TrendForce’s investigations show that, among the three categories in the upstream semiconductor supply chain, which consist of semiconductor manufacturing equipment, materials, and EDA, China made the most progress regarding self-sufficiency in semiconductor equipment, followed by materials, with EDA coming in last, in 2020. In other words, Chinese companies are relatively slow to develop EDA solutions.

The EDA market is relatively oligopolistic and involves two US companies. That means once the US implements more stringent controls over the export of EDA technologies and products to China, China’s development of semiconductor self-sufficiency will most likely suffer dire consequences as a result. Even if Chinese domestic companies are able to supply semiconductor equipment for mature process nodes as well as technologies for chip design, manufacturing, and packaging/testing, these things are essentially inoperable without EDA software and technical support. That is to say, the EDA industry remains the final piece of the puzzle for China’s quest for semiconductor self-sufficiency. Since China’s new IC policies (termed the Policies for Promoting the High-Quality Development of the Integrated Circuit Industry and the Software Industry in the New Era) place more emphasis on semiconductor equipment, materials, and software, compared to past policies, EDA (for which China’s self-sufficiency rate is lower than 10%) will likely become the top developmental priority within the software category in the new IC policies.

Chinese EDA suppliers are likely to provide domestic substitute solutions for mature process nodes

As the Chinese semiconductor design and manufacturing industries continue to expand, the Chinese EDA software market is expected to grow at a 15.1% CAGR across 2020-2024, which is faster than the global average of 10.3%. Although Synopsys, Cadence, and Siemens still account for an approximately 80% share in the Chinese EDA market, domestic companies in China have been accelerating their pace of development in recent years. For instance, companies that have more than 10 years of experience developing EDA software, including S2C, Empyrean, Primarius, Xpeedic, NineCube, and Cellixsoft, are gradually making waves in the industry, while many other emerging companies, such as X-EPIC, Arcas, LEDA, and AMEDAC have also been attracting more attention in the EDA market recently. Now that China-US trade tensions have yet to be resolved, and China continues to proceed with its new IC policies, Chinese EDA suppliers will likely experience rapid growth going forward, especially in their attempt to create domestic substitutes for 28nm and other mature process technologies.

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DRAM contract prices are likely to exit a bullish period that lasted three quarters and be on the downswing in 4Q21 at a QoQ decline of 3-8%, according to TrendForce’s latest investigations. This decline can be attributed to not only the declining procurement activities of DRAM buyers going forward, but also the drop in DRAM spot prices ahead of contract prices. While the buying and selling sides attempt to gain the advantage in future transactions, the DRAM market’s movement in 2022 will primarily be determined by suppliers’ capacity expansion strategies in conjunction with potential growths in demand. The capacity expansion plans of the three largest DRAM suppliers (Samsung, SK hynix, and Micron) for 2022 are expected to remain conservative, resulting in a 17.9% growth in total DRAM bit supply next year. On the demand side, inventory levels at the moment are relatively high. Hence, DRAM bit demand is expected to grow by 16.3% next year and lag behind bit supply growth. TrendForce therefore forecasts a shift in the DRAM market next year from shortage to surplus.

Total DRAM bit supply is projected to grow by 17.9% in 2022 in light of DRAM suppliers’ low inventory levels and resurging demand in the server market

As buyers expanded their DRAM procurement in 1H21 in response to supply chain disruptions, DRAM suppliers were able to register better-than-expected shipment performances and reduce their inventory levels considerably. These suppliers are now bullish on the growth of DRAM bit demand generated by the resurging server market. In particular, while Samsung and SK hynix have marginally increased their wafer input for DRAM products, DRAM suppliers’ process technologies are continuing to migrate towards the 1Z nm and 1alpha nm nodes. TrendForce therefore expects total DRAM bit supply to increase by 17.9% YoY in 2022.

Most of Samsung’s wafer input growth takes place in the P2L fab, which houses relatively large physical spaces. As the prevailing market leader, Samsung will likely continue to increase wafer input for DRAM products going forward. The company’s DRAM bit supply growth for 2022 is expected to reach 19.6%, the highest out of the three dominant suppliers, despite the relatively modest growth in Samsung’s current wafer input, most of which comes from advanced process technologies. It should also be pointed out that Samsung’s newest fab P3L is expected to be fully built by mid-2022. P3L will likely contribute to DRAM production by a limited amount next year but continue to provide further growth for Samsung’s DRAM supply after 2023.

Given the bear market for DDR3 memory, SK hynix will likely speed up the reallocation of wafer capacity from DRAM to logic IC products at its old M10 fab next year. After kicking off DRAM production at its newest M16 fab this year, SK hynix will see its total production capacity for DRAM chips continue expanding in 2022, although the company will also adjust its DRAM output according to the state of the market. SK hynix is currently focused on raising the yield rates of its 1Y nm and 1Z nm process technologies, which will contribute to the forecasted 17.7% increase in SK hynix’s total DRAM bit supply next year.

The latest expansions at Micron’s A3 fab are primarily undertaken as a safeguard against possible wafer losses during the fab’s upcoming transition to next-gen process technologies. Hence, Micron’s total production capacity will unlikely undergo drastic changes for the 2021-2022 period, and growths in its DRAM bit output will be mostly derived from the increased yield of the 1Z nm and the latest 1alpha nm process technologies. In addition, DRAM products manufactured with Micron’s 1alpha nm process technology have been widely adopted by clients, and Micron has been making the fastest progress in terms of process technology migration among the three largest DRAM suppliers. The company is expected to increase its DRAM bit supply by 16.3% next year.

Regarding Taiwanese suppliers, Nanya Tech is expected to finalize the construction of its new fab in 2024, while Winbond’s new fab is expected to kick off only pilot runs in 2H22. Taiwanese suppliers are therefore expected to make very limited contributions to the increase in total DRAM bit supply in 2022.

DRAM bit demand is expected to increase by merely 16.3% in 2022, as the bear market for various products results in a high base period in 2021

The smartphone, server, and notebook computer segments comprise the three largest sources of DRAM consumption. All three product categories have been seeing tremendous growth in 2021, thereby resulting in a high base period for comparison against next year’s figures, meaning that significant YoY growths in these products’ production and shipment, and subsequently their DRAM consumption, for 2022 are unlikely to take place. Furthermore, the ongoing shortage of components has continued to affect various industries and constrain device assembly, leading to a decline in demand for DRAM, since OEMs/ODMs are carrying a relatively high level of DRAM inventory. For 2022, DRAM bit demand is expected to increase by only 16.3% and lag behind DRAM bit supply.

Regarding smartphones, while the shortage of key components such as chipsets and driver ICs remains unresolved, total smartphone shipment for 1Q22, which is already a period of cyclical downturn, will fall below expectations. Although the upcoming release of new models is expected to bring about quarterly increases in smartphone production, TrendForce’s current forecast indicates an annual production volume of about 1.4 billion units for 2022, a modest 3.5% YoY growth. This forecasted figure will likely be subject to additional declines if the shortage of semiconductor components extends further. As such, the main growth driver of mobile DRAM demand in 2022 is expected to be the increase in “content per box” (which refers to the total DRAM contained within each individual handset). For 2022, mobile DRAM will account for approximately 40% of total DRAM bit consumption; there will likely be a 15% increase in mobile DRAM bit demand as well. This increase represents a relatively sluggish performance, as mobile DRAM demand generally increased by more than 20% YoY in previous years.

The server industry likewise faced supply chain-related issues, including disruptions in server assembly operations based in Southeast Asia, as well as shortages of PMICs and passive components. With these issues projected to persist through 2022, total server shipment is expected to increase by 4.3% in 2022, primarily thanks to CSPs’ data center expansions. On the other hand, the rise in Intel Ice Lake CPUs’ market share this year has led DRAM suppliers to manufacture more high-density dies (16Gb mono die) due to the server market’s surging demand for 64GB modules. Once Intel’s next-gen Xeon server CPUs, Sapphire Rapids, enter the market next year, the penetration rate of 64GB server DRAM modules is expected to surpass 60%. Hence, server DRAM bit demand is projected to increase by 20% in 2022, the highest among all DRAM product categories.

Annual shipment of notebook computers for 2022 is projected to reach 222 million units, a nearly 7% YoY decrease, owing to increased vaccination rates in Europe and North America. However, as WFH and distance education become the norm, annual notebook shipment will undergo some growth in the medium to long term, without falling back down to pre-pandemic levels. Although Chromebooks remained the fastest-growing product category among all notebooks in 1H21, demand for Chromebooks has been steadily declining in 2H21 due to the increased Chromebook inventory carried by distribution channels in response to high demand for educational notebooks in 1H21. Instead, demand has shifted to commercial notebooks, which are equipped with more DRAM capacity, and this shift will persist through 2022. Total PC DRAM bit demand is expected to increase by more than 15% next year.

DRAM revenue for 2022 will likely be mostly flat as bit shipment growth offsets decline in quotes

On the whole, DRAM suppliers have performed exceptionally well this year in terms of bit shipments thanks to OEMs’ energetic stock-up activities. The annual total revenue of the DRAM industry is also projected to surpass US$90 billion in 2021 because of the price uptrend and the growth in bit shipments. However, the DRAM market will begin to see prices falling in 4Q21 and a sharpening downtrend in 1H22. The overall ASP of DRAM products for the whole 2022 is projected to register a YoY drop of 15-20%. On the other hand, the YoY growth rates of DRAM suppliers’ bit shipments will also be within a similar range for next year. This means that the bit shipment growth will mostly offset the price decline, thereby keeping the total DRAM revenue for 2022 at a similar level to this year. There are still uncertainties as to the movements of DRAM prices during 2H22. If prices manage to rally, then the annual total DRAM revenue may again reach a new high.

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 for fast chargers used for various consumer electronics has been quickly rising. For instance, smartphone brands such as Xiaomi, OPPO, and Vivo led the industry by releasing fast chargers in 2018, subsequently gaining consumer acceptance via their fast chargers’ competitive advantages in cooling efficiency and compact physical dimensions. At the moment, notebook computer manufacturers are also expressing a willingness to adopt fast charging technology. Hence, the GaN power devices segment became the fastest-growing category in the third-generation semiconductor industry. TrendForce expects annual GaN power devices revenue for 2021 to reach US$83 million, an impressive 73% YoY increase.

Regarding the ranking of GaN power devices suppliers, Navitas is projected to obtain a 29% market share (measured by total shipment) and overtake Power Integration for the top position this year. Thanks to Navitas’ proprietary GaNFast power IC design and great relationships with its partners in the semiconductor supply chain, it has become the largest supplier of GaN power IC chips in the consumer electronics markets. The company is currently partnering with leading global smartphone and PC OEMs, including Dell, Lenovo, LG, Xiaomi, and OPPO. Given the rising demand for Navitas’ fast charge ICs from clients this year, the company is expected to transition its chip orders in 2H21 from TSMC’s Fab 2, which is a 6-inch wafer fab, to other 8-inch fabs instead, in order to resolve the issue of insufficient production capacity. At the same time, Navitas is also targeting SAIC (Xiamen Sanan) as a potential supplier of foundry services. With regards to other markets for GaN applications, Navitas will likely target the data center market first by releasing related products in 2022.

Proven power management IC supplier PI (Power Integrations) was the longtime undisputed leader in the GaN power devices market. For this year, PI has released the latest InnoSwitchTM4-CZ series of chips, based on its proprietary PowiGaNTM technology. Featured in products such as Anker’s 65W fast chargers, the InnoSwitch4-CZ chips have received universal acclaim from the fast charge market. In addition, PI’s recently released integrated AC-DC controller and USB PD controller ICs are expected to be major drivers of PI’s revenue growth this year. With an estimated 24% market share, PI will likely take the runner-up spot in the ranking of GaN power devices suppliers for 2021.

China-based Innoscience is expected to possess the third-highest market share in 2021 due to increased support from the Chinese government

It should be pointed out that the market share of China-based Innoscience is projected to rise to 20% this year, the third highest among GaN suppliers. Innoscience’s remarkable performance can primarily be attributed to the massive spike in its shipment of high-voltage and low-voltage GaN products. In particular, Innoscience’s GaN power ICs, used for fast chargers, are now entering the supply chains of tier-one notebook manufacturers for the first time ever. At the same time, while the company’s Suzhou-based 8-inch wafer fab has already kicked off mass production, Innoscience will gradually expand the competitive advantage derived from its IDM business model in the fast-evolving GaN industry. Not only is the company currently actively cultivating its presence in applications including Lidar, OBC (onboard charger) for EVs, and LED power supplies, but it will also look to increase its market share even further next year via its diverse product mix.

Incidentally, the Chinese government has been increasing its support of the domestic third-generation semiconductor industry, while the ongoing China-US trade war has also forced Huawei and other companies in the downstream supply chain to reassess potential supply chain risks. Taken together, these factors have now created the perfect opportunity for China’s third-generation semiconductor material and component suppliers in both qualification/validation and production of domestic substitutes, thereby further propelling the growth of the third-generation semiconductor industry in China. According to TrendForce’s investigations, China invested in about 25 projects aimed at expanding the domestic production capacity of third-generation semiconductors in 2020 (excluding GaN-based optoelectronics materials and devices). These projects totaled more than RMB¥70 billion, a 180% YoY increase.

In particular, commercial products manufactured using SiC substrates, which are the most crucial materials in the third-generation semiconductor industry chain, are primarily based on 4-inch wafers in China, but the country is currently migrating to 6-inch wafers. Although the technological gap between China and its global competitors is fast narrowing, China is still noticeably inferior in terms of monocrystalline quality, resulting in a relatively low self-sufficiency rate of high-performance SiC substrates. TrendForce’s data indicate that, as of 1H21, about seven production lines have been installed in China for GaN-on-Si wafers, while at least four production lines for GaN power devices are currently under construction, also in China. On the other hand, China possesses at least 14 production lines (including those allocated to pilot runs) for 6-inch SiC 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

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

This year sees the continuation of the persistent chip shortage, which entails a shortage of production capacity for not only 12-inch wafers fabricated with mature process technologies but also 8-inch wafers in particular. The shortage of 8-inch wafer production capacity initially began gestating in 2H19, owing to emerging demand from structural changes in the semiconductor industry, with 5G smartphones and PMICs used in new energy vehicles as two examples of such demand. At the same time, the consumption of semiconductor production capacity has also increased multiplicatively in recent years as a result of the aforementioned structural changes. TrendForce expects demand for semiconductor capacity from emerging applications to continue rising in the coming years.

In response to this emerging demand, foundries such as TSMC, UMC, and SMIC are currently expanding their investment in mature process technologies. TrendForce expects the industry’s total 8-inch wafer capacity to grow at a 3-5% CAGR from 2019 to 2023, while 12-inch wafer capacity is expected to grow at an 11-13% CAGR across the same period. It should be pointed out that production capacities allocated to the 0.18-0.11µm process nodes（for 8-inch wafer fabrication） and 55nm-12nm nodes（for 12-inch wafer fabrication）represent the most severe shortage among all process nodes. Hence, certain foundries are expected to gradually install additional production capacities for mature process technologies in 2H22-1H23. These installations will likely help address the ongoing chip shortage.

In addition, several foundries are focusing on expanding their 28nm manufacturing capacity, primarily because transistor architecture below the 20nm node requires a transition to FinFET architecture, which is relatively costly. The 28nm node represents the sweet spot in terms of cost/benefit and is widely used for manufacturing such mainstream products as notebook Wi-Fi chips, smartphone OLED driver ICs, automotive MCUs, and image signal processors. Furthermore, chips used for IoT applications, including smart home appliances and set-top boxes, as well as other products currently manufactured at the 40nm node will likely be migrated to 28nm manufacturing, meaning the demand for 28nm capacity will continue to grow going forward.

（Image credit: Pixabay）