The analog IC industry is one with a long history of development and product adoption across various applications. Annual analog IC revenue reached US$53.9 billion in 2020. As the spread of the COVID-19 pandemic is gradually brought under control in China and the US this year, their domestic demand for telecom, automotive, industrial, and consumer electronics products has also kept growing, in turn generating strong demand for analog ICs. TrendForce therefore expects IC revenue for 2021 to reach US67.9 billion, a 22.1% YoY increase.

More specifically, analog IC demand from the automotive market is expected to undergo remarkable growth this year, primarily due to the recovery of the global automotive market and the continued trend towards automotive electrification as commercial opportunities from ADAS, EV, and automotive electronics enter a period of rapid growth. In response to demand from automakers and the auto market, various major IDMs have been placing a heavy emphasis on automotive analog IC development. Led by Infineon, NXP, Renesas, TI, and STM, the automotive IC market is expected to experience a 24.6% growth in 2021.

What is an analog IC?

The analog IC is an indispensable component in electronic devices. These chips can be divided into two categories according to their functions: general purpose analog IC and application specific analog IC. The former category encompasses amplifiers/comparators (signal conditioning), signal conversion, interface, and power management (general purpose). In sum, general purpose analog ICs are characterized by their low costs, single purpose, and universal compatibility.

Application specific analog ICs, on the other hand, encompass such use cases as consumer, computer, communications, automotive, and industrial/others. This product category refers to analog ICs that are designed and manufactured in accordance with electrical systems specified by the client. Compared to digital ICs, analog ICs are much more diverse in terms of product type, less costly, and more stable, while also having longer lifecycles.

The current state of the top three analog IC manufacturers

Almost all major analog IC suppliers are IDMs with long histories. In particular, longtime market leader Texas Instruments once against took pole position in the ranking of analog IC suppliers by revenue last year. With a range of analog ICs that includes more than 80,000 products, Texas Instruments possessed a 19% market share. The company is expected to maintain its dominance in 2021 thanks to its diverse product lines, high market acceptance, and high volume of client orders.

Infineon, which took second place on the ranking, registered a 19% YoY revenue growth on the back of its expansion into automotive and power management markets. Third-ranked STMicroelectronics benefitted from rising sales of its analog, MEMS, and sensor product portfolios. TrendForce expects Infineon and STMicroelectronics to continue their upward trajectories throughout 2021.

Whereas China is the largest market for analog ICs, the analog IC industry will see the highest growth in the US

China is expected to account for 42% of analog IC sales, the highest among all regions in 2021, with the consumer electronics segment comprising most of these transactions. However, the US is expected to undergo the highest growth in terms of analog IC sales with a US$10.6 billion revenue in 2021, a 25% YoY growth. This performance can mostly be attributed to the fact that the US economy has been recovering in the post-pandemic era owing to increasing purchases in the consumer electronics, telecom, and automotive markets.

Furthermore, the US government has been pushing for infrastructure developments with a focus on transportation, networking, and electricity generation, leading to expanded procurement of analog ICs used in these applications. As the markets welcomes the arrival of the traditional peak season for analog IC procurement in 2H21, growth in the US market will likely persist as well.

（Cover image source: Pixabay）

After DRAM prices made a rebound into an upward trajectory in 1Q21, buyers expanded their DRAM procurement activities in 2Q21 as they anticipated a further price hike and insufficient supply going forward, according to TrendForce’s latest investigations. Not only was demand robust from clients in the notebook segment, which benefitted from ongoing WFH and distance learning applications, but CSPs also sought to gradually replenish their DRAM inventories. Furthermore, demand for products that are relatively niche, including graphics DRAM and consumer DRAM, remained strong. Hence, DRAM suppliers experienced better-than-expected QoQ increases in their DRAM shipment for 2Q21. At the same time, DRAM quotes grew by a greater magnitude compared to the first quarter as well. With both shipment and quotes undergoing growths in tandem, DRAM suppliers registered remarkable growths in their revenues in 2Q21. Total DRAM revenue for 2Q21 reached US$24.1 billion, a 26% QoQ increase.

However, heading into 3Q21, the issue of mismatched component availability began surfacing in the upstream supply chain and bottlenecking the assembly of electronic devices. Some OEMs/ODMs (especially notebook manufacturers) have therefore scaled down their DRAM procurement due to their relatively high level of DRAM inventory in comparison with other components. As a result, although most DRAM suppliers remain bullish on the market’s future, the growth in demand from certain product segments is likely to slow down, since DRAM buyers still carry ample inventory. In light of suppliers’ insistence on raising quotes, TrendForce expects the overall ASP of DRAM products for 3Q21 to undergo a QoQ increase, albeit at a narrower 3-8% now compared to 2Q21.

DRAM suppliers significantly improved their earnings performances in 2Q21 due to massive price hikes and increased shipment of products manufactured with advanced process technologies

The three dominant suppliers (Samsung, SK hynix, and Micron) of DRAM products put up similar revenue performances for 2Q21 as they saw an increase in both ASP and shipment, with the latter surpassing the suppliers’ expectations. On the demand side, buyers showed an increased willingness to expand DRAM procurement because they anticipated that prices will rise even further. In addition, frequent shortages of various semiconductor components this year drove buyers to stock up on DRAM ahead of time so as to avoid potential manufacturing bottlenecks due to low DRAM inventory. Hence, each of the three suppliers increased its revenue by more than 20% QoQ in 2Q21. Samsung in particular registered the most remarkable growth, at a 30.2% QoQ increase. For 3Q21, these suppliers will not only continue to hike up quotes, but also increase their quarterly shipments by a similar magnitude. TrendForce thus expects their market shares to remain relatively unchanged from the previous quarter.

DRAM suppliers likewise experienced considerable growths in terms of profitability for 2Q21 thanks to the massive increase in DRAM quotes, along with the fact that DRAM products manufactured with advanced process technologies occupied a growing share of the suppliers’ DRAM bit shipment. For instance, while Samsung kicked off mass production with the 1Znm process in 1Q21 at a relatively low yield rate (since the technology was still in its infancy at the time), the company was able to considerably ramp up production in 2Q21, thereby raising its operating profit margin from 34% in 1Q21 to a staggering 46% in 2Q21. SK hynix similarly raised its operating profit margin to 38% in 2Q21 by improving the yield rate of its advanced process technology. Micron, on the other hand, increased its DRAM quotes by a similar magnitude compared to its Korean competitors in 2Q21 (Micron counts the March-May period as its fiscal quarter) and saw a jump in its operating profit margin from 26% in 1Q21 to 37% in 2Q21. Assuming that prices and shipment continue their upward trajectory in 3Q21, TrendForce is bullish on DRAM suppliers’ profitability for the quarter as well and expects market leader Samsung to reach 50% in operating profit margin for the first time in nearly three years.

Taiwanese suppliers delivered similar revenue growths to the three dominant suppliers’ in 2Q21 thanks to persistent market demand for specialty DRAM

Taiwanese DRAM suppliers posted a massive increase in their revenues for 2Q21 owing to persistently high specialty DRAM quotes and high demand from clients. More specifically, Nanya Tech’s revenue grew by about 28% QoQ for 2Q21, and its operating profit margin increased from 17.1% in 1Q21 to 31.2% in 2Q21. These growths can primarily be attributed to a 30% increase in the company’s specialty DRAM quotes, and Nanya Tech has expressed that it expects further earnings growth in 3Q21. Winbond, on the other hand, saw strong demand from its clients and raised its DRAM quotes by a greater magnitude than its NAND Flash quotes. Winbond’s revenue from its DRAM business not only rose by 39% QoQ in 2Q21, but also accounted for an increasing share of its total revenue, at 46%.

It should be pointed out that the two aforementioned Taiwanese suppliers are still currently facing the issue of insufficient production capacities, and their existing fabs do not have the physical space to house additional manufacturing equipment. Hence, before these suppliers finish constructing new fabs, they must rely on raising quotes in order to grow their DRAM businesses in the short run. Nanya Tech’s new fab that is currently under construction will not be able to contribute to the company’s production capacity until construction concludes in 2024. In the short run, Nanya is able to marginally increase its bit output only through migrating to advanced process technologies at the 1A/1Bnm nodes. Similarly, Winbond will not be able to resolve its issue of insufficient production capacity until its fab located in Luzhu, Kaohsiung, kicks off mass production in 2H22. As for PSMC, its revenue from sales of PC DRAM products manufactured in-house increased by about 7% QoQ in 2Q21. However, PSMC’s total revenue from both sales of in-house DRAM and its DRAM foundry business increased by 19% QoQ in 2Q21. Much like its Taiwanese competitors, PSMC must carefully allocate its limited production capacity between logic IC products and memory products.

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 the pace of electrification accelerates in the global automotive market, and various governments worldwide implement subsidy policies that encourage consumer EV purchases, sales of new energy vehicles (NEV, which includes both BEV and PHEV) are continuing to rise as well, according to TrendForce’s latest investigations. NEV sales for 2021 are projected to reach 4.35 million units, a 49% increase YoY.

TrendForce indicates that electrification, smartization, and automation are the three key determinants of the ongoing transformation taking place in the automotive industry. Guided by these three determinants, not only are the strategies, business models, and competitions of automakers transforming, but the automotive supply chain is also changing and expanding. Upstream component suppliers and downstream manufacturers alike are now operating in accordance with new paradigms.

High potential for NEV growth entices emerging competitors to enter the market

Now that the competition between traditional and emerging automakers in the NEV market is gradually intensifying, traditional automakers have begun releasing BEVs that are based on purely electric platforms rather than preexisting ICE vehicles. However, for the vast majority of mainstream automakers, NEV sales account for less than 10% of their total car sales. These automakers are therefore placing a top priority on expanding the lineup and sales volume of their NEV models. Emerging automakers, on the other hand, are instead focusing on expanding their production capacities, and Tesla as well as Chinese brands (including NIO and XPeng) have made their respective capacity expansion plans.

NEV sales currently account for only 5% of total automotive sales. As such, not only does the NEV market still have high potential for growth, but this potential has also attracted new players, which are mostly consumer electronics and IoT vendors such as Xiaomi and OPPO, to enter the market. Given their lack of competencies in developing and manufacturing whole vehicles, these companies are instead acquiring existing automakers or utilizing ODM services. Therefore, automotive ODM services are likely to ramp up going forward, while automakers and ODMs will continue building factories via joint ventures, sharing their technologies, and jointly developing NEV models.

A small subtropical island off the coast of southeast China, Taiwan is subject to certain cyclical weather changes throughout the year, the most notorious of which is its yearly typhoons that at different times benefit its agricultural industry and cause various natural disasters.

Much like everything else that happened in 2020, last year marked a stark exception for the island’s climate, which saw no typhoons, resulting in a relatively dry year. Compounding the issue is the current season of low precipitation. Taken together, these factors have since resulted in a significant drought that required an all-hands-on-deck approach from the government, such as rationing water on specific weekdays and advising industries to cut down on water consumption.

Meanwhile, a similar drought has been taking place in the global semiconductor world. As the arrival of the COVID-19 pandemic last year brought fundamental changes to the way we work, study, and live, so too has the general public’s consumption of electronic devices – and, in turn, the worldwide demand for chips used in these devices – risen.

If there are bumps in the road to Taiwanese foundries’ continued dominance, lack of rain certainly isn’t one.

Seeing as how Taiwan is the central hub of the world’s advanced semiconductor technologies, acts as home to industry leader TSMC (which is the exclusive supplier of Apple’s M1 processors), and accounts for more than half of the world’s chip manufacturing capacity, industries and media alike are fearing that the domestic drought will exacerbate the current global chip shortage, since chip fabrication processes require enormous amounts of clean water.

However, true to its market leadership, the Taiwanese semiconductor industry has so far remained unaffected, at least on the supply side, by the water shortage. This is in part due to the fact that domestic foundries (i.e., chip manufacturers) have previously completed numerous drills related to worst-case scenarios of long droughts and are accordingly well prepared in these extenuating circumstances. Furthermore, the foundries also signed contracts with utility companies to ensure an ample supply of water to keep fabs (semiconductor fabrication plants) running via water tank trucks.

TrendForce therefore expects domestic foundry operations to continue unabated for the time being. Case in point, on April 15, TSMC announced an increased capital expenditure of US$30 billion for 2021. The foundry is also actively expanding its production capacity of mature technology processes in response to the growing demand from clients worldwide.

In the world of semiconductors, advancements in process technologies occupy merely one part of the equation when it comes to long-term success. Other requirements pertain to governmental, infrastructural, climate, procedural, and talent-related dimensions, just to name a few.

While Taiwanese foundries look for a way out of the ongoing drought, they are not only acing these requirements in spades, but also staying in the spotlight of the electronics supply chain in light of geopolitical tensions, oligopolistic market trends, and the persistent global health crisis. If there are bumps in the road to Taiwanese foundries’ continued dominance, lack of rain certainly isn’t one.

（Cover image source：TrendForce）

TrendForce’s investigations find that India has become the second largest market for smartphones since 2019. However, the recent worsening of the COVID-19 pandemic in the country has severely impaired India’s domestic economy and subsequently dampened various smartphone brands’ production volume and sales (sell-in) performances there. TrendForce is therefore revising the forecasted YoY growth in global smartphone production for 2021 from 9.4% down to 8.5%, with a yearly production volume of 1.36 billion units and potential for further decreases going forward.

TrendForce further indicates that the top five smartphone brands (Samsung, Apple, Xiaomi, OPPO, and Vivo) have either set up assembly plants in India or sought assistance from EMS providers with operations in the country. Hence, the share of made-in-India smartphones has been on the rise over the years, even though the majority of the domestically manufactured devices are still for meeting the demand of the home market. Judging from the current state of Indian smartphone manufacturing, TrendForce expects the second wave to reduce the country’s smartphone production volume for 2Q21 and 3Q21 by a total of 12 million units, in turn resulting in a 7.5% YoY decrease in smartphone production in India for the whole year.

In India, the second wave of COVID-19 has heavily impacted the middle and upper classes and weakened the sales of smartphones in 2Q21

India’s demographic dividend has generated an enormous demand in the domestic smartphone market. As well, the Indian government has been actively promoting domestic electronics manufacturing so as to boost the economy and create new job opportunities. On one hand, the Indian government has instituted a more restrictive tariff policy to force the localization of the supply chain. On the other hand, it is offering incentives to international smartphone brands so that they will expand the share of local device production. According to local news, people from the more affluent middle and upper classes are being hit the hardest by the second wave. This development will directly impact the country’s smartphone market in 2Q21 by weakening domestic consumer demand and in turn causing a drop in the ASP of smartphones. Smartphone brands are therefore expected to closely monitor their inventories of whole devices and adjust their subsequent production plans accordingly.

The top four smartphone brands in India, which are Xiaomi, OPPO, Samsung, and Vivo, with respective market shares of 25%, 23%, 22%, and 16%, collectively account for about 86% of the country’s total sales. As these brands primarily focus on the US$100-$250 product segment, the worsening pandemic has had an impact on all of them. With regards to manufacturing operations, most factories are reportedly operating normally without being disrupted by the pandemic. However, the accelerated spread of the coronavirus may adversely affect the lower and middle classes, who comprise the vast majority of the labor force. Should the health crisis in India remain unaddressed, TrendForce believes that the country’s import/export operations may come to a standstill as a result, and transportation of key smartphone components may also be disrupted.

On the whole, if the pandemic were to remain uncontained in India throughout 2Q21, then the country’s economic outlook for 2H21 would likely be less than optimistic, and there would be a further reduction in global smartphone production for the year. If these developments were to take place, then TrendForce proposes a “bear case scenario” in which the global smartphone production for the year increases by less than 8% 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