From 2020 to 2025, the compound annual growth rate (CAGR) of 12-inch equivalent wafer capacity at the world’s top ten foundries will be approximately 10% with the majority of these companies focusing on 12-inch capacity expansion, which will see a CAGR of approximately 13.2%, according to TrendForce’s research. In terms of 8-inch wafers, due to factors such as difficult to obtain equipment and whether capacity expansion is cost-effective, most fabs can only expand production slightly by means of capacity optimization, equating to a CAGR of only 3.3%. In terms of demand, the products primarily derived from 8-inch wafers, PMIC and Power Discrete, are driven by demand for electric vehicles, 5G smartphones, and servers. Stocking momentum has not fallen off, resulting in a serious shortage of 8-inch wafer production capacity that has festered since 2H19. Therefore, in order to mitigate competition for 8-inch capacity, a trend of shifting certain products to 12-inch production has gradually emerged. However, if shortages in overall 8-inch capacity is to be effectively alleviated, it is still necessary to wait for a large number of mainstream products to migrate to 12-inch production. The timeframe for this migration is estimated to be close to 2H23 into 2024.

PMIC and Audio Codec gradually transferred to 12-inch production, alleviating shortage of 8-inch production capacity

At present, mainstream products produced using 8-inch wafers include large-sized panel Driver IC, CIS, MCU, PMIC, Power Discrete (including MOSFET, IGBT), Fingerprint, Touch IC, and Audio Codec. Among them, there are plans to gradually migrate Audio Codec and some more severely backordered PMICs to the 12-inch process.

In terms of PMICs, other than certain PMICs used in Apple iPhones already manufactured at 12-inch 55nm, most mainstream PMIC processes are still at 8-inch 0.18-0.11μm. Burdened with the long-term supply shortage, IC design companies including Mediatek, Qualcomm, and Richtek have successively planned to transfer some PMICs to 12-inch 90/55nm production. However, since product process conversion requires time-consuming development and verification and total current production capacity of the 90/55nm BCD process is limited, short term relief to 8-inch production capacity remains small. Effective relief is expected in 2024 when large swathes of mainstream products migrate to 12-inch production.

In terms of Audio Codec, Audio Codecs for laptops are primarily manufactured on 8-inch wafers, and Realtek is the main supplier. In the 1H21, the squeeze on capacity delayed lead times which affected notebook computers shipments. Although the stocking efforts of certain tier1 customers proceeded smoothly in the second half of the year, these products remained difficult to obtain for some small and medium-sized customers. At present, Realtek has partnered with Semiconductor Manufacturing International Corporation (SMIC) to transfer the process development of laptop Audio Codecs from 8-inch to 12-inch 55nm. Mass production is forecast for mid-2022 and is expected to improve Audio Codec supply.

In addition to PMIC/Power Discrete, another mainstream product derived from 8-inch manufacturers is the large-sized panel Driver IC. Although most fabs still manufacture 8-inch wafers, Nexchip provides a 12-inch 0.11-0.15μm process technology used to produce large-sized Driver ICs. As production capacity at Nexchip grows rapidly, the supply of this product has been quite smooth. However, TrendForce believes that this is a special case. Mainstream large-sized Driver ICs are still manufactured on 8-inch wafers and there is no trend to switch to 12-inch wafers.

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

Driven by forces such as the pandemic, geopolitics, and the digital transformation of everyday life, there has been a shortage of global foundry production capacity for nearly two years and shortages have been especially severe for mature 1Xnm~180nm nodes, according to TrendForce’s investigations. Although all foundries are furiously increasing capital expenditures to expand capacity, unrealized future expansion does not ease existing supply issues. In addition, the uneven distribution of supply chain resources that has exacerbated the shortage of parts and components has yet to be definitively alleviated. Circumstances as a whole will continue affecting shipments of related whole devices. Only the PC category is expected to emerge largely unscathed in 1Q22.

Moving into 1Q22, TrendForce states, due to the limited increase in production capacity, the market’s supply situation is expected to be approximately the same as in 4Q21. However, some end products have entered their traditional off-season cycle and the slowdown in demand momentum is expected to alleviate the immediate pressure on OEMs and ODMs regarding supply chain stocking.

In terms of the whole servers, the FPGA delivery cycle is currently at over 50 weeks at most, while the delivery cycle of Lan chips has improved significantly, from the original 50+ weeks to approximately 40 weeks. However, escalating purchase order activity caused by the uncertainty of the pandemic combined with an accumulated backlog of demand (Back order/backlog) have pushed the SMT capacity of ODMs to full load in general. The aforementioned phenomenon have not only accelerated the consumption of ICs such as FPGA and PMIC, but the demand for additional purchase orders of FPGA, PMIC and MOSFET is still compelling. The overall market remains tight and the production of server motherboards in the future may face hidden issues. TrendForce has ascertained a more crucial matter. Taking the L6 server as an example, its production scale in 1Q22 will be roughly the same as the previous quarter. However, whole server shipments will show a seasonal decline with a decrease of approximately 8% QoQ.

In terms of mobile phones, material shortages have gradually eased from the second half of 2021 partly due to the discretionary adjustment of mobile phone specifications. Mobile phone brands can adjust their specifications and configurations based on available materials. Currently, the supply of four components remains relatively tight. Among them, 4G SoC (30-40 weeks) and OLED DDIC/Touch IC (20-22 weeks) have a significant impact on the market. The former will affect brands that focus on selling 4G mobile phones. The latter is affected by oligopolistic market structure and the adjustment of foundry capacity. Thus, there are rumblings of insufficient supply. Though the supply of the remaining two items, PMIC and A+G Sensor, remains tight, material shortage risk can be largely mitigated through alternative material replacements or the adjustment of specifications and configurations. In terms of production, the 1Q22 supply chain will essentially carry on its performance from the previous quarter. However, due to disappointing holiday demand at the end of 2021, mobile phone brands must adjust the distributed inventory level of finished products in a timely manner. Combined with uncertainty caused by disruptions stemming from a winter-time pandemic, 1Q22 production performance is estimated to fall by approximately 13% QoQ.

In terms of PCs and laptops, starting from November 2021, material shortages have been partially alleviated. Therefore, the shipment volume of PC ODMs in 4Q21 has been revised upwards. Compared with mobile phones and whole servers, the impact of under/oversupply of materials on end PCs and notebooks is relatively minor. Except for the SSD PCIe 3.0 controller, current tightness exhibited in component supply is due to delays in the transition of Intel’s new platform. This temporary shortfall has led to a delivery cycle of approximately 8-12 weeks while any tightness in the supply of Type C IC, WiFi, and PMIC is gradually abating. TrendForce expects that, as overall supply chain stability recuperates, notebook shipments from ODM brands in 1Q22 will only decrease by 5.1% QoQ. However, if the component shortage factor is discounted, subsequent sales originating from various distribution channels will be another major variable TrendForce must consider.

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

Due to material shortages caused by insufficient semiconductor supply, to date, power management IC (PMIC) prices remain on an upward trend, according to TrendForce’s latest investigations. Average selling price (ASP) for 1H22 is forecast to increase by nearly 10%, reaching a record six year high.

In terms of the global supply chain, in addition to the production capacity of major IDM manufacturers including TI, Infineon, ADI, STMicroelectronics, NXP, ON Semiconductor, Renesas, Microchip, ROHM (Maxim has been acquired by ADI and Dialog by Renesas), IC design houses such as Qualcomm and MediaTek (MTK) have obtained a certain level of production capacity from foundries. Of these, TI is in a leadership position and the aforementioned companies possess a combined market share of over 80%.

In terms of product structure, unrelenting demand from the consumer electronics, telecommunications, industrial control systems, and automotive end-user sectors and product innovation driven by industrial transformation will push a dramatic increase in global market demand for PMICs. The largest application for PMICs is consumer electronic products and there are near term rumblings in demand for notebooks, Chromebooks, smartphones, and televisions. In addition, restocking impetus for a small number of structurally simple items such as low drop-out regulators (LDO) has encountered a real slowdown. However, since the demand placed on PMICs by electronic products is a structural increase, certain models are still experiencing shortages. Qualcomm and MTK are limited by a shortage of mature production capacity on the foundry end, even resulting in a tightening of inventory for PMICs earmarked for self-use.

Furthermore, recovery in the automotive market and rapid growth in electric vehicles, automotive electronics, and advanced driver-assistance systems (ADAS) have increased demand in power source control and management and charging technology. In addition, automotive-use ICs are required to pass a number of inspections and must guarantee consistency and a zero failure rate. Currently, IDM companies’ automotive IC order backlog stretches until the end of 2022. Due to factors such as production running at full capacity and a shortage of raw materials, PMIC suppliers have currently announced longer lead times with consumer electronic IC lead times increasing to 12~26 weeks, automotive IC lead times reaching 40~52 weeks, and a cessation of orders for certain exclusive production models.

TrendForce expects 4Q21 demand for PMICs to remain strong with shortages in overall production capacity. Led by IDM companies, PMIC pricing will remain high. Despite variables related to the pandemic and the difficulties of greatly increasing 8 inch wafer production capacity, TI’s new fab RFAB2 will begin mass production in 2H22. In addition, due to the plans of foundries to carry forward a portion of 8 inch wafer PMIC manufacturing to 12 inch, there is a high likelihood of a moderation in PMIC shortages. However, close attention must still be paid to changes in future market supply.

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

Display panels contain certain semiconductor parts, including driver ICs, TCONs, and LCD PMICs; the price trends of these ICs used in different applications depend on their respective supply and demand situations. Not only has demand for driver ICs used for TVs, Chromebooks, and consumer IT displays declined ahead of other applications, but panel suppliers have also accumulated a considerable inventory of driver ICs for these aforementioned products, according to TrendForce’s latest investigations. Hence, these driver ICs may see their prices stagnate in 4Q21. Nevertheless, although driver IC suppliers will not be able to offload the foundry costs for driver IC manufacturing to panel suppliers entirely, panel suppliers are still expected to procure additional driver ICs in order to avoid possible shortages, since demand for commercial IT displays and driver ICs used in these displays still exists. TrendForce therefore expects driver IC prices to experience a minor price hike in 4Q21.

It should be pointed out that certain TCONs and LCD PMICs are experiencing either shortages or excessive lead times. Furthermore, TSMC will raise the prices of their mature foundry process technologies in 4Q21 by a relatively high margin. Taking these factors into account, TrendForce expects TCON and PMIC prices to remain in an uptrend for the quarter. With regards to smartphone TDDI, the decline in client orders for 4Q21 means that smartphone TDDI will not continue to undergo a price hike in 4Q21. Conversely, smartphone OLED DDIC prices are likely to remain bullish in 4Q21 for the following reasons: First, foundries’ production capacities for smartphone OLED DDIC are currently insufficient. Second, this product category involves a high level of technological barrier to entry in terms of IC design, meaning there are very few IC design companies capable of offering a stable supply of OLED DDIC; smartphone manufacturers are therefore scrambling to book OLED DDIC orders for next year’s handsets.

On the other hand, IC design companies have traditionally sold driver ICs, TCONs, and PMICs as a bundle to panel suppliers during shortages because bundling these components not only increases their sales volumes, but also ensures that panel suppliers receive these components in matching inventory levels. Despite rumors pointing to a possible price hike of driver ICs, TrendForce believes that, given the ongoing shortage of TCONs and PMICs, products sold as a bundle are likely to undergo successful price hikes.

After experiencing component shortages for more than a year, panel suppliers are projected to more carefully address issues of IC procurement and inventory management. On the whole, driver IC prices for 4Q21 will likely remain relatively unchanged from the previous quarter. Looking ahead to 2022, TrendForce expects the demand for display panels to trend downwards during the cyclical downturn of 1H22. This bear market, along with the fact that display manufacturers still need to use up their existing inventory of display panels, means that panel suppliers will almost certainly revise down their driver IC procurement. At the same time, as certain foundries gradually ramp up their driver IC production, the gap between supply and demand of driver ICs will in turn diminish. In other words, potential risks of driver IC shortage will also become slowly mitigated. For driver IC suppliers, their primary challenge for 2022 will be the ability to dynamically adjust their operations between peak demand and low demand periods. Consequently, IC suppliers that possess more robust operations and more diverse product portfolios will also hold the competitive advantage.

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