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Downstream foundry clients are currently exhibiting strong demand due to upcoming year-end shopping festivities in Europe and North America and the National Day long weekend and Singles’ Day sales promotions in China, according to TrendForce’s latest investigations. The strong momentum from downstream clients has in turn brought about a stable growth in foundries’ capacities and wafer input orders, with total foundry revenue projected to growth by 14% YoY in 3Q20.
On August 17, the U.S. Department of Commerce announced the latest revisions to its Entity List, which now includes 38 additional Huawei subsidiaries. Suppliers are prohibited from providing semiconductor products and components manufactured with U.S. equipment and software to Huawei and its subsidiaries. TrendForce provides the following analyses on the impacts that the expanded sanctions against Huawei have on five tech industries, including semiconductors, memory products, smartphones, display panels, and 5G communications.
The last cyclical upturn in DRAM contract prices began at the start of 2020 and was led by server DRAM, according to TrendForce’s latest investigations. In 2Q20, the emergence of the COVID-19 pandemic shocked the global economy, but OEMs maintained or even stepped up procurement of components because they feared disruptions in the supply chain. As a result, DRAM suppliers’ bit shipments surpassed expectations for the quarter, in turn widening the overall increase in DRAM ASP and raising the global DRAM revenue by 15.4% QoQ in 2Q20 to US$17.1 billion.
Many enterprises transitioned their CAPEX in server procurement to OPEX in managed cloud services in 1H20 in the face of economic and other uncertainties from the COVID-19 pandemic, according to TrendForce’s latest investigations. These enterprises have subsequently slowed down their server procurement orders, in turn resulting in enterprise server suppliers, led by Dell and HPE, to revise down their yearly shipment targets starting in 3Q20. TrendForce has thereby also revised the forecasted 0.8% QoQ decline in 3Q20 server shipment down to 4.9%.
The border restrictions and national lockdowns instituted by various governments due to the COVID-19 pandemic’s impact in 1Q20 resulted in low inventory levels for clients of packaging and testing (OSAT, outsourced semiconductor assembly and test) companies and for distribution channels as well, according to TrendForce’s latest investigations. As the supply chain gradually recovered in 2Q20, governments began instituting fiscal policies to stimulate the economy. These factors, combined with the rise of the stay-at-home economy, led to an increased restocking demand from downstream clients, in turn providing a boost to OSAT revenue, which reached US$6.325 billion in 2Q20, a 26.6% increase YoY.