Nvidia CEO Jensen Huang announced on the 11th the company’s intention to deepen collaboration with high-tech companies in Vietnam, with a focus on fostering local expertise in AI and digital infrastructure development. Huang revealed plans to establish a chip center in Vietnam, as reported by Reuters.

According to documents released by the White House in September to enhance bilateral relations, Nvidia has invested USD 250 million in Vietnam. The company has strategically aligned with leading tech companies to implement AI technology in cloud computing, automotive, and healthcare industries.

This marks Huang’s first visit to Vietnam, where, during an event in Hanoi, he emphasized, “Vietnam is already our partner as we have millions of clients here.” He stated, “Vietnam and Nvidia will deepen our relations, with Viettel, FPT, Vingroup, VNG being the partners Nvidia looks to expand partnership with,” Huang said, adding Nvidia would support Vietnam’s artificial training and infrastructure.

Vietnam’s Minister of Planning and Investment, Chi Dung Nguyen, highlighted during the meeting on December 11th the country’s ongoing efforts to design mechanisms and incentives to attract investments in semiconductor and AI projects.

During his meeting with Vietnamese Prime Minister Pham Minh Chinh on the 10th, Huang shared the vision of establishing an R&D center, emphasizing that “the base will be for attracting talent from around the world to contribute to the development of Vietnam’s semiconductor ecosystem and digitalization.” Subsequently, on the 11th, Nguyen Chi Dung extended an invitation for Nvidia to consider establishing an R&D base in the country.

On the 11th, Nvidia engaged in discussions with the Vietnamese government and local tech companies regarding semiconductor cooperation agreements. According to insiders, Nvidia may potentially reach a technology transfer agreement with at least one Vietnamese company.

Given the strained trade relations between China and the U.S., Vietnam’s technology and manufacturing sectors are presented with a significant opportunity. The government actively seeks to enhance chip design capabilities and explore avenues for establishing a viable chip manufacturing industry.

Vietnam already serves as a pivotal IC packaging hub for global chip manufacturers. For instance, Intel boasts that it has world’s largest IC packaging and testing facility, is situated in Vietnam. Despite temporary delays in the expansion of its Vietnamese factory due to power supply and bureaucratic challenges, Intel affirmed in a Reuters interview, “Vietnam will continue to be a critical part of our global manufacturing operations as demand for semiconductors grows.”

Furthermore, several chipmakers have recently set up or expanded production facilities in Vietnam. Major OSAT provider Amkor commenced operations at its new USD 1.6 billion IC packaging plant in Yen Phong 2C Industrial Park, Bac Ninh Province, Vietnam, in October this year. A month earlier, Samsung’s OSAT partner, Hana Micron, announced the inauguration of its USD 600 million IC packaging plant in Bac Giang Province.

(Image: Nvidia)

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According to TrendForce research, driven by strong demand for 5G mobile phones, base stations, automobiles, and HPCs, the global output value of packaging and testing (including foundry and IDM) reached US$82.139 billion in 2021, or 25.83% YoY. This upward momentum is forecast to continue in 2022, taking output value to US$101.185 billion in 2022, or 23.19% YoY. From the perspective of regional distribution, China’s IC packaging and testing output value in 2021 was approximately US$39.443 billion, increasing 31.7% compared with US$29.941 billion in 2020, becoming the world’s fastest-growing major market in terms of packaging and testing output value.

Shanghai pandemic lengthens overall lead time, hinders China’s packaging and testing growth in 2Q22

In 2Q22, Shanghai was locked down due to the COVID-19 pandemic. Although wafer fabs and packaging and testing plants were still operating normally, the pandemic hindered logistics and the materials required for packaging could not be effectively shipped from Shanghai, affecting transportation efficiency and logistics costs to a certain degree. Overall, China’s packaging and testing industry was not significantly affected by the pandemic in 1Q22 but, in 2Q22, the industry will bear the brunt of the COVID-19 situation, with packaging and testing companies experiencing prolonged overall lead times and sluggish revenue growth.

NEVs and HPCs to become new growth drivers, fabs and packaging and testing companies accelerate deployment

The growth rate of smartphones, a core driving force behind IC packaging and testing output value, is slowing down. Since smartphone shipments peaked at 14.575 million units in 2017, volume has not surpassed this number in the ensuing years. Even though the upgrade from 4G to 5G brought about a wave of replacements, the overall smartphone market has reached maturity, with slowing growth or even negative growth, so its demand on wafer manufacturing and packaging and testing is likewise slowing down.

Aside from mobile phones, growth in HPC and new energy vehicles (NEV) is becoming a new revenue engine. At present, the world’s major automobile production countries are accelerating the penetration rate of NEVs, and packaging and testing companies are also accelerating their investment in the automotive and HPC sectors. From the perspective of fabs, TSMC’s HPC revenue accounted for 41% of total packaging and testing revenue in 1Q22, surpassing mobile phones for the first time and becoming the largest source of the company’s packaging and testing revenue.

（Image credit: Unsplash）

The stay-at-home economy generated by the COVID-19 pandemic has galvanized a rising demand for IT products this year, with a corresponding increase in DDI demand as well, according to TrendForce’s latest investigations. More specifically, large-sized DDI demand is expected to increase by as much as 7.4% YoY in 2021, although the availability of 8-inch foundry capacity in the upstream supply chain is expected to increase by a mere 2.5% YoY due to other chips with relatively higher margins occupying much of this capacity. Foundries such as NexChip and SMIC are still continuing to install production capacities this year, and the supply of large-sized DDI will undergo a slight increase as a result. However, these newly installed capacities will be unable to fully alleviate the scarcity of large-sized DDI, which may potentially persist until the end of 2021.

While the supply of TCON similarly faces the issue of shortage, high-end TCON models bear the brunt of the impact

In addition to the tight supply of large-sized DDI, the recent shortage of TCON (timing controllers) has also adversely affected the shipment volume of large-sized panels, especially for high-end TCON models. The shortage of TCON can primarily be attributed to the fact that high-end TCON is mainly manufactured in 12-inch fabs, where various chips compete over limited wafer capacities. In addition, backend logic IC packaging and testing capacities are similarly in short supply, thereby adding further risk to the supply of TCON. In particular, manufacturing high-end TCON requires longer wire bonding time compared with mainstream TCON, meaning the current shortage of wire bonding capacity will lead to a widening shortage of high-end TCON. While the expanding capacity of packaging and testing services for logic chips is yet to catch up to the surging demand for various end products, the shortage of high-end TCON will unlikely be alleviated in the short run.

Prices of large-sized DDI will undergo an increase once again in 3Q21 due to persistently tight supply

TrendForce’s investigations indicate that, as 8-inch foundry capacities fall short of market demand, production capacities allocated to large-sized DDI have accordingly been crowded out by other chips. Foundry quotes are also expected to undergo an increase once again in 3Q21. Hence, IC suppliers will accordingly raise their large-sized DDI quotes for clients in the panel manufacturing industry as well. It should be pointed out that the demand for IT products is expected to slow down in response to increased vaccinations in Europe and the US, where governments have been gradually easing lockdown measures and border restrictions. Therefore, demand for panels, which has remained in an upward trajectory since last year, will likely experience a gradual downward correction in 4Q21, thus narrowing the gap between supply and demand of large-sized DDI. However, IC suppliers will not be able to address the tight supply of backend packaging and testing capacity in the short run, so panel suppliers will still need to contend with a shortage of TCON going forward.

On the whole, IC suppliers are unlikely to obtain sufficient 8-inch foundry capacities for manufacturing large-sized DDI, since 8-inch fabs will continue to operate at maximum capacity utilization rates for the next year. IC suppliers must therefore flexibly adjust their large-sized DDI procurement in accordance with cyclical downturns of foundry demand. In other words, the supply and demand situation of large-sized DDI and TCON will remain key to the supply and demand of panels in 2022.

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