According to TechNews’ report, after a prolonged period of price suppression in the mobile panel market, there has been an upswing in demand since the end of the second quarter, as customer inventories have reached a turning point.

The report further quoted industry sources, stating that the increased demand is notably driven by Huawei’s new models, and other customers initiating stockpiling for new models. This gradual increase in demand is raising AMOLED panel utilization rates, subsequently leading to a price uptick, which is also influencing LTPS LCD panel prices.

Previously reported by IJIWEI, the robust demand for Huawei’s Mate 60 series smartphones is expected to contribute to a total annual smartphone shipment of 40 to 50 million units. This surpasses the previous year’s shipments of 30 million units by 30 to 70%.

Industry insiders cited by South Korean media indicate that Huawei’s shipping target for the next year is 100 million units, surpassing market research company predictions by over 40%, which estimated around 70 million units.

The demand for Huawei’s new smartphone models is on the rise, especially as its high-end products extensively adopt LTPO backplane technology, occupying a portion of panel manufacturers’ capacity. Additionally, other customers initiating preparations for new models have contributed to the surge in demand, bringing China’s AMOLED panel capacity back to 80-90%.

Looking ahead to next year, the demand for AMOLED panels will still need to be monitored, particularly around the Lunar New Year. If demand continues to grow steadily, it will likely support panel prices.

As for the crucial component, OLED DDI (Display Driver IC), the process is gradually shifting from 40nm to 28nm. Currently, only UMC (United Microelectronics Corporation) globally can mass-produce the 28nm HV (High Voltage) process required for OLED DDI, while SMIC (Semiconductor Manufacturing International Corporation) employs the 40nm HV process.

With TSMC (Taiwan Semiconductor Manufacturing Company) set to join the 28nm HV process in 2025, there is no imminent shortage of supply. Therefore, the price increase in AMOLED panels may have limited impact on OLED DDI prices, and the fourth quarter and the first quarter of next year are likely to maintain a stable trend.

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• [News] Industry Insiders Report Huawei’s Target of Shipping 100 Million Smartphones Next Year

(Photo credit: Huawei)

As the global semiconductor supply chain based on specialization, the design and development of Application Processors (AP) or System on Chip (SoC) for smartphones primarily fall under the responsibility of IC design houses. In the wake of Apple’s notable success in pioneering in-house chips, other smartphone companies are now emulating this trend.

Developing in-house chips poses a challenge for smartphone brands, involving not only significant initial investments but also the navigation of various modules and architectures on the smartphone’s SoCs, including ISP and Modem. Balancing performance and power consumption optimally in specific application scenarios tests the R&D skills of designers, presenting a particularly challenging task for brands lacking relevant technological expertise. However, fueled by the ambition to “product differentiation” and “have a say in the market,” smartphone brands remain enthusiastic about venturing into in-house chips.

Smartphone Brands and SoC Dilemma

In current specialization, smartphone brands typically purchase SoC chips from IC design companies like Qualcomm or MediaTek. While they can fine-tune chip performance to suit the brand’s needs after purchase, the room for modification is quite limited.

Currently, smartphone product development is reaching maturity, and the market lacks innovation. For consumers, in the intensely competitive landscape, smartphones equipped with similar-level SoCs from Qualcomm may only differ in terms of “pricing” as a determining factor for purchase. If the market shifts into a price competition, it becomes unprofitable for smartphone brands.

Moreover, without the ability to develop in-house SoC, smartphone brands become dependent on IC design companies. If IC design companies alter their fee structures or take measures such as raising prices or adding licensing fees, brands have little choice but to comply, significantly impacting their profits.

As the central component of smartphones, if brands can design everything from scratch, it enables them to create product differentiation and gain a competitive edge. Although the initial investment is substantial, in the long run, it allows smartphone brands to have a say in the market.

Apple’s in-house SoC chip has become a significant standard for other smartphone brands in shaping their strategies. Examining Apple’s development trends, the success of the iPhone is largely attributed to Apple’s creation of powerful and efficient SoC chips.

Apple’s decision not to rely on IC design companies but to design chips in-house allowed iPhone to surpass other competing smartphone products. The key lies in Apple’s ability to plan for hardware and software from the ground up through its self-designed SoC architecture, achieving a high level of product differentiation. In addition to creating the most suitable SoC for the iPhone, it also solidifies a unique competitive advantage for Apple.

The Costly Pursuit on SoC          

However, venturing into in-house chips poses formidable challenges for smartphone brands. The primary hurdle lies in the necessity for a substantial financial investment. According to statistics from The New York Times, Apple invested about US$10 billion in developing the A4 chip, while Apple’s revenue at that time was approximately US$65 billion. At that time, the smartphone market was not saturated at that time and was still in the development stage, providing ample room for Apple’s growth.

Focus on the data, from 2010 to 2011, Apple’s revenue generated from selling iPhones grew from about US$25.2 billion to approximately US$45.9 billion, with a growth rate of about 82%. Apple’s revenue scale surpassed US$100 billion in 2012. With a huge and sufficient revenue scale support and the market still having growth potential, although self-developing chips require a large amount of investment, it is indeed feasible for Apple, whose iPhone business is thriving.

In the current mature and competitive smartphone market, creating product differentiation is the only way to break through. As most Chinese smartphone brands lack the technology to develop SoC, it becomes trending to adopt new strategy of developing in-house chips. Apart from self-developing SoC, some brands also choose to enter from the “specific function chip” on the smartphone.

Next Challenges in Plateauing Market

However, compared to the smartphone market situation when Apple initially turned to in-house SoC, current market has entered a plateau phase from the previous golden growth period. Brands find it difficult to generate sufficient revenue scale to support the high cost of in-house chips in the saturated and competitive market.

Moreover, with the continuous advancement of semiconductor process technology, the current cost to enter is much higher comparing to the past. Even with funds. Achieving in-house SoC involves a significant technical threshold, and it is challenging to bypass patents, especially when competitors have accumulated decades of experience.

Therefore, while the strategy of brands choosing to self-develop chips is likely to impact IC design companies like Qualcomm and MediaTek, its effects are expected to be limited. The reason is that for IC design companies like MediaTek and Qualcomm, they already occupy a place in the market with exclusive key technologies and accumulated intellectual property rights (IP), making it challenging for smartphone brands’ in-house chips to completely replace MediaTek and Qualcomm products.
(Image: Apple)

According to MoneyDJ’s report, Samsung Electronics, the South Korean smartphone giant, unveiled its latest foldable phones, the Galaxy Z Fold5 and Galaxy Z Flip5, in August. With a year until the next generation hits the market, speculation is arising that Samsung plans to incorporate foldable features into mid-range models. This move aims to lower the entry barrier, attract a broader customer base, and strengthen Samsung’s leading position in the foldable phone market.

TrendForce recently reported that Android smartphone brands are actively entering the foldable phone market, aiming to break through the plateau in smartphone market growth with the unique design of foldable phones. However, the widespread adoption of foldable phones faces a significant obstacle in their high pricing.

According to supply chain sources, Samsung is set to launch a mid-range foldable phone in 2024, targeting a relatively budget-friendly price range of $400 to $500 USD.

In August, Samsung launched its latest generation of foldable phones, the Galaxy Z Fold5 and Galaxy Z Flip5, maintaining a premium pricing strategy. The suggested retail prices are $1,799 USD for the Galaxy Z Fold5 and $999 USD for the Galaxy Z Flip5.

The market is eagerly anticipating Samsung’s introduction of a mid-range foldable phone. However, as of now, this remains in the speculative phase, and there’s no information available regarding its design, specifications, or other details.

Previous market rumors suggested that Samsung’s Z series of foldable phones might follow the flagship S series by introducing a “Lite Flagship” FE version. This version is expected to feature hardware downgrades to offer a more budget-friendly price, aiming to attract consumers.

According to a TrendForce’s forecast, as foldable phones gain increased acceptance in the consumer market, the global shipment volume of foldable smartphones is estimated to reach 18.3 million units in 2023. This represents a substantial 43% growth compared to 2022, although it accounts for only 1.6% of the total smartphone market sales. Looking ahead to 2024, the shipment volume is expected to grow by another 38%, reaching 25.2 million units, and the market share is projected to increase to 2.2%.

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• [News] Can Foldable Phones Become Lifeline for the Declining Global Smartphone Market?
• After the iPhone 15 Series Debut, Will a Foldable Phone Be Apple’s Next Step?

(Photo credit: Samsung)

Chinese smartphone giants like Xiaomi and Vivo are entering the satellite communication technology arena. A Chinese industry insider claimed that Huawei maintains an exclusive hold on satellite communication solutions for smartphones has stirred controversy, resulting in other smartphone manufacturers having to bide their time before introducing their satellite communication features, Jiwei reported.

An insider at China Telecom affirmed that this technology is not exclusively held by Huawei. However, achieving satellite communication on smartphones indeed poses certain technical challenges, crossing over the substantial R&D efforts to break through the bottlenecks on chip module miniaturization (including RF, Baseband Unit, etc), optimizing the TCP/IP protocol over satellite communication, and end user management.

Huawei Mate 60 Pro has emerged as a pioneer in satellite communication, offering support for satellite calling. Industry insiders have revealed that the satellite communication processor within Huawei Mate 60 Pro was specially crafted for Huawei by a research institute under the China Electronics Technology Group Corporation (CETC). Therefore, Huawei Mate 60 partnered with China Telecom to achieve “satellite calls” services via China’s domestic satellite “Tiantong”, which is currently operated by China Telecom.

Moreover, Qualcomm’s recent announcement about partnering with smartphone brands such as Motorola, OnePlus, Honor, OPPO, Vivo, Xiaomi, and others to develop smartphones with satellite communication feature indicates a broader interest in this technology.

Currently, the consumers tends to extend their device-replacement timelines since the upgrades on smartphone hardware stuck in the bottlenecks such as the performance improvements of processors and camera modules are limited, proven by TrendForce’s estimation that the YoY growth rate of the average DRAM content of smartphones will reach around 6.7% for 2023. This projection is a significant improvement compared with the YoY growth rate of 3.9% for 2022. However, TrendForce also forecasts that the YoY growth rate will stay under 10% in the next several years.

As for smartphone CIS, the shipments is projected to decrease from 4.46 billion units in 2022 to a more subdued 4.318 billion units in 2023. That translates to a YoY contraction of 3.2%.

Consequently, satellite communication is poised to become a key selling point, enticing consumers to upgrade their devices. The industry foresees satellite communication features extending beyond high-end smartphones, and becoming available across a wider range of models, with this shift expected to happen between 2024~2025.
(Image: Huawei)

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Samsung’s upcoming flagship Galaxy S24 series, reportedly set to be unveiled in mid-January 2024, will feature Qualcomm’s latest Snapdragon 8 Gen 3 processor. This new series will highlight Samsung’s first-ever generative AI smartphone, with a sales target expected to increase by over 10% compared to the previous S23 model, reaching more than 34 million units.

As reported by “The Korea Daily,” Samsung is planning to unveil the Galaxy S24 series of new smartphones in mid-January 2024, making it the first major Android flagship to be launched next year. To ensure the successful market debut of the new devices, Samsung is expected to initiate the procurement process from its supply chain in the very near future.

Industry sources have revealed that Samsung’s internal estimates project smartphone sales for next year to reach approximately 253 million units and this figure is expected to be adjusted upwards in the near future according to Economic Daily.

In comparison, Apple’s projected total iPhone sales for the next year, according to a market analyst, are expected to be around 250 million units, making the estimates of these two major smartphone giants quite close.

It is reported that Samsung’s recent flagship devices in the S series have delivered subpar performance. Both the S21 and S22 models achieved sales figures of fewer than 30 million units, while the estimated sales for the S23 series stand at around 31 million units.

Notably, Samsung is currently collaborating with major players such as Google and Microsoft, and there is a strong likelihood that they will incorporate generative AI features like Google Bard or ChatGPT into the Galaxy S24.

This move aims to make the Galaxy S24 their first generative AI smartphone, serving as a prominent selling point for the new device and enhancing the operating system, thereby narrowing the gap with Apple.

Industry experts point out that while smartphone brands tend to estimate sales figures for new products before their launch, the smartphone market has experienced weakened demand in recent years.

Many brands have adopted a conservative approach to sales estimates, even controlling production capacity and marketing budgets to reduce risks. In this context, Samsung’s decision to set clear growth targets stands as a demonstration of their high confidence in the new product.

As for the supply chain, Largan Precision is the primary supplier of main camera components for the Galaxy S24, while GIS is responsible for supplying the in-display fingerprint module, and TXC Corporation provides quartz components.

(Photo credit: Samsung)