The emergence of the COVID-19 pandemic led to severe delays in manufacturing and logistics. In particular, governments worldwide began implementing border restrictions in 2Q20 to combat the ongoing health crisis, leading to a sudden decline in order volumes for channel-market SSDs, according to TrendForce’s latest investigations. Annual shipment of SSDs to the channel (retail) market reached 111.5 million units in 2020, a 15% YoY decrease. In terms of market share by shipment, Kingston, ADATA, and Kimtigo once again occupied the top three spots, respectively.

Looking at the channel market for SSDs as a whole, NAND Flash suppliers (among which Samsung possessed the largest market share) accounted for around 35% of the total shipments in 2020, while SSD module makers accounted for the other 65%. The top 10 module makers accounted for 71% of channel-market SSD shipments from all SSD module makers. Taken together, these figures show that the market remained relatively oligopolistic in 2020. However, it should be noted that TrendForce’s ranking of SSD module makers for 2020 takes account of only products bound for the channel market and under brands owned by the module makers themselves; NAND Flash suppliers were therefore excluded from the top 10 ranking.

As the pandemic eliminated tier-2 and tier-3 suppliers at an increasingly rapid pace, the collective market share of the top 10 module makers continued to rise

Kingston demonstrated the competitive advantage that it derived from having a global strategy while the pandemic took place. The company saw its market share increase by 1% against market headwinds in 2020 and comfortably took the number one spot among the top 10 SSD module makers. At the same time, Kingston sourced its SSD controller ICs from a diverse group of suppliers in order to avoid potential issues with SSD production due to insufficient foundry capacities. By ensuring a stable supply of controller ICs, Kingston will likely raise its market share even further going forward. On the other hand, ADATA had previously shifted the focus of its R&D and manufacturing operations to SSD products. Not only did ADATA release high-end products ahead of most of its competitors, but it also raised its markets share thanks to the increased demand for its gaming products during the pandemic. ADATA took the second spot on the top 10 list.

Kimtigo, ranked third on the list, shifted its focus to mid-range and high-end products due to their relatively high profitability. Furthermore, Kimtigo successfully expanded its market share both overseas and online, in turn taking the number one position in China. In light of China’s policies prioritizing domestic semiconductor production as well as Kimtigo’s ongoing efforts to cultivate a presence in tier-3 and tier-4 cities in China, the company will likely continue to increase its market share going forward. Netac similarly possessed comprehensive sales networks in China and the overseas markets, in addition to having committed to long-term developments in online sales channels. As the pandemic drove up online sales last year, Netac was able to leapfrog to fourth place in the rankings. Likewise, Lexar saw a slight growth in its market share last year due to not only the comprehensive global sales network it had previously developed, but also its gradually maturing manufacturing operations and aftersales customer services.

The COVID-19 pandemic drove up orders for Teclast’s self-branded notebook computers and displays. As a result, Teclast’s shipment of SSDs last year underwent an increase that in turn led to a corresponding increase in its market share. As for Colorful and Galaxy, the two companies primarily focused on the gaming market. Hence, the increase in demand for gaming consoles and high-end notebooks allowed Colorful and Galaxy to enjoy increased visibility in the SSD market. Lenovo’s shipments fell slightly in 2020 because the other competing brands increased their efforts in developing the overseas markets. As a result, its place in the ranking also dropped from 2019. As the ranking indicates, the competition among brands in the Chinese market remained very intense. There is the possibility that the brands’ positions in the ranking will undergo more reshuffling for 2021.

It should be pointed out that TrendForce has noted the participation of additional brands in the SSD module market in recent years. One such brand is Gigabyte, which has registered remarkable performances. Gigabyte grew its shipment of SSD products by more than 30% YoY in 2020 through leveraging its preexisting reputation in the motherboard and graphics card markets. Although Gigabyte has yet to enter the top 10 list at the moment, it will likely do so within the coming years thanks to its comprehensive global sales network and the growing visibility of its SSD products.

Rise of YMTC strengthens China’s domestic NAND Flash production, and Chinese SSD manufacturers are gradually gaining a brand advantage

As the trend of the localization of semiconductor manufacturing comes to the forefront of the Chinese memory market, YMTC is carrying out a massive capacity expansion plan. In terms of layer technology, YMTC is steadily advancing to 128L and catching up to the major NAND Flash suppliers. Among Chinese SSD brands, Biwin secured financial support from the China IC Industry Investment Fund (the Big Fund) this September; it is now expanding the production capacity of its plant in Huizhou. Besides this, Biwin has also acquired sufficient product development capability to meet clients’ demand for customized products and services. The company is therefore expected to experience a wave of growth in the future.

Turning to Taiwan-based SSD brands, Liteon’s shipments of branded SSDs have slowed down significantly after the company was fully incorporated into Kioxia in July 2020. Due to certain considerations pertaining to the allocation of internal resources, Kioxia will assign the Liteon SSD team to support the development of SSDs for PC OEMs. In the future, Kioxia’s focus will not be on brand development. As for other Taiwan-based SSD brands, they will unlikely return to the top 10 ranking because they have not been able to catch up to the brands based in Mainland China with respect to the economies of scale. TrendForce believes that Taiwan-based brands will continue to be on the decline.

PCIe G4 SSDs become new main offerings, and module makers have adopted QLC solutions

The effects of the COVID-19 pandemic have contributed to a significant increase in the average memory density of SSDs this year. With 512GB becoming the mainstream capacity size, the cost advantage of QLC will become increasingly recognizable. Hence, module makers will be introducing QLC products into their SSD offerings. In the aspect of interface technologies, the proportion of SATA in the retail SSD market has been declining over the years, and module makers are switching to PCIe for their new products. TrendForce’s research finds that PCIe products accounted for almost 30% of retail SSDs shipped in 2020. With shipments of PCIe G4 SSDs expected to grow rapidly in the future, module makers will assign PCIe as the mainstream interface for new products.

Also, an increasing number of Chinese IC design houses are now involved in the development of SSD controller ICs. This, in turn, has led to more PCIe G4 SSD controllers entering mass production. As China pursues the localization of semiconductor manufacturing, module makers will be tested to develop suitable solutions that can maintain growth in the Chinese market.

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

Contract prices of NAND Flash products are expected to undergo a marginal drop of 0-5% QoQ in 4Q21 as demand slows, according to TrendForce’s latest investigations. Hence, the current cyclical upturn in NAND Flash prices will have lasted for only two consecutive quarters. Looking ahead, NAND Flash suppliers’ capacity expansion plans will be affected by the outlook on future trends and the supply of other non-memory components. At the same time, attention will have to be paid to the demand projection. At the moment, NAND Flash suppliers appear likely to downsize their capacity expansion activities for 2022, resulting in a 31.8% YoY increase in NAND Flash bit supply next year. Annual bit demand, on the other hand, is projected to increase by 30.8% YoY. With demand being outpaced by supply and competition intensifying among suppliers for higher-layer products, the NAND Flash market will likely experience a cyclical downturn in prices in 2022.

YoY Growth of bit supply for 2022 is projected to reach 31.8% as competition for higher-layer NAND Flash remains fierce

With demand surging for a significant part of this year, customers have accelerated their adoption of higher-layer NAND technologies. Suppliers have also revised their production plans several times so as to raise output, reaching a YoY growth of nearly 40% in total NAND Flash bit supply in 2021. In light of the somewhat high base for comparison and the relatively weak demand outlook next year, TrendForce expects annual NAND Flash bit supply to increase by only about 31.8% YoY in 2022.

NAND Flash bit demand will grow by just 30.8% due to high base for comparison and factors related to arrival of post-pandemic era

The analysis of the demand side of the NAND Flash market finds that the shipment volumes of smartphones, notebook computers, and servers have been undergoing robust growths in 2021, resulting in a relatively high base period for comparison against next year’s figures. Hence, substantial YoY increases in device production or shipment in 2022 will be difficult. In addition, the procurement side still suffers from mismatched availability of components. With NAND Flash supply being relatively healthy and device manufacturers carrying a growing NAND Flash inventory, NAND Flash procurement for the upcoming period will likely be limited. TrendForce expects NAND Flash bit demand to increase by 30.8% YoY in 2022, which represents a slower growth compared with the increase in NAND Flash bit supply.

Regarding the smartphone market, the persistent shortage of components, including chipsets and driver ICs, is expected to exacerbate the decline in smartphone shipment during the traditional off-season of the first quarter. As for the average storage capacity of handsets, one driver of growth is the iPhone series, which is adopting a 1TB solution for the first time with this year’s line-up (i.e., iPhone 13 Pro/Pro Max). This will encourage brands in the Android camp to follow suit and have a 1TB solution featured in the future flagship models that are released in 2022, thus slightly increasing the shipment share of high-density solutions. Furthermore, brands in the Android camp will be focusing on pushing models with 256GB or 512GB in response to Apple’s storage upgrade for this year’s iPhone lineup. TrendForce forecasts that the NAND Flash bit demand related to smartphones will rise by around 28.5% YoY in 2022, which is noticeably lower than the growth rates that approached almost 30% for the years prior to 2021.

Regarding the notebook market, orders for notebook computers will enter a period of downward correction in 2022 compared to the peak growth that took place in 2021 as increasingly widespread vaccinations lead to a gradual easing of border restrictions. Although the workforce’s return to physical offices has now generated some upside demand for commercial notebooks, the demand for consumer notebooks and Chromebooks, which are highly contingent on the education sector, will undergo a sharp decline. Taking these factors into account, TrendForce forecasts a modest 23.2% YoY growth in client SSD bit demand in 2022, which falls short of the growth in 2021 by a considerable margin.

Regarding the server market, CSPs’ continued procurement of servers in 2022 is expected to drive up annual server shipment by about 4.5% YoY. In particular, the average storage capacity of enterprise SSDs is expected to experience a more significant growth next year compared to previous years due to the gradual release of new server CPU platforms with PCIe Gen 4 support, which features more PCIe lanes allocated to SSD data transfer. These new CPUs will also come with substantial upgrades in terms of both core count and processing power. Adoption of large-capacity enterprise SSDs enables servers equipped with such CPUs to achieve improved computing performance and in turn allows CSPs to cut down on the number of server nodes required, thereby optimizing the cost of data center build-out. In terms of applications, computing demand from AI and big data will continue growing, and this growth will also contribute to the increase in the average storage capacity of enterprise SSDs next year. In addition to the aforementioned developments, the release of Intel’s Sapphire Rapids platform, which supports PCIe Gen 5, will bring about a further bump in enterprise SSD data transfer speed, as well as average storage capacity, which is expected to increase by 33.5% YoY in 2022.

Annual NAND Flash revenue is projected to increase by merely 7% YoY in 2022 while falling quotes offset growth in bit shipment

NAND Flash ASPs have not shown significant downturns for two consecutive years since 2020. At the same time, as the COVID-19 pandemic drives up the demand for electronic products and cloud services, the overall growth in NAND Flash bit demand has been remarkable, resulting in an annual NAND Flash revenue growth of more than 20% YoY in both 2020 and 2021. Looking ahead to 2022, the YoY increase in NAND Flash bit demand will diminish due to the high base for comparison this year. The NAND Flash market is projected to enter a period of price downturn, with an over 18% decline in NAND Flash ASP. While such a decline offsets the rise in bit shipment, annual NAND Flash revenue will likely increase by merely 7% in 2022, the lowest YoY growth in three years.

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

Apple’s latest AirPods 3 still feature an optical in-ear detection mechanism, according to TrendForce’s 2021 Infrared Sensing Market Trend – 3D Sensing, LiDAR, SWIR LED report. Through the integration of PPG (photoplethysmography) technology, the AirPods 3 contain an improved in-ear detection mechanism based on skin-detect sensors that are equipped with four SWIR (short-wave infrared) LED chips that have two different wavelengths, as well as two InGaAs photodiodes. Industry insiders indicate that the AirPods 3’s skin-detect sensors may potentially detect the water content in the wearer’s skin, giving them the ability to differentiate between human skin and other surfaces. TrendForce expects annual AirPods shipment for 2022 to reach 85 million sets, a 3.7% YoY increase.

While the demand for these end-products rises, the relevant suppliers will stand to benefit as a result. Such companies include SWIR LED chip suppliers Epistar and DOWA; InGaAs photodiode suppliers DOWA and II-VI/Finisar; and module assembler USI.

SWIR wavelengths range from 1,050-2,500 nm, which encompasses the optical properties of compounds such as water, sugar, and alcohol. While SWIR technologies gradually mature, and prices begin to reach feasible levels, wearables manufacturers are expected to officially integrate SWIR technologies into their products in 2H21. With improvements in their algorithm, wearables are increasingly likely to feature PPG-based biosensing functions, which can measure not only heart rate and blood oxygen levels, but also other variables including body hydration as well as blood glucose, blood lipid, and blood alcohol levels in the future.

For more information on reports and market data from TrendForce’s Department of Optoelectronics Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com

Having experienced in worldwide lockdown caused by COVID-19 and rising geopolitical worries in recent years, governments of various countries hope to have wafer manufacturing plants in their own territories to reduce the possible impact of supply chain disconnection; however, building and operating a semiconductor wafer manufacturing factory is not an easy task. In addition to the extremely high cost, high labor demand, and environmental conditions are also a threshold. Therefore, TSMC, the leader in foundries, has naturally become the target of active invitations by governments to set up factories. In addition to Japan,  after evaluating customer needs, cost, and environmental resources (including water, electricity, land) and other conditions, TSMC doesn’t rule out the possibility of setting up factories in other countries if it is cost-effective.

Japan, once the world’s largest semiconductor cluster, still occupies a very important position in some semiconductor equipment, raw materials and packaging materials, and technologies. TSMC has previously announced the establishment of a 3DIC material R&D center in Japan, and this time it announced the establishment of a wafer manufacturing plant. In addition to deepening the streamlined process of customer products from manufacturing to packaging, it can also cooperate closely with upstream equipment vendors, chemical raw materials factories, such as TEL, SCREEN, SUMCO, Shinetsu, etc.

（Image credit: TSMC）

Escalating trade tensions between the US and China, rising geopolitical issues, increased tariffs, and uncertainties stemming from the COVID-19 pandemic’s emergence last year have compelled server ODMs to actively shift their operations closer to clients as well as engage in risk mitigation strategies, according to TrendForce’s latest investigations. Taiwanese ODMs, in particular, are shifting their production bases away from domestic China and accelerating the installation of additional overseas production lines. TrendForce expects the share of servers manufactured in domestic China by global server ODMs to undergo a 7% YoY decrease this year as these ODMs shift their production bases mainly to Taiwan. Furthermore, Taiwanese ODMs are expected to account for about 90% of total server production this year.

On the other hand, server assembly operations, which are closely related to motherboard manufacturing operations, are also dynamically reserving their L6 capacities. Server assembly facilities located in New Mexico and the Czech Republic are gradually installing new production lines for server motherboards there. Inventec, Wistron (including Wiwynn), and Foxconn all currently possess sufficient motherboard manufacturing capacities for allocation as needed.

While future changes in the overall server supply chain remains to be seen, it should be pointed out that the migration of production bases pertaining to US companies is of particular importance. For instance, North American CSPs have requested their server ODM partners to migrate L6 assembly lines to locations such as Taiwan and Southeast Asia in response to potential geopolitical factors going forward. However, servers to be shipped to non-US regions will still be manufactured in China in accordance with prior plans. Aside from Google and Facebook, both of which have production lines in Taiwan, AWS and Microsoft have also transitioned their production lines to Taiwan.

Regarding major server ODMs’ current progress, most of them have installed new production lines in Taiwan, with Inventec, Wistron, Quanta, and Foxconn making the most headway. For instance, after installing three additional production lines in Guishan, Taoyuan at the end of 2020, Inventec currently operate a total of eight production lines, while Wistron has not only installed several spare production lines in the Southern Taiwan Science Park, but also planned to expand production bases in Southeast Asia at the end of 2021 for capacity allocation purposes. Quanta is aiming to capitalize on demand from 5G-related applications and data center build-outs by continually adjusting its production capacity for motherboards in Taiwan and Thailand. Finally, by expanding the physical capacity of its Taoyuan facility, Foxconn is able to avoid incurring tariffs for its North American clients’ L6 assembly operations.