to effectively mitigate the impact of sanctions from the Department of Commerce. As such, Huawei recorded a quarterly production volume of 34.5 million units in 4Q20, a 21% decrease QoQ. This performance was sufficient to land Huawei in the fifth place in the production ranking for the quarter. Going forward, if suppliers of relevant smartphone components are unable to obtain approval to ship to Huawei by the end of 1Q21, then Huawei is expected to experience a noticeable cutoff of material supplies by the end of 2Q21. Furthermore, after being officially sold off by its parent company Huawei in early 2021, Honor is similarly facing the issue of foundry capacity shortage, which is projected to constrain the production volume of new Honor for the entirety of 2021.

2021 Ranking of smartphone brands by market share remains under scrutiny as LG suspends R&D of new products

LG has been considering either closing down or selling off its smartphone business since early 2021 while also suspending the R&D of new models. This has introduced additional uncertainties into the smartphone market following Huawei’s diminished presence. Although LG was relentless in innovating and developing high-end smartphones in the past, its sales performances lagged behind more competitive offerings from Samsung and Apple in the high-end segment. In the entry-level and mid-range segments, LG similarly fell short of Chinese brands, whose products enjoyed a pricing advantage. As a result, LG’s smartphone market share underwent gradual YoY declines since 2016, finally coming to ninth place in the global smartphone production ranking in 2020. Going forward, LG will concentrate its sales efforts in the Americas, while its market share is expected to fall to other brands, including Samsung, Xiaomi, and even certain telecom companies’ in-house brands.

For the rest of 2021, as the pandemic gradually slows down, the smartphone industry, which provides an essential daily necessity for the public, is likely to make a recovery as well. Given the industry’s cyclical replacement demand as well as demand from emerging regions, TrendForce projects the total smartphone production volume for 2021 to reach 1.36 billion units, a 9% increase YoY. It should be pointed out that the recent shortage in foundry capacities has led to a very limited supply of smartphone components, such as AP and TDDI. This means most smartphone brands have to make do with the materials they are able to obtain, even if such materials constitute a bottleneck in the manufacturing process. As a result, the boundaries between what would otherwise be off seasons and peak seasons will be relatively ambiguous this year, resulting in a smaller magnitude of QoQ growths.

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