Thanks to their continued capacity expansion and M&A efforts, Chinese panel manufacturers accounted for nearly 60% of the global supply of TV panels in 1H21, according to TrendForce’s latest investigations. These suppliers have not only managed to dominate their global competitors, but also become the key determinant of the supply and demand situation in the TV panel market. TrendForce believes that, while the TV panel market has started to experience a bearish trend, the industry must pay close attention to whether Chinese suppliers will eschew their previous strategy of maximum capacity utilization and instead turn to other options in order to maintain the health of the overall market. Taiwanese and Korean suppliers, on the other hand, have opted for a strategy that optimizes their existing operations by reallocating some of their production capacities from TV panels to other product categories such as IT panels. In addition to raising these suppliers’ competitiveness through better product differentiation, the reallocation of production capacity also alleviates the suppliers’ pressure of having to rely solely on TV products to expend their panel capacities.

Because the TV panel market’s out-of-balance supply and demand situation is unlikely to be resolved on its own, certain panel manufacturers have already begun assessing the feasibility of adjusting their production capacities for 4Q21. In particular, Gen 8.5 and Gen 10.5 production lines, which manufacture the majority of TV panels, play a key role in ensuring balance between the market’s supply and demand. While panel suppliers are expected to independently reduce their current capacity utilization rates, their new production lines will also gravitate towards a slowdown in panel output. Furthermore, ongoing issues with the supply of glass substrates will also constrain the capacity utilization rates of certain panel suppliers.

Taking the above considerations into account, TrendForce expects Gen 5 (and above) production lines to contribute to the supply of all display panels, measured by total panel area, by 2.5% less than previously expected for 4Q21. As well, in order to alleviate the pressure of excess production capacity for TV panels, panel suppliers will not only increase the share of 85-inch (and above) TV panels in their current output, but also reallocate some of their production capacities from TV panels to IT panels, including desktop monitor panels and notebook panels, both of which are currently in demand. These aforementioned assumptions would suggest that total TV panel input by area is expected to undergo a 2.1% QoQ decline for 4Q21. In particular, Gen 8.5 lines, which account for much of TV panel manufacturing, will experience the most noticeable capacity reduction at an 11.5% QoQ drop for 4Q21.

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

The rise of such products as automotive, industrial, telecom, and networking chips in recent years has resulted in continued advancements in packaging and testing technologies, and the market revenue of these technologies has seen a corresponding rise as well. Demand for advanced packaging has been relatively strong thanks to high demand for 5G smartphones, consumer electronics, and high-performance processors.

In particular, the mainstream development of advanced packaging and testing is currently concentrated on three major fields: HPC chip packaging（2.5D/3D）, FOPLP（fan out panel level packaging）, and SiP（system in package）. Some of the other factors driving forward the technological development of advanced packaging also include improvements in end product functions, advancements in transistor gate sizes, reduction in advanced packaging L/S, and migration of chip interconnect technology from micro-bumping to hybrid bond.

According to TrendForce’s investigations, the advanced packaging market last year reached a revenue of US$31.037 billion in 2020（which was a 13% increase YoY）and accounted for 45.8% of the total packaging market. At the moment, most packaging and testing companies have successively entered the advanced packaging market, with Flip Chip applications accounting for the majority of applications across smartphone AP, WiFi chips, entry-level processors, and high-end PMICs. Flip Chip applications make up more than 80% of the total advanced packaging revenue.

In spite of continued growth, advanced packaging will unlikely overtake traditional packaging in terms of market share within 5-10 years

In spite of the multitude of companies that are eager to enter the advanced packaging industry, not all of them possess the technological competence to progress in R&D, thus making acquisition the fastest path to advanced packaging success. With regards to technological competence, foundries and IDMs are the likeliest candidates to enter the industry, as they already possess ample experience in chip development.

At the moment, TSMC, Intel, and Samsung are the most well-equipped to do so, respectively. With regards to outsourced operations, Taiwanese companies such as ASE, SPIL, and PTI lead the industry in terms of packaging technologies, while U.S.-based Amkor is able to compete for neck-and-neck with ASE. Although these aforementioned companies are not specialists in chip fabrication, they have an extremely strong grasp of the downstream assembly ecosystem, hence their superiority in advanced packaging.

On the other hand, thanks to China’s Big Fund, the trinity of Chinese packaging and testing operators（JCET, TFME, and Hua Tian）were able to acquire major global players, including STATS ChipPac, AMD-SUZ, and Malaysia-based Unisem, respectively, during the 2014-2019 period.

Hence, not only have the Chinese trio been able to raise their market shares and rankings in the global packaging and testing market, but they have also been able to acquire certain competencies in advanced packaging technologies.

The current market would seem to suggest that advanced packaging has been gradually cannibalizing the market share of traditional packaging. However, as applications including home appliances and automotive electronics still require traditional packaging, TrendForce believes that only after 5-10 years will advanced packaging overtake traditional packaging in terms of market share.

（Cover image source: TSMC）