The Line S2 fab of Samsung in Austin, Texas sustained a power interruption, which has forced it to suspend operation since mid-February, under the impact from the winter storm. TrendForce’s latest investigations indicate that the capacity utilization rate for the entire fab is not expected to climb back to over 90% until the end of March. In particular, Samsung manufactures several products that are highly important for the production of smartphones, including the Qualcomm 5G RFIC, Samsung LSI OLED DDIC, and Samsung LSI CIS Logic IC. Supply-wise, the first two products sustained the brunt of the winter storm’s impact, and global smartphone production for 2Q21 is therefore expected to drop by about 5% as a result.

According to TrendForce’s investigations, Samsung was able to prepare for the power interruption ahead of time as the company had been forewarned by the local utility. Hence, the loss of WIP (work in progress) wafers caused by the incident was minimal. However, the delay in the resumption of full operation at the plant is expected to last more than two weeks, during which the fab will suspend its wafer input. The incident on the whole will have a definite impact on the global foundry industry that is already experiencing a serious capacity crunch. In terms of wafer input, the Qualcomm 5G RFIC, Samsung LSI OLED DDIC, and Samsung LSI CIS Logic IC account for 30%, 20%, and 15% of the Line S2’s monthly production capacity, respectively.

Of the three aforementioned products, the Qualcomm RFIC is primarily supplied to smartphone brands to be used in 5G handsets. This product is delivered to clients as part of either AP bundles or 5G modems. The winter storm’s impact on the production of the Qualcomm RFIC is expected to take place in 2Q21, resulting in a 30% decrease in 5G smartphone production for the quarter. However, TrendForce expects this incident to impair the 2Q21 production of all smartphones by only about 5%, given smartphone brands’ existing inventory of 5G AP bundles and 5G modems, in addition to the fact that smartphone brands are likely to keep up their quarterly smartphone production by increasing the production of 4G handsets to make up for the shortfall in 5G handsets. Furthermore, TrendForce expects the Line S2 fab to prioritize resuming the production of RF products ahead of other products, in turn further mitigating the winter storm’s impact on global smartphone production.

On the other hand, the Samsung LSI OLED DDIC is primarily used in Apple’s iPhone 12 series. The winter storm’s impact on these DDICs will similarly take place by the end of 2Q21. Even so, Apple likely possesses sufficient DDIC inventory, at least in the short term, since the period of peak DDIC demand for the company’s existing smartphone models has already passed. Moreover, the iPhone 12 mini may reach EOL earlier than expected due to disappointing sales. Should Apple decide to cut iPhone 12 mini production, the company will be able to further minimize the impact of OLED DDIC undersupply. Finally, as sales of the iPhone 11 (which is equipped with an LCD, instead of OLED, panel and therefore does not require OLED DDIC) have been resurging recently, Apple may increase the share of iPhone 11 in its total smartphone production in order to keep up its quarterly production volume. In light of these factors, TrendForce believes that the production volume of iPhones in 2Q21 will suffer only limited impact from OLED DDIC supply disruptions.

On the whole, although the production of 5G smartphones will face a relatively considerable challenge in 2Q21, smartphone brands will be able to keep up their quarterly production volume by raising the production share of 4G smartphones instead. TrendForce thus projects the winter storm to impair smartphone production for 2Q21 by no more than 5%, while maintaining the previous forecast of 1.36 billion units produced for 2021. However, TrendForce also does not rule out the possibility that the winter storm will lower the penetration rate of 5G smartphones in 2021 from 38%, as previously forecasted, to 36.5%.

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

Demand in the global foundry market remains strong in 1Q21, according to TrendForce’s latest investigations. As various end-products continue to generate high demand for chips, clients of foundries in turn stepped up their procurement activities, which subsequently led to a persistent shortage of production capacities across the foundry industry.

TrendForce therefore expects foundries to continue posting strong financial performances in 1Q21, with a 20% YoY growth in the combined revenues of the top 10 foundries, while TSMC, Samsung, and UMC rank as the top three in terms of market share. However, the future reallocation of foundry capacities still remains to be seen, since the industry-wide effort to accelerate the production of automotive chips may indirectly impair the production and lead times of chips for consumer electronics and industrial applications.

TSMC has been maintaining a steady volume of wafer inputs at its 5nm node, and these wafer inputs are projected to account for 20% of the company’s revenue. On the other hand, owing to chip orders from AMD, Nvidia, Qualcomm, and MediaTek, demand for TSMC’s 7nm node is likewise strong and likely to account for 30% of TSMC’s revenue, a slight increase from the previous quarter. On the whole, TSMC’s revenue is expected to undergo a 25% increase YoY in 1Q21 and set a new high on the back of surging demand for 5G, HPC, and automotive applications.

In response to increased client demand for 5G chips, CIS, driver ICs, and HPC chips, Samsung will continue to raise its semiconductor CAPEX this year, which is divided between its memory and foundry businesses and represents Samsung’s desire to catch up to TSMC. With regards to process technologies, the Korean company’s capacity utilization rates for the 5nm and 7nm nodes have been relatively high in 1Q21, during which Samsung is expected to increase its revenue by 11% YoY.

In addition to chip demand from the automotive sector, UMC has been keeping up with manufacturing driver ICs, PMICs, RF front-end, and IoT products. The company’s capacity thus remains fully loaded in 1Q21, and UMC is expected to undergo a 14% YoY increase in revenue. GlobalFoundries is similarly experiencing high capacity utilization rates due to the increase in automotive chip demand, as well as the military chips that it has been manufacturing for the U.S. Department of Defense. GlobalFoundries’ revenue is expected to increase by 8% YoY in 1Q21.

SMIC’s revenue for the 14nm and below nodes is expected to decline in 1Q21 as the company was added to the Entity List by the U.S. and subsequently faced constraints in the development of advanced processes. However, with the persistent demand in the foundry market for mature processes above (including) the 40nm node, SMIC’s revenue is projected to stay on a positive trajectory and reach a 17% YoY increase in 1Q21. TowerJazz will spend about US$150 million on a small-scale capacity expansion, but equipment move-in and calibrations will not be finalized until approximately 2H21, after which the expanded capacity will start measurably contributing to the company’s revenue. In 1Q21, TowerJazz’s revenue is expected to be on par with the previous quarter while reaching a 15% increase YoY.

PSMC is primarily focused on manufacturing memory products, DDICs, CIS, and PMICs. At the moment, high demand for 8-inch and 12-inch wafer capacities and for automotive chips has resulted in fully loaded capacity for PSMC. The company’s revenue is expected to increase by 20% YoY in 1Q21. Likewise, VIS’ capacity is fully loaded across all of its process technologies. Driven by increased spec requirements for PMICs and small-sized DDICs, VIS’ revenue is expected to increase by 26% YoY in 1Q21. Finally, Hua Hong is currently placing considerable emphasis on expanding the 12-inch capacity of HH Fab7 in Wuxi. Process technologies for 12-inch production lines, including NOR, BCD, Super Junction, and IGBT, have all passed qualifications, thereby injecting fresh momentum into Hua Hong’s development. Furthermore, given Hua Hong’s fully loaded 8-inch capacities and the fact that its performance in 1Q20 represents a relatively low base period for YoY comparison, Hua Hong’s revenue may likely reach a 42% YoY increase in 1Q21.

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

In compliance with the local policy, Samsung’s Austin-based foundry Line S2 partially suspended operation on Tuesday, Feb 16 due to the winter storm affecting Texas. According to TrendForce’s investigation of the event, as the city’s public utility Austin Energy was able to warn of an impending power blackout ahead of time, the partial shutdown of the plant was not accidental but planned in advance. TrendForce’s data show that the monthly 12-inch capacity of Line S2 accounts for nearly 5% of the global total. While the winter storm is estimated to impair about 1-2% of the global 12-inch wafer foundry capacity, the actual duration of the impact will still depend on the region’s temperature. Assuming that Austin will gradually warm up on Friday, Feb 19, and a phased restoration of power will take place at the fab, TrendForce now expects Line S2 to return to full operation after at least one week.

TrendForce indicates that the main process technologies of the fab are the 14nm and 11nm nodes. These technologies are mainly used to manufacture Qualcomm’s 5G RFICs. The fab’s other production capacity is distributed among production lines that feature nodes ranging from 65nm to 28nm and mainly manufacture products under Samsung System LSI. Additionally, the fab manufactures automotive chips for Tesla and Renesas. Although Samsung had implemented corresponding measures in advance of the blackout, with no silicon wafers reported to be damaged and a mere slight extension in lead times for certain products, Line S2’s increased lead times are still expected to exacerbate the strained semiconductor market in light of the industry’s shortage of production capacities for various semiconductor applications, including automotive products, which remain in extremely high demand.

Despite the blackout’s limited impact on NAND Flash controller manufacturing, urgent orders from SSD purchasers may result in a potential price hike

It should be pointed out that, although Line S2 has stopped manufacturing NAND Flash, Samsung LSI still manufactures 14-40nm NAND Flash/SSD controllers at the fab. Given that the volume of wafer starts for controllers at Line S2 is relatively low, and Samsung had already made emergency response preparations ahead of time, the blackout is expected to result in only a slight extension of lead times, without significant impact on the overall controller output. However, as PC OEMs and CSPs are now starting to negotiate for the procurement of SSDs, major SSD suppliers have taken the strained supply of controller ICs into account when quoting SSD prices. As such, despite the blackout’s relatively low impact on NAND Flash/SSD controller manufacturing, SSD purchasers, including the aforementioned PC OEMs and CSPs, may potentially accept a price hike during the negotiation process due to their urgency in procuring additional SSDs. With regards to 2Q21 prices, TrendForce is currently adhering to the previous forecast of “mostly flat” for client SSDs and “slight decline” for enterprise SSDs, but TrendForce does not rule out the possibility that overall SSD prices may move in a positive trajectory once some purchasers accept a price hike.

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