Thanks to their flexible pricing schemes and diverse service offerings, CSPs have been a direct, major driver of enterprise demand for cloud services, according to TrendForce’s latest investigations. As such, the rise of CSPs have in turn brought about a gradual shift in the prevailing business model of server supply chains from sales of traditional branded servers (that is, server OEMs) to ODM Direct sales instead. Incidentally, the global public cloud market operates as an oligopoly dominated by North American companies including Microsoft Azure, Amazon Web Services (AWS), and Google Cloud Platform (GCP), which collectively possess an above-50% share in this market. More specifically, GCP and AWS are the most aggressive in their data center build-outs. Each of these two companies is expected to increase its server procurement by 25-30% YoY this year, followed closely by Azure.
TSMC’s Fab14 P7 in the Southern Taiwan Science Park suffered a power outage on April 14th. The cause of the power outage was an accidental severing of an underground power cable during construction work nearby. According to TrendForce’s latest investigations, the facility accounts for around 4% of TSMC’s total 12-inch wafer foundry capacity and around 2% of the global 12-inch wafer foundry capacity, and TSMC is still assessing the exact figures for the wafers that have to be scrapped and the wafers that can be reworked. According to the latest available information, power was fully restored to the fab site at 7:30 p.m. on April 14th. The diesel uninterruptible power supply (DUPS) of the facility kicked in instantly when the power cable was cut, but there was still a short period of power interruption and voltage drop. As a result, some of the equipment systems in the facility temporarily experienced operational irregularity or malfunction. Based on past experiences with this type of incident, TrendForce believes that it will take 2-7 days to recalibrate the equipment systems so that they can return to normal operation.
As the global economy enters the post-pandemic era, technologies including 5G, WiFi6/6E, and HPC (high-performance computing) have been advancing rapidly, in turn bringing about a fundamental, structural change in the semiconductor industry as well, according to TrendForce’s latest investigations. While the demand for certain devices such as notebook computers and TVs underwent a sharp uptick due to the onset of the stay-at-home economy, this demand will return to pre-pandemic levels once the pandemic has been brought under control as a result of the global vaccination drive. Nevertheless, the worldwide shift to next-gen telecommunication standards has brought about a replacement demand for telecom and networking devices, and this demand will continue to propel the semiconductor industry, resulting in high capacity utilization rates across the major foundries. As certain foundries continue to expand their production capacities this year, TrendForce expects total foundry revenue to reach a historical high of US$94.6 billion this year, an 11% growth YoY.
Enterprise demand for cloud services has been rising steady in the past two years owing to the rapidly changing global markets and uncertainties brought about by the COVID-19 pandemic. TrendForce’s investigations find that most enterprises have been prioritizing cloud service adoption across applications ranging from AI to other emerging technologies as cloud services have relatively flexible costs. Case in point, demand from clients in the hyperscale data center segment constituted more than 40% of total demand for servers in 4Q20, while this figure may potentially approach 45% for 2021. For 2021, TrendForce expects global server shipment to increase by more than 5% YoY and ODM Direct server shipment to increase by more than 15% YoY.
The emergence of the COVID-19 pandemic in 1H20 seemed at first poised to devastate the IC design industry. However, as WFH and distance education became the norm, TrendForce finds that the demand for notebook computers and networking products also spiked in response, in turn driving manufacturers to massively ramp up their procurement activities for components. Fabless IC design companies that supply such components therefore benefitted greatly from manufacturers’ procurement demand, and the IC design industry underwent tremendous growth in 2020. In particular, the top three IC design companies (Qualcomm, Broadcom, and Nvidia) all posted YoY increases in their revenues, with Nvidia registering the most impressive growth, at a staggering 52.2% increase YoY, the highest among the top 10 companies.