Given the expected price hike of LCD display panels in 2021 and the high demand for electronic products that has persisted since last year due to the stay-at-home economy, various IT product suppliers are under tremendous stress from not only the enormous number of client orders, but also surging quotes from panel manufacturers. And LCD monitor manufacturers are no exception.

According to TrendForce’s investigations into monitor pricing, the cost of the LCD panel typically accounts for about 40-50% of a monitor’s retail prices. Conversely, in the high-end segment, panel costs account for about 30-40% of monitor retail prices due to other factors, such as the inclusion of industrial design and premium components.

Regarding the sales of mainstream products, monitor brands face three different sources of pricing pressure. Put in layman’s terms, these sources are equivalent to taking an SAT, hunting for jobs post-college, and (for middle-aged people) transitioning one’s career after being fired.

Despite ample room for panel prices to change, raising retail prices of monitors remains difficult, and such prices hikes lag far behind the increase of panel costs

More specifically, 27-inch IPS FHD products can be analogized to the SAT, as monitor brands are relatively well-equipped to deal with increases in panel costs for this product category. For the most part, panel costs account for less than 50% of these products’ retail prices in 2021. In other words, since 27-inch IPS FHD monitors are still relatively profitable for monitor brands, brands will attempt to increase the share of these products in their shipment of all product categories.

With regards to 23.8-inch IPS products, monitor brands face pressure that is about equivalent to the job search process that takes place after graduating from college. Panel costs have been accounting for more than 40% of monitor retail prices since February. In view of rising panel costs, this percentage is expected to reach 50-55% in 3Q21, which is approximately the breakeven point for monitor brands.

However, because brands will attempt to maintain a certain level of shipment, 23.8-inch IPS monitors will continue to remain the market mainstream.

On the other hand, brands do not prioritize the sales of 21.5-inch TN products as much as they do the other products. Panel prices for this product category have been rising since 2Q20, and this price hike has been intensifying since 2H20.

Entering October 2020, panel costs began accounting for a considerable part of retail prices, in turn surpassing 50% in January 2021 and 60% in June 2021. Since panel manufacturers are disinclined to continue supplying 21.5-inch TN panels, the gap between supply and demand will persist, resulting in either an upward trajectory or bullish outlook for panel prices. In other words, the relative high costs of these panels will not only remain unresolved, but also likely worsen going forward.

TrendForce therefore believes that monitor brands may need to package their 21.5-inch TN monitors within bundle sales in order to offset the rising costs of panels. Alternatively, brands may also raise the retail prices of these products by about US$20-30 in order ensure that panel costs account for only about 50% of the monitors’ retail prices.

On the whole, the magnitude of financial losses incurred by monitor brands through price hikes, panel shortages, or the continued sale of 21.5-inch TN monitors will become the key determinant to how monitor brands adjust the volume of other mid-sized and large-sized products within their total monitor shipments.

（Cover image source: Unsplash）

As the pace of electrification accelerates in the global automotive market, and various governments worldwide implement subsidy policies that encourage consumer EV purchases, sales of new energy vehicles (NEV, which includes both BEV and PHEV) are continuing to rise as well, according to TrendForce’s latest investigations. NEV sales for 2021 are projected to reach 4.35 million units, a 49% increase YoY.

TrendForce indicates that electrification, smartization, and automation are the three key determinants of the ongoing transformation taking place in the automotive industry. Guided by these three determinants, not only are the strategies, business models, and competitions of automakers transforming, but the automotive supply chain is also changing and expanding. Upstream component suppliers and downstream manufacturers alike are now operating in accordance with new paradigms.

High potential for NEV growth entices emerging competitors to enter the market

Now that the competition between traditional and emerging automakers in the NEV market is gradually intensifying, traditional automakers have begun releasing BEVs that are based on purely electric platforms rather than preexisting ICE vehicles. However, for the vast majority of mainstream automakers, NEV sales account for less than 10% of their total car sales. These automakers are therefore placing a top priority on expanding the lineup and sales volume of their NEV models. Emerging automakers, on the other hand, are instead focusing on expanding their production capacities, and Tesla as well as Chinese brands (including NIO and XPeng) have made their respective capacity expansion plans.

NEV sales currently account for only 5% of total automotive sales. As such, not only does the NEV market still have high potential for growth, but this potential has also attracted new players, which are mostly consumer electronics and IoT vendors such as Xiaomi and OPPO, to enter the market. Given their lack of competencies in developing and manufacturing whole vehicles, these companies are instead acquiring existing automakers or utilizing ODM services. Therefore, automotive ODM services are likely to ramp up going forward, while automakers and ODMs will continue building factories via joint ventures, sharing their technologies, and jointly developing NEV models.

Thanks to the increased adoption of AMOLED panels by major smartphone brands including Apple and Samsung, the penetration rate of AMOLED panels in the smartphone market is expected to reach 39.8% in 2021 and 45% in 2022, according to TrendForce’s latest investigations. As AMOLED panels see increased adoption, the consumption of AMOLED DDI will undergo a corresponding increase as well. However, not only are the process technologies used for AMOLED DDI manufacturing currently in short supply, but some foundries are also yet to finalize their schedules for expanding their AMOLED DDI production capacities. Given the lack of sufficient production capacity, the increase in AMOLED panel shipment may potentially be constrained next year.

Regarding process technologies, the physical dimension of AMOLED DDI chips is generally larger compared to other chips, meaning each wafer yields relatively fewer AMOLED DDI chips, and more wafer inputs are therefore needed for their production. The vast majority of AMOLED DDI is currently manufactured with the 40nm and 28nm medium-voltage (8V) process technologies. In particular, as 40nm capacity across the foundry industry is in tighter supply compared to 28nm capacity, and TSMC, Samsung, UMC, and GlobalFoundries are the only foundries capable of mass producing AMOLED DDI, an increasing number of new wafer starts for AMOLED DDI are being migrated to the 28nm node instead.

Regarding wafer supply, the foundry industry is currently unable to fulfill client demand for 12-inch wafers. Hence, 12-inch capacities allocated to AMOLED DDI production are relatively limited as well. At the moment, only TSMC, Samsung, and UMC are able to allocate relatively adequate wafer capacities, although their capacity expansion efforts are still falling short of growing market demand. In addition, while SMIC, HLMC, and Nexchip are developing their respective AMOLED DDI process technologies, they have yet to confirm any mass production schedules. TrendForce therefore expects that the additional AMOLED DDI capacities to be installed next year will remain scarce, in turn further limiting the potential growth of the AMOLED panel market.

AMOLED DDI suppliers must overcome the issues of limited production capacity and technological difficulties in R&D

Other than the issue of tight production capacities, the difficulty of AMOLED DDI development is further compounded by the fact that each panel manufacturer has its unique specifications of AMOLED panels. For instance, panel manufacturers differ in terms of their display image uniformity (including the calibration of on-screen picture quality via eliminating display clouding, poor color/brightness compensation, and sandy mura). Hence, in order to address the discrepancies among panels manufactured by different companies, IC suppliers must adopt different compensating solutions and account for different parameters. Panel manufacturers therefore are likelier to adopt DDI from IC suppliers whose solutions have already been in mass production.

If prospective IC suppliers were to enter the AMOLED DDI market, they would need to overcome various difficulties in AMOLED DDI development, including long processes of validation and revision, in order to mass produce at scale. As well, each individual panel supplier requires its own different set of IP cores (referring to the various functional modules in an IC) and specifications, making it difficult to manufacture AMOLED DDI that is universally compatible with all AMOLED panels. For instance, ICs that are supplied to Korean panel manufacturers by AMOLED DDI suppliers are incompatible with AMOLED panels from Chinese panel manufacturers, which require new wafer starts with their own requirements.

On the whole, other than certain DDI suppliers which have their own subsidiary foundries or have longstanding foundry partners capable of DDI production, TrendForce believes that fabless AMOLED DDI suppliers must not only secure a stable and sufficient source of foundry capacity, but also possess sufficient technological competency for mass production, in order to successfully expand their presence in the AMOLED DDI market.

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, the US and Europe, which are Apple’s main markets for iPhone devices, are seeing an easing of the pandemic and expecting an economic recovery. Furthermore, Apple is expected to benefit from Huawei’s abandonment of some market share for high-end smartphones, and the sales of the new iPhone devices in 2H21 will likely be boosted thanks to this development. On the whole, the outlook on Apple’s performance in the smartphone market for the whole year is positive, according to TrendForce’s latest investigations. Although the ongoing capacity crunch in the foundry industry will have a constraining effect on Apple in terms of ramping up its iPhone production and growing its market share in the future, TrendForce is still maintaining a cautiously optimistic view and forecasts that the annual total iPhone smartphone production for 2021 will grow by around 12.3% YoY to 223 million units, with additional room for a slight growth going forward.

Apple will prioritize the optimization of existing functions with the iPhone 12s series, while retail prices are expected to remain on par with last year’s release of iPhone 12 models

Apple plans to unveil the next generation of iPhones, tentatively called the iPhone 12s series (official name has yet to be revealed), in September 2021, and the smartphone market has placed the spotlight on the new handsets’ physical appearances as well as retail prices. Regarding the general outward appearance of the upcoming iPhone devices, the notch on top of the screen will shrink due to the decreased size of their sensor housings. Apart from this, other upgrades will mostly relate to the optimization of existing functions and features. All in all, the degree of innovation is not particularly significant in terms of appearance, and the four new models can be regarded as an extension to the iPhone 12 series. Because of this, TrendForce also believes that Apple will continue the proactive pricing strategy that it adopted in 2020 so as to maintain its market share for high-end smartphones. Even though prices of some key components have risen due to tightening supply, Apple is taking into account of the growth in the revenue of peripheral services in relation to the growth of iPhone sales. This means that the starting price of the upcoming iPhone series will likely be relatively on par with the starting price of the iPhone 12 series.

For the latest iPhone models, Apple has made certain upgrades to the handsets. TrendForce here summarizes the key components of the latest iPhone models, including the processor, display, memory, and camera. The iPhone 12s series will feature the A15 processors manufactured at TSMC’s 5nm+ node. Regarding the display, the new models will be equipped with flexible AMOLED panels with On-cell touchscreen technology; the two Pro models will also feature a 120Hz refresh rate. Judging by the iPhone 12s series’ starting prices as well as the differences among various models’ retail prices, TrendForce expects the new handsets’ memory capacities to remain the same as their iPhone 12 counterparts. On the camera front, Apple has upgraded all iPhone 12s handsets’ main cameras to include sensor-shift image stabilization technologies. For the Pro models, not only are their ultra-wide cameras now equipped with 6P lens (which is an upgrade over the previous generation), but they are also capable of autofocus functions. Notably, it should be pointed out that LiDAR scanners are available in the Pro models only.

On the whole, TrendForce expects the latest iPhone devices to account for about 39% of Apple’s total annual production volume for 2021. As all iPhone 12s handsets contain 5G modems, the share of 5G models in the overall iPhone production is projected to expand massively from 39% in 2020 to 75% in 2021. Furthermore, Apple is expected to focus on driving sales of the three non-mini models in the iPhone 12s series in view of the fact that the iPhone 12 mini (which reached End-of-Life ahead of time in 2Q21) suffered disappointing sales performances compared to other models in the iPhone 12 family.

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

The stay-at-home economy generated by the COVID-19 pandemic has galvanized a rising demand for IT products this year, with a corresponding increase in DDI demand as well, according to TrendForce’s latest investigations. More specifically, large-sized DDI demand is expected to increase by as much as 7.4% YoY in 2021, although the availability of 8-inch foundry capacity in the upstream supply chain is expected to increase by a mere 2.5% YoY due to other chips with relatively higher margins occupying much of this capacity. Foundries such as NexChip and SMIC are still continuing to install production capacities this year, and the supply of large-sized DDI will undergo a slight increase as a result. However, these newly installed capacities will be unable to fully alleviate the scarcity of large-sized DDI, which may potentially persist until the end of 2021.

While the supply of TCON similarly faces the issue of shortage, high-end TCON models bear the brunt of the impact

In addition to the tight supply of large-sized DDI, the recent shortage of TCON (timing controllers) has also adversely affected the shipment volume of large-sized panels, especially for high-end TCON models. The shortage of TCON can primarily be attributed to the fact that high-end TCON is mainly manufactured in 12-inch fabs, where various chips compete over limited wafer capacities. In addition, backend logic IC packaging and testing capacities are similarly in short supply, thereby adding further risk to the supply of TCON. In particular, manufacturing high-end TCON requires longer wire bonding time compared with mainstream TCON, meaning the current shortage of wire bonding capacity will lead to a widening shortage of high-end TCON. While the expanding capacity of packaging and testing services for logic chips is yet to catch up to the surging demand for various end products, the shortage of high-end TCON will unlikely be alleviated in the short run.

Prices of large-sized DDI will undergo an increase once again in 3Q21 due to persistently tight supply

TrendForce’s investigations indicate that, as 8-inch foundry capacities fall short of market demand, production capacities allocated to large-sized DDI have accordingly been crowded out by other chips. Foundry quotes are also expected to undergo an increase once again in 3Q21. Hence, IC suppliers will accordingly raise their large-sized DDI quotes for clients in the panel manufacturing industry as well. It should be pointed out that the demand for IT products is expected to slow down in response to increased vaccinations in Europe and the US, where governments have been gradually easing lockdown measures and border restrictions. Therefore, demand for panels, which has remained in an upward trajectory since last year, will likely experience a gradual downward correction in 4Q21, thus narrowing the gap between supply and demand of large-sized DDI. However, IC suppliers will not be able to address the tight supply of backend packaging and testing capacity in the short run, so panel suppliers will still need to contend with a shortage of TCON going forward.

On the whole, IC suppliers are unlikely to obtain sufficient 8-inch foundry capacities for manufacturing large-sized DDI, since 8-inch fabs will continue to operate at maximum capacity utilization rates for the next year. IC suppliers must therefore flexibly adjust their large-sized DDI procurement in accordance with cyclical downturns of foundry demand. In other words, the supply and demand situation of large-sized DDI and TCON will remain key to the supply and demand of panels in 2022.

For more information on reports and market data from TrendForce’s Department o Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at vivieliu@trendforce.com