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Press Releases
Major Foundries Ready to Battle for a Share of China’s Fast-Growing IC Market, TrendForce Reports



Taiwan-based chip maker and semiconductor foundry Powerchip broke ground for a 12-inch fab today (October 20) in Hefei, capital city of Anhui Province in China This fab is a RMB 1353 billion joint venture between Powerchip and Hefei City Government and will be initially producing large-size LCD driver ICs on the 015um process The fab is expected to be in operation in 2017 with a capacity of 40,000 wafers per month According to global market research firm TrendForce, Chinese IC design houses have benefitted from generous government subsidies in recent years Moreover, Chinese OEM vendors are extending their overall share of the downstream system market worldwide As their products become increasingly competitive, Chinese IC design houses such as HiSilicon and Spreadtrum are also developing into a growing challenge to the US and European IC industries At the same time, major foundries are scrambling to China in order to seize a strategic position in this vast market TrendForce’s latest data reveals that the strength of the Chinese fabless IC industry has built up significantly since 2009 due to strong domestic demand and rise of domestic IC design companies China’s share of the global fabless IC sales therefore has expanded steadily, from 71% in 2009 to the estimated 185% in 2015 The total sales revenue of the Chinese fabless IC industry between 2009 and 2015 is also projected to grow at a high CAGR of 25% Based on TrendForce’s analysis, foundry demand growth will be highest in China in the next three years due to increasing orders from Chinese IC design houses The 2015~2017 period will therefore be crucial for major international foundries in their competition to establish a secure foothold in China as to benefit from the anticipated demand surge Process technologies, from the 28nm to the more advanced 14/16nm, will also be a key factor in gaining Chinese market shares Other important factors to success will include developing strategic alliances with local technology enterprises and getting strong support from the Chinese government To achieve these, international foundries would need to find ways to maximize mutual benefits with all local industry participants in China UMC is ahead of other foundries in setting up operations in China Among the foundries that have set up operations in China, Taiwan-based United Microelectronics Corporation (UMC) has been the fastest in building fabs there Presently, UMC has a fab in Suzhou with a capacity of 60,000~70,000 wafers per month This fab, which is a joint venture with a local foundry service HeJian Technology, is not planned for further expansion in 2016 However, UMC has partnered up with Xiamen Municipal People’s Government, to build a 12-inch fab in Xiamen The construction of the Xiamen fab began in March of this year, and UMC will be investing US$13~14 billion in the US$62 billion project within this five-year period The fab is scheduled to be in operation sometimes during the fourth quarter of 2016 and the first quarter of 2017, with the initial capacity of 10,000~20,000 wafers per month on the 40/55nm processes Depending on the market situation, UMC may expand Xiamen fab’s capacity and upgrade its manufacturing technology to the 28nm in the future China’s leading domestic foundry, Semiconductor Manufacturing International Corporation (SMIC), presently has three 8-inch fabs respectively situated in Shanghai, Tianjin and Shenzhen The Shanghai and Tianjin fabs have a combined capacity of 130,000~140,000 wafers per month, whereas the Shenzhen fab is scheduled to start production in the fourth quarter of this year SMIC’s 8-inch capacity in total is estimated to reach 150,000~160,000 wafers per month in 2016 SMIC also has two 12-inch fabs separately located in Shanghai and Beijing Their combined capacity is about 50,000 wafers per month, and the foundry plans to expand the Beijing fab’s capacity by another 10,000 wafers per month Whether SMIC can elevate to a new level of operation will depend on its ability to overcome the bottleneck in the 28nm manufacturing Foundry giant Taiwan Semiconductor Manufacturing Company (TSMC) currently has an 8-inch fab located in Songjiang Industrial Zone, southwest of Shanghai This plant’s capacity is around 100,000~110,000 wafers per month The company is also internally assessing the necessity of building a 12-inch fab in China Once the plan is given the go ahead, TSMC will probably first introduce the 28nm or more advanced process to the new plant considering the construction schedule and market demand

Press Releases
TrendForce 2016 IT Industry Forecast – Optoelectronics and Semiconductor Sectors Braces for a Challenging 2016 as Consumer Electronics Product Shipments Weaken


Semiconductors , Consumer Electronics , Display +2

Global market research firm TrendForce held its 2016 IT Industry Forecast Conference at Room 101 of the NTUH International Center in Taipei, Taiwan, on October 15, 2015 A team of senior analysts assembled from TrendForce’s major research divisions – TrendForce, DRAMeXchange, WitsView, LEDinside and EnergyTrend – will share their detailed forecasts on trends in major tech industries for 2016 Below is a summary of the presentations given during the second half of the conference TrendForce: IoT to play a key role in the transformations and adjustments of IC industry in 2016 The integrated circuit (IC) industry has undergone quantitative and qualitative changes in 2015 The annual growth rate has dropped from 72% in 2014 to 2~3% this year TrendForce research manager Jian-Hong Lin notes that developments in the Internet of Things (IoT) sector will increasingly exert influences on semiconductor products in terms of design features and production cycles Going into 2016, IC companies will need to differentiate their products to become more competitive as well as transforming their business models in order to prepare for the next wave of innovations IoT in particular will significantly change the production cycles of products and affect the distribution of profits among supply chain partners in some applications At the same time, however, IoT also gives rise to new, underdeveloped market segments that can create values for companies To fill these market gaps, companies will have to develop new positioning strategies and design processes In sum, transformations and adjustments will be the primary challenges for the industry next year DRAMeXchange: Weak demand continues to drag down DRAM prices Even though the DRAM industry has become an oligopoly of three companies – Samsung, SK Hynix and Micron, competition remains fierce this year Among different types of DRAM products, PC DRAM and server DRAM have been hit hard by weak demand through much of 2015 PC DRAM prices have fallen close to 40% year on year while the price decline in the server DRAM market is expected to be steeper during this year’s second half The mobile DRAM market on the other hand has been the exception to the severe downtrend as its growth is sustained by smartphone sales As Apple continues to upgrade iPhone’s memory specs and equipped the latest iPhone 6s with 2GB RAM, the drop in the mobile DRAM prices has moderated in general  Looking ahead to 2016, Samsung will maintain its technological lead and put considerable pressure on its competitors by migrating to the 18nm process However, SK Hynix and Micron will also have plans to make sure that they are not too far behind Ken Kuo, DRAMeXchange assistant vice president, expects the DRAM chip market to suffer sharper price decline next year if there is not enough demand to effectively consume the DRAM chips DRAMeXchange: Demand bit growth of NAND Flash at 44% next year, posing challenges for suppliers The year 2016 will be filled with challenges and opportunities for the NAND Flash industry On the supply front, the migration to advanced manufacturing process will continue and the development of 3D-NAND Flash technology will accelerate DRAMeXchange’s latest projection shows that annual supply bit growth for next year will reach 50% On the other hand, the demand forecast for next year is on the conservative side Sean Yang, DRAMeXchange assistant vice president, points out that the slowing global economy will be negatively affecting OEM end demand as well as retail markets for memory cards and USBs Demand bit growth for 2016 is currently estimated at 44%, meaning that the NAND Flash market will be having a notable oversupply problem next year LEDinside: Market for high-brightness LED products to grow just 2% this year as the industry prepares for consolidation next year This year has been very difficult for companies in the LED industry While LED lighting products are seeing rising demands and have replaced numerous traditional products in different applications, their average selling prices have gone down by 30~40% due to oversupply According to LEDinside, the value of the market for high-brightness LED products is projected to grow 2% year on year to US$1452 billion in 2015 Duff Lu, LEDinside research manager, notes that the industry will undergo consolidation next year with companies merging or being driven out of business With uncompetitive players leaving, the industry will gradually reorganize itself EnergyTrend: PV market to see falling prices in 2016; devising new business strategies will become imperative The photovoltaic (PV) sector have consistently achieved high growth each year, and EnergyTrend forecasts the total market demand to grow by almost 10% annually in 2016, reaching 58GW With China and the US being the main growth driver, the global PV market will be unaffected by seasonality and stay hot during the first half of next year China’s share in the global demand will gradually increase The US on the other hand will significantly scale back its investment tax credit (ITC) benefits; but before this cut in subsidy rate, PV companies will keep expanding their shipments Consequently, installed capacity growth in the US is expected to peak next year  According to EnergyTrend analyst Corrine Lin, the current oversupply situation in the market is unlikely to ease due to the ongoing capacity expansion efforts by major PV companies Prices across the PV supply chain therefore will still be under heavy downward pressure in 2016 The strategic concern of industry participants will be to develop businesses outside the low-margin market segments WitsView: Prices to remain weak in the panel market during the first half of 2016 as production capacity outstrips market demand The downturn of the global economy has seriously weakened the demand for consumer electronics products this year Respective shipments of monitors, notebooks and tablets are projected to drop 10% year on year on average, while shipments of LCD TVs are seeing near-zero growth For next year, vendors will be offering products with special features and technologies, such as HRD TVs, wide-viewing angle monitors and HD notebooks They are banking that these products, along with the promotion of large-size tablets, will become strong incentives to consumers However, the overall demand will stay stagnant because various applications markets are becoming saturated Eric Chiou, WitsView senior research director, noted that panel makers are constantly expanding their production capacity for large- and small-size panels Furthermore, their stances on capacity adjustments have been generally conservative since they want to retain their market shares The oversupply situation will therefore gradually worsen On a quarterly basis, the overall panel supply-demand ratio is estimated to be upwards of 9% between this year’s fourth quarter to the middle of 2016 Panel prices will also remain weak 

Press Releases
TrendForce 2016 IT Industry Forecast – Competitions Among End Products to Expand Into Emerging Markets Next Year as Mobile Devices Drives IoT Growth


Telecommunications , Emerging Technologies , Semiconductors +1

Global market research firm TrendForce held its 2016 IT Industry Forecast Conference at Room 101 of the NTUH International Center in Taipei, Taiwan, on October 15, 2015 The conference was divided into two sessions, with the first part devoted to forecasts on tech industries for 2016 TrendForce analysts specifically addressed thematic issues such as innovative end market solutions and trends in communication technologies Below is a summary of their presentations Smartphone shipment growth to slow in 2016 with China and India becoming the main growth centers Major Chinese smartphone vendors – Huawei, Lenovo and Xiaomi – have risen to become three of the top five international smartphone brands this year Supported by a large domestic market, these vendors have expanded into the emerging markets, Europe and the US with high cost-performance products However, challenges loom ahead as the feature phone market falters and the growth of the smartphone market enters a plateau period Smartphone shipments in 2016 are expected to fall steadily, and their annual growth rate will just reach 77% The driver of the global smartphone market next year will come from the replacement demand for 4G smartphones in China, according to Kelly Hsieh, TrendForce senior manager for mobile communication and end device research Vendors will also be very active in the emerging markets, with India being the focus of their attention Though the smartphone penetration rate in India is currently only around 20%, local telecom operators are working hard to expand mobile network coverage for suburbs of first and second-tier cities Usage of smartphones will effectively increase as telecom operators start offering devices with bundle plans Three major vendors will dominate the VR device market next year and sales will soar to 14 million units The introduction of the Apple Watch did not generate high growth in the smartwatch market as initially expected Therefore, wearable device developers are now shifting their interests to other attractive products, and virtual reality (VR) devices presently show a lot of potentials Jason Tsai, TrendForce wearable device analyst, said the sales of VR devices is estimated to soar to 14 million units next year, when vendors will be making mass shipments of their products With content offerings being the decisive factor the upcoming VR device war, products from HTC, Oculus and Sony will be the most competitive in the market HTC Vive, for instance, will be supported by Steam, a digital content distribution platform Oculus Rift, on the other hand, is championed a large group of independent developers Sony’s VR headset, PlayStation VR, will have access to its parent company’s massive collection of multimedia resources The spotlight of the competition in the VR scene next year will be on these three vendors as they make advances in the market and become the dominant players As IoT branches into different applications, developing better services will become the new competitive advantage Breakthroughs in key technologies, the proliferation of mobile devices and the explosive growth of the Internet have accelerated both the market and application growth of the Internet of Things (IoT) Smart homes, smart cities, and the much-discussed Industry 40 are some of the fields that are seeing the implementation of IoT-related technologies And within the IoT sector there are various applications, including healthcare, retail, logistics, transportation and other specific vertical industries Together these applications are projected to account for 70% of the sector’s total revenue  According to TrendForce IoT analyst Jimmy Liu, participants in the IoT sector will continue to focus on developing service-based applications Cultivating vertical industry expertise and cross-industry collaboration will be essential to creating new kinds of services The participation of the “Maker” communities can also complement the efforts of private enterprises and stimulate the market environment In addition to improving efficiency and reducing costs, advances in the IoT sector will also help create a value-added, sharing economy that is more human oriented Worldwide sales of industrial robots will reach 290,000 units in 2016 with Asia being the primary growth driver Harrison Po, TrendForce industry consultant, noted that the global market demand for industrial robots has been rising in recent years due to factors such as increase in the elderly population, rising wages, and labor shortage in the manufacturing sector On an annual basis, the sales of industrial robots worldwide are projected to grow 15% in 2015 and 10% in 2016, totaling 264,000 and 290,000 units respectively In 2014, the top three markets for industrial robots were China, Japan and the US However, Asia as a whole is set to become a significant market, and the region may even outpace Europe and the US in demand growth by 2016  Currently, industrial robots are most widely used in the auto manufacturing industry Growth in this application will come from the emerging markets, where investments in car assembly plants are taking place Another source of demand for industrial robots will be the expansion of the plug-in vehicle battery production In addition, opportunities are abound in the service robot market as more people around the globe are becoming elderly and/or living alone Currently, service robots are primarily designed to do domestic chores such as vacuuming China becomes the world’s largest plug-in vehicle market and automotive electronics market will shine in the next three to five years Growth in the auto market has fallen short of expectations this year due to the slowdown of the global economy China in particular has registered flat growth contrary to the impressive performances of the past years However, China’s plug-in vehicle market is significantly ahead of those in other countries in development, and it has overtaken the US in the first half of 2015 to become the world’s largest Based on TrendForce’s estimation, plug-in vehicle sales will surpass 450,000 units this year, and the market is expected to see steady growth in 2016 According to Eric Chang, TrendForce automotive electronics analyst, there are three major trends currently developing the auto industry First, there is the rapid development of automated driving systems Second, Connected Cars have become the forerunners to smart cars Third, breakthrough opportunities are emerging for plug-in vehicles in the ride-sharing market Chang stated that the automotive electronic market will experience a boom in the next three to five years as these trends converge

Press Releases
TrendForce Finds Panel Makers Turn to Developing High-Value Products as Notebook Panel Shipments Fall Short of Expectations



The August shipments of notebook display panels grew 21% over the prior month to 1443 million units, according to the latest large-size panel shipment report from WitsView, a division of TrendForce Though the August result was impressive, inventory pressure continues to build and demand has been weak compared with the prior year Based on WitsView’s estimation, just 4174 million units of notebook panels will be shipped this third quarter, a 4% quarterly drop compared with 4343 million units shipped this second quarter (which also had a shorter base period) Facing lackluster shipments, panel makers are shifting their focus from volumes to high-value products Wide-view angle, for instance, has become one of the value-added features to be widely incorporated in display panel products South Korean panel makers are the most active developers of wide-view angle products since they are pioneers in this field and have a technological edge The leading South Korean panel makers, LG Display and Samsung Display Corporation, are expected to have wide-view angle products representing 25~30% of their respective notebook panel shipments for this year Though China-based BOE Technology Group is a latecomer to the notebook market, it has emerged as one of the major players and its share of wide-view angle products in its notebook panel shipments for this year is projected to reach 10% Taiwanese panel makers in contrast are concentrating on developing products based on TN (Twisted Nematic) technology, so the share of wide-view angle products in their combined shipments for this year is estimated just around 5% On the whole, wide-view angle products are projected to account for 17% of the worldwide notebook panel shipments in 2015 Besides the marketing activities of panel makers, the merging of the notebook and tablet application will blur the distinctions among products Strong demand from wide-view angle displays will come from 2-in-1 devices sized 133 inches and under The penetration rate of this technology is therefore anticipated to rise further to 26% in 2016 Another feature change in display panels involves the resolution spec, which is moving towards Full HD and above Strategically speaking, the current HD products have razor-thin margins as competing panel makers continues to undercut each other Products with higher resolutions by contrast will offer more room for price negotiation Furthermore, major panel makers are on the same page and have become more aggressive in upgrading their products Therefore, the share of panels with Full HD or above resolution specs in the annual panel shipments is forecast to grow significantly from 13% in 2014 to 20% this year With mainstream TVs and mobile phones migrating to higher resolutions, notebooks will soon follow this development path Niche markets such as gaming notebooks and notebooks with the narrow bezel feature are also emerging, thereby increasing the application demand for advanced display resolutions WitsView thus expects the share of products with advanced resolution specs within the annual notebook panel shipments to grow up to 30% in 2016

Press Releases
Panel Makers to Have Challenges Staying Profitable in Fourth Quarter as Prices Keep Falling, TrendForce Reports



Prices of TV panels continue to drop and are approaching to the products’ cash costs, according to the latest report from WitsView, a division of TrendForce The pressure relating to business operation is going to multiply for panel makers as they go into the fourth quarter WitsView says prices of LCD TV panels steadily increased from the second quarter of 2014 to the start of this year, generating sizable profit for panel makers However, the depreciation of foreign currencies since the end of this first quarter has slowed down the sales of branded LCD TV sets in Europe and the emerging markets With profits turning to losses, branded TV vendors have scaled back their panel demand, leading to rising inventory level and falling prices Hence, the panel market is not showing signs of recovery despite the arrival of the traditional peak season Since excess inventories need time to be cleared out and Chinese panel makers are still expanding their capacities, the current price downtrend is likely to persist and influence panel purchasers’ decisions In sum, the panel market’s performance will become even more conservative in this fourth quarter TV panels have had a noticeable price decrease with the average decline between the start of this year and present being almost 15% Among the products, the 32-inch HD OC (open-cell) and the 55-inch FHD OC panels have suffered the worst with their declines respectively at 25% and 16% The price of the 32-inch HD OC panels has dived from US$93 at the start of this year to US$69 in the first half of September It is expected to keep falling during this quarter to around US$67, which is below the average total cost of US$70~71 and the average cash cost of US$59~60 As for the 55-inch FHD OC panels, their average price has dropped to US$225 in the first half of September and is nearing their average total cost of US$216~217 (their average cash cost is around US$176~177) WitsView expects the average price of this product segment to fall through its total cost level in October Panels of other sizes from the 395- to the 50-inch still have US$20~45 differences between their prices and total costs Panel makers therefore will depend mainly on them for profits Though the general price decline in the TV panel market is unlikely to ease, there is still some room for profitability Cutting production is the quickest and most effective way of dealing with continuing oversupply and downward price pressure Nonetheless, this practice can also impact the growth and profitability of the panel market Taiwanese and South Korean panel makers have a cost advantage over their Chinese competitors when it comes to Gen-85 production as their fabs are near the end of their amortization period Looking ahead, WitsView expects overcapacity, diminishing demand, falling prices and weak profits to remain as serious issues for the panel market in the fourth quarter

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