Quarterly TV shipment for 3Q21 reached 52.51 million units, representing an 8.3% QoQ increase but a 14.7% YoY decrease, according to TrendForce’s latest investigations. Demand for TVs was constrained during the quarter by the increase in various country’s vaccination rates as well as the rising retail prices of TV sets, resulting in a YoY shipment decline despite the arrival of the peak season. It should be noted that prices of TV panels began to plummet in August, and this price drop enabled Chinese TV brands to both expand sales during the Singles’ Day (November 11) shopping festival and in turn make up for deficits in their yearly sales targets. Global brands, on the other hand, will be unable to capitalize on the price drop of TV panels by reflecting this cost-savings on their TV sets’ retail prices until 1Q22 due to factors such as production, transportation, and inventory adjustments. These brands are therefore having a difficult time increasing their TV shipment for 4Q21. Quarterly TV shipment for 4Q21 is expected to reach 59.13 million units, representing a 12.6% QoQ increase but an 10.3% YoY decrease. TV shipment for 2H21 will therefore likely be among the lowest compared to shipment volumes for second halves of previous years historically.
TrendForce further indicates that TV manufacturers’ shipment performances have been weakening this year as the market approaches the year’s end. Stimulus checks issued in the US resulted in persistently high TV shipment in North America in 1H21, with brands maintaining their procurement of TV panels, thereby driving up the prices of TV panels as a result. As the COVID-19 pandemic is gradually brought under control, and everyday life returns to normalcy in Europe and North America in 2H21, the pandemic-generated upswing in TV sales subsequently lost momentum. Furthermore, while prices of raw materials and transportation/logistics services remained sky-high, manufacturing costs of whole TV sets also underwent a sharp climb and were then transferred to consumers. Taken together, these factors quickly wiped out market demand for TVs. TrendForce therefore expects annual TV shipment for 2021 to reach 210 million units, a 3.2% YoY decline.
With a forecasted annual shipment of 6.8 million units for 2021, OLED TVs have become favored by various brands amidst rising manufacturing costs of TV sets
TV brands face various manufacturing-related challenges this year. Not only have panel costs, which account for the largest share of TV sets’ manufacturing costs, undergone an increase, but port congestions have also led to rising shipping costs and an extended lead time before TV sets can be delivered for retail sale. In addition to an uneven availability of various components, these aforementioned obstacles all exacerbate the risks involved with TV brands’ shipment. In a bid to maximize profits, however, brands have been making a concentrated effort to ensure that the production of OLED TVs remained free from disruptions in an effort to maximize profits.
As brands shift the focus of their sales efforts to OLED TVs, OLED TV shipment for 2021 is expected to reach 6.8 million units, a 72.8% YoY increase. This growth can primarily be attributed to an increase in OLED TV supply due to the expanded production capacity of LGD’s production line in Guangzhou, as well as the narrowing difference between LCD panel prices and OLED panel prices due to the sharp rise in the former in 1H21. In particular, LGE is set to take leadership position with an over 60% market share and a 91% YoY growth in its OLED TV shipment. Trailing behind in second place is Sony, which has been sourcing OLED panels from LGD. The Japanese company is expected to register a 53% YoY increase in shipment and possess a 20% market share. Panasonic, on the other hand, comfortably took third place with a 7% market share. Notably, Xiaomi and Sharp are the two dark horses with regards to OLED TV shipment this year with explosive YoY growths of 900% and 140%, respectively.
Major brands will concentrate on the high-end and large-sized segments, while smaller brands will continue to steadily develop mainstream products
While demand in the TV market recovers as the pandemic runs its course, TrendForce expects 45% and 55% of the total annual TV shipment for 2022 to take place in 1H22 and 2H22, respectively. TV shipment for 2022 will likely reach 217 million units, a 3.3% YoY increase, as brands are able to aggressively ramp up their TV shipments thanks to not only an undisrupted supply of panels, but also gradually stabilizing prices. For major brands, their focus will be on medium-sized and large-sized products and on products with substantial added values. Hence, the market share of large-sized TVs (including 65-inch and above models) will for the first time ever surpass 20%, with medium-sized (40-inch to 59-inch models) TVs remaining at a 55% market share. Although major brands are gradually exiting the small-sized segment, and smaller brands will have an easier time expanding their presence in emerging markets owing to gradually stabilizing prices, small-sized (39-inch and below models) TVs will see their market share drop by 1.8% next year to 25%. In any case, the primary target markets for major brands and smaller brands will not overlap next year.
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TrendForce expects global notebook shipment for 2021 to reach 244 million units, with 49% and 51% of the annual shipment taking place in 1H21 and 2H21, respectively. This distribution would seem to indicate that, although the growth momentum of consumer notebook models that began in 1H21 has gradually waned, strong performances from the commercial notebook segment are able to provide some upward momentum for the notebook market’s shipment performance in 2H21.
The first half of the year saw tight supply of materials, strong upside demand, and a market driven primarily by consumer models
Despite the shortage of materials from the supply chain, global notebook shipment for 1H21 still reached 119 million units. During this time, the COVID-19 pandemic caused considerable worldwide impact. Given the important role played by notebook computers in bringing business, education, and entertainment from the real world to the virtual world, shipments of commercial notebooks, Chromebooks, and gaming notebooks, which respectively fulfill the three aforementioned functions, remained strong.
Take Chromebooks as an example; shipment of these products reached 25.94 million units for 1H21, primarily thanks to a wave of procurement demand for educational notebooks, which are primarily produced and sold in response to tender offers, by the US, Japanese, and western European governments in an attempt to immediately kick off distance learning initiatives. The bullish Chromebook market also incidentally resulted in a 70% increase across the 1Q20-2Q21 period in the ASP of 11.6-inch notebook panels, which are used in mainstream Chromebook models.
Shifting demand and stabilizing supply of materials in 2H21 mean commercial notebooks have now become the primary driver of market growth
As the supply chain’s availability of materials gradually stabilizes in 2H21, global shipment of notebooks for the period will still likely reach 125 million units, a 5.7% increase compared with 1H21. Regarding quarterly shipments, market demand peaked in 3Q21, during which a total of 62.73 million notebooks were shipped. Following this peak, demand has remained mostly unchanged in 4Q21, reaching a forecasted 62.71 million units in shipment for the quarter. This slight decline can primarily be attributed to an estimated shipment of 11.62 million Chromebooks for 2H21, which is a 55.2% decrease from 1H21. The downturn of Chromebooks indicates that the educational notebook market, which is mostly driven by Chromebooks, no longer has sufficient momentum to keep up its high shipment in 2H21. Instead, demand has now shifted to commercial notebooks as the pandemic’s slowdown resulted in a corresponding return to physical offices and schools for work and study, respectively.
Fortunately for notebook manufacturers, commercial notebooks, which are primarily aimed at servicing enterprise customers, are able to shore up the weakening demand for other product categories in time in 2H21. On average, up to 34% of the product mixes offered by notebook brands such as Dell, HP, and Lenovo now consist of commercial models during this period. As such, TrendForce expects commercial notebook shipment for 2021 to reach 65.61 million units and account for 26.9% of total notebook shipment for the year.
The growth of the metaverse will drive an increasing number of companies to participate in the build-out of the virtual world, with use cases such as social communities, gaming/entertainment, content creation, virtual economy, and industrial applications all becoming important points of focus in the coming years, according to TrendForce’s latest investigations. Apart from increases in both computing power of semiconductors and coverage of low-latency, high-speed networks, the metavere’s development will also depend on the adoption of AR/VR devices by end users. TrendForce expects global AR/VR device shipment for 2022 to reach 12.02 million units, a 26.4% YoY increase, with Oculus and Microsoft each taking leadership position in the consumer and commercial markets, respectively.
TrendForce further indicates that the success of AR/VR devices in the consumer and commercial markets will be determined by their retail prices and degree of system integration, respectively, while these two factors are also responsible for leading companies’ continued competitive advantages. However, gross and net profit considerations regarding AR/VR hardware have made it difficult to not only price these devices competitively, but also increase the volume of AR/VR device shipment.
Even so, the growing popularity of the metaverse will drive more and more hardware brands to enter the AR/VR market and push online service platform providers to either directly or indirectly propel the growth of the hardware market in 2022. Regarding the consumer market, AR/VR device suppliers may look to expand their user base and increase their market penetration via low-priced yet high-spec devices, while compensating for their reduced hardware profitability through software sales. Oculus, for instance, has adopted such a strategy to maintain its advantage in the market, thereby raising the market share of the Oculus Quest products to a forecasted 66% next year.
Regarding the commercial market, there has been a growth in applications ranging from remote interactions and virtual collaborations to digital twins; hence, enterprises have become increasingly willing to adopt AR/VR devices. Compared to the consumer market, which is mainly driven by products with low prices and high specs, the commercial market is comprised of enterprises that are more willing to choose high-priced and high-performance products, although such products must be paired with a full system integration solution or customized services. Possessing substantial competency in the industrial ecosystem, Microsoft enjoys a relatively large competitive advantage in the commercial market, as the company’s HoloLens 2 became one of the few commercial AR devices with an annual shipment exceeding 200,000 units this year.
It should also be pointed out that, given the rapid advancements in high-speed 5G networks, video-based remote assistance applications enabled by low-priced AR glasses and 5G smartphones’ computing and networking functions will become yet another commercial AR/VR use case. TrendForce believes that these applications can serve as a low-cost, easily deployable early trial that will not only raise enterprises’ willingness to adopt more AR/VR commercial applications going forward, but also accelerate the development of commercial services related to the metaverse.
Smartphones are essential to people’s daily lives and constitute a basic necessity. TrendForce therefore expects the smartphone industry to rebound and post marginal growth next year, assuming that economic activities worldwide will mostly return to normal by then. The main trend drivers in the smartphone market next year are still going to be the usual device replacement cycle and the additional demand from emerging markets. TrendForce expects annual smartphone production for 2022 to reach about 1.39 billion units and the YoY growth rate hitting 3.8%.
Expanding market share will be very challenging for smartphone brands due to fierce competition
Samsung’s smartphone production for 2022 is expected to reach 276 million units, a 1.1% YoY growth. The company continues to reorganize and extend its product series. The integration of the Galaxy Note series with the Foldable series, the continuation of the S-Pen, etc. are some of the moves that Samsung has taken to maintain its market share in the high-end segment. Moreover, Samsung has increased the outsourcing portion of its device manufacturing in order to make its mid-range and low-end models more cost competitive. However, advances in device design and manufacturing will only intensify the competition in developed markets. In the emerging markets, demand will continue to concentrate on entry-level models. Hence, Samsung will have increasing difficulty in growing its market share as most of its offering do not target the demand for entry-level products. This also means that retaining market share will become more challenging for the brand.
Apple is set to release the latest model in its iPhone SE lineup (i.e., the third-generation SE), featuring a 4.7-inch display, A15 SoC, and 5G support, by the end of 1Q22. Other than these features, the rest of the new SE’s hardware specifications will be similar to those of the second-gen SE. In this regard, the new SE can be seen as an invaluable asset with which Apple attempts to enter the mid-range 5G smartphone segment. In 2H22, the company will keep to its tradition of announcing four new models, two of which will feature a 6.1-inch display, while the other two will feature a 6.7-inch display. Although the release of these five new handsets will likely help Apple increase its market share next year, this increase will be constrained by the fact that Apple will have to raise the retail price of its smartphones in order to keep up with rising component prices and ensure some profitability. TrendForce therefore expects Apple’s smartphone production for 2022 to reach 243 million units, representing a 5.4% YoY growth and the second highest volume among all smartphone brands.
Given that demand will unlikely increase by a significant margin in the domestic Chinese smartphone market next year, the three major Chinese brands, including OPPO, Xiaomi, and Vivo, will primarily depend on overseas sales for their smartphone market share growths. It should be pointed out that TrendForce’s calculation of Xiaomi’s production volume also includes handsets released by the brand’s subsidiaries Mi, Redmi, POCO, and Black Shark. Thanks to Xiaomi’s relatively early expansion in the overseas markets, as the global spread of the COVID-19 pandemic is gradually brought under control, Xiaomi is expected to benefit the growth of its overseas sales and register a smartphone production of 220 million units, representing a 15.8% YoY growth and the third highest volume among all brands.
Fourth-ranked OPPO sells its smartphones globally under three brands: OPPO, Realme, and OnePlus. TrendForce expects OPPO group’s annual smartphone production for 2022 to reach 208 million units, a 2.5% YoY growth. Regarding product planning, OPPO is relatively similar compared with Xiaomi, as both of these brands differentiate between various markets and client bases through subsidiaries. Likewise, OPPO has in recent years actively expanded its peripheral ecosystem businesses, such as software services and additional consumer items, in order to improve its profitability for the year. Finally, Vivo will take the fifth rank next year by producing almost 150 million handsets, a 6.4% YoY growth. This brand depends heavily on its customers’ cyclical replacement demand for its sales. Therefore, while the Chinese smartphone market, which is Vivo’s primary sales region, becomes increasingly saturated, the brand’s room for growth next year will also be relatively limited. In addition, as HONOR will also aggressively look to capture market shares in China, the production volumes of OPPO and Vivo will be further constrained next year.
Annual 5G smartphone production for 2022 is expected to reach about 660 million units despite slowing growth rate
Thanks to the Chinese government’s active push for 5G commercialization for the past two years, the global market share of 5G smartphones will likely hit 37.4% in 2021, with about 500 million units produced throughout the year. Going forward, now that the market share of 5G smartphones has surpassed 80% in China, the smartphone industry will shift its focus of 5G development to other regional markets. However, because countries vary in the progress of 5G infrastructure build-out, and 5G service plan fees are higher than 4G fees, the growth of 5G market share now appears to be slowing. As such, TrendForce expects 5G smartphone production for 2022 to reach about 660 million units, translating to a market share of 47.5% for 5G handsets in the overall smartphone market.
On the other hand, the growing market share of 5G smartphones also generates a corresponding growing demand for components. Given the increased shipment in servers, IoT devices, and EVs, foundries will find it even harder to manufacture enough components for 5G handsets since foundry capacities are already stretched to their limits. What this also means is that the market share of smartphone brands will depend on how successful they are in booking foundry capacities. Smartphone brands’ scramble for foundry capacities, however, may in turn result in overbookings or uneven allocation of capacities to components, thereby further exacerbating the mismatched availability of smartphone components. Hence, if the actual demand from smartphone buyers falls short of expectations, TrendForce believes that smartphone brands may be forced to adjust their inventories once again in 2H22.
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By leveraging advantages such as lifelike interaction and virtual simulation, the metaverse will enable the growth of various applications ranging from virtual meetings, digital modeling and analysis, to virtual communities, gaming, and content creation, in the infancy of its development. According to TrendForce’s latest investigations, constructing the metaverse, which is more complex than the existing internet world, requires more powerful data processing cores, networking environments capable of transferring enormous data, and user-side AR/VR devices with improved display performances. These requirements will further drive forward the development of memory products, advanced process technologies, 5G telecommunications, and display technologies.
Regarding memory products, the conceptual framework of the metaverse is heavily contingent on the support provided by compute nodes. The data center industry will therefore experience more catalysts brought about by the metaverse, and there will be a corresponding growth in micro-servers and edge processing applications. The metaverse will also require an increase in the performance of storage devices. This means that SSDs, which are substantially faster than HDDs in writing data, will become an indispensable storage solution. On the DRAM front, take VR devices as an example; most existing devices are equipped with 4GB LPDRAM, which has the dual advantage of low power consumption and high performance. In the short run, manufacturers will not plan to massively upgrade the applications processors in these devices, which also operate in relatively simple processing environments. Hence, the growth in VR devices’ DRAM density will remain relatively stable. In terms of storage, on the other hand, because most AR/VR devices are equipped with Qualcomm chips whose specifications closely resemble those of flagship smartphone SoCs, AR/VR devices will also feature UFS 3.1 solutions.
Regarding advanced process technologies, the integration of AI and the increase in demand for computing power have resulted in a corresponding demand for high-performance chips, which enable improved graphics rendering and computation of massive amounts of data. Advanced process technologies allow the production of high-performance chips that deliver enhancements in performance, power consumption, and chip size. The realization of the metaverse requires high-performance chips for data and graphics processing, so high-performance CPUs and GPUs will assume key roles in this regard. TrendForce’s investigations indicate that, with respect to CPUs, the current mainstream products from Intel and AMD are manufactured at the Intel 7 node (equivalent to the 10nm node) and TSMC’s 7nm node, respectively, and the two companies will migrate to TSMC’s 3nm and 5nm nodes in 2022. With regards to GPUs, AMD’s wafer input plans for GPUs are basically in lockstep with its plans for CPUs, whereas Nvidia has been inputting wafers at TSMC’s 7nm node and Samsung’s 8nm node. Nvidia is currently planning to input wafers at the 5nm node, and the resultant GPUs will likely be released to market in early 2023.
Regarding networking and telecommunications, due to the metaverse’s demand for virtual interactions that are instant, lifelike, and stable, greater attention will be paid to the bandwidth and latency of data transmissions. 5G communication is able to meet this demand as it features high bandwidth, low latency, and support for a greater number of connected devices. Hence, the arrival of the metaverse will likely bring about the commercialization of 5G-related technologies at an increasingly rapid pace. Notably, some of these 5G technologies that are set to become the backbone of network environments powering the metaverse include SA (standalone) 5G networks, which delivers greater flexibility via network slicing; MEC (multi-access edge computing), which increases the computing capabilities of the cloud; and TSN (time sensitive networking), which improves the reliability of data transmissions. In addition, 5G networks will also be combined with Wi-Fi 6 in order to extend the range of indoor wireless connections. In light of their importance in enabling the metaverse, all of these aforementioned technologies have become major drivers of network service development in recent years.
Regarding display technologies, the immersive experiences of VR/AR devices depend on the integration of higher resolutions and refresh rates. In particular, an increase in resolution will receive much more attention in the market now that Micro LED and Micro OLED technologies have gained gradual adoption as display technologies shrink in terms of physical dimensions. As well, the traditional 60Hz refresh rate can no longer satisfy the visual demands of advanced display applications, meaning display solutions with higher than 120Hz refresh rates will become the mainstream going forward. In addition, the metaverse’s emphasis on interactivity demands display technologies that are not limited by traditional physical designs. The market for flexible display panels, which allow for free form factors, is expected to benefit as a result. At the same time, the metaverse is also expected to generate some demand for transparent displays, which serve as an important interface between the virtual world and real life.
（Image credit: Ready Player One）