Thanks to their continued capacity expansion and M&A efforts, Chinese panel manufacturers accounted for nearly 60% of the global supply of TV panels in 1H21, according to TrendForce’s latest investigations. These suppliers have not only managed to dominate their global competitors, but also become the key determinant of the supply and demand situation in the TV panel market. TrendForce believes that, while the TV panel market has started to experience a bearish trend, the industry must pay close attention to whether Chinese suppliers will eschew their previous strategy of maximum capacity utilization and instead turn to other options in order to maintain the health of the overall market. Taiwanese and Korean suppliers, on the other hand, have opted for a strategy that optimizes their existing operations by reallocating some of their production capacities from TV panels to other product categories such as IT panels. In addition to raising these suppliers’ competitiveness through better product differentiation, the reallocation of production capacity also alleviates the suppliers’ pressure of having to rely solely on TV products to expend their panel capacities.
Because the TV panel market’s out-of-balance supply and demand situation is unlikely to be resolved on its own, certain panel manufacturers have already begun assessing the feasibility of adjusting their production capacities for 4Q21. In particular, Gen 8.5 and Gen 10.5 production lines, which manufacture the majority of TV panels, play a key role in ensuring balance between the market’s supply and demand. While panel suppliers are expected to independently reduce their current capacity utilization rates, their new production lines will also gravitate towards a slowdown in panel output. Furthermore, ongoing issues with the supply of glass substrates will also constrain the capacity utilization rates of certain panel suppliers.
Taking the above considerations into account, TrendForce expects Gen 5 (and above) production lines to contribute to the supply of all display panels, measured by total panel area, by 2.5% less than previously expected for 4Q21. As well, in order to alleviate the pressure of excess production capacity for TV panels, panel suppliers will not only increase the share of 85-inch (and above) TV panels in their current output, but also reallocate some of their production capacities from TV panels to IT panels, including desktop monitor panels and notebook panels, both of which are currently in demand. These aforementioned assumptions would suggest that total TV panel input by area is expected to undergo a 2.1% QoQ decline for 4Q21. In particular, Gen 8.5 lines, which account for much of TV panel manufacturing, will experience the most noticeable capacity reduction at an 11.5% QoQ drop for 4Q21.
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Leading driver IC OSAT company Chipbond and major foundry UMC announced on September 3 that the two companies established a strategic partnership via a stock swap, through which UMC (and its subsidiary UMC Capital) will hold 9.09% of Chipbond’s equity, while Chipbond will hold 0.62% of UMC’s equity. TrendForce believes that this strategic partnership will not only strengthen the two companies’ presence throughout all parts of the driver IC supply chain, but also kick-start a business model that involves the simultaneous development of RF front-end ICs and power devices in the third-generation semiconductor industry.
TrendForce further indicates that, although Chipbond has traditionally dominated the panel driver IC OSAT package and test industry along with ChipMOS, recent aggressive attempts at seizing market share by major OSAT companies from China have persuaded Chipbond to expand its business to other markets, such as PA (power amplifier) or electronic filter packaging, in order to diversity its previously specialized operations. The strategic partnership between Chipbond and UMC is also noteworthy because demand has been constantly growing in the third-generation semiconductor market.
Most of the predominant companies in the third-generation semiconductor industry are major IDMs based in Europe, the US, and Japan. As for foundries, they generally play the role of fulfilling excess client orders outsourced by IDMs whose capacities are fully loaded.
Regarding the technological competencies of foundries in the power devices industry, Taiwanese foundries (including TSMC, VIS, and EPISIL) possess the competitive advantage in terms of manufacturing processes, while WIN and AWSC are also among the most representative foundries in the RF front-end segment.
Although UMC slightly lags behind some of its other competitors in the aforementioned markets, its subsidiary Wavetek has been actively strengthening its competencies. For the RF front-end segment, Wavetek is making strides towards 5G PA manufacturing by leveraging its existing 4G PA successes. On the other hand, Wavetek is also in the midst of developing its own GaN on Si power devices.
It should be pointed out that the production of back-end components such as power devices and RF front-end remains relatively low in scale. Hence, in consideration of order volumes, profitability, and equipment costs, major OSAT companies such as ASE and Amkor generally are unwilling to fulfill package and test orders for these components, most of which subsequently fall to either foundries or IDMs.
For Chipbond, which is attempting to enter the power devices and RF front end markets, the aforementioned situation spells good news, as Chipbond has to compete with only mainstream foundries and IDMs. In spite of the relatively low volume of client orders, the room for profitability is still there. Second of all, by partnering with major upstream foundry UMC, Chipbond’s third-generation semiconductor packaging and testing capacities can be secured and stabilized.
On the whole, TrendForce believes that the strategic partnership between Chipbond and UMC can be said to result in a win-win situation with regards to both revenue and industrial integration, since Chipbond now receives an infusion of cash that can facilitate its R&D into third-generation semiconductor, while UMC on the other hand also benefits from the partnership as upstream IDMs may now be incentivized to input wafers at UMC’s fabs.
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Thanks to favorable policies by governments worldwide as well as massive adoption of horticultural LED lighting products in the medical and recreational marijuana markets in North America, horticultural lighting LED revenue saw an explosive growth in 2020, reaching US$301 million, a 57% YoY increase, according to TrendForce’s 2021 Global LED Lighting Market Outlook – Light LED and LED Lighting Market Trend report. This growth is expected to maintain its momentum throughout 2021, during which the market is expected to reach US$399 million in revenue, a 33% YoY increase.
However, it should be pointed out that horticultural red light LED chips, especially high-end ones, will likely suffer a shortage in 3Q21, as suppliers’ production capacities for these chips are constrained by other products, including automotive and infrared LED products. At the same time, demand for horticultural LED lighting products cannot be fully met due to the ongoing shortage of PMICs. Furthermore, delayed ocean freight schedules and North American governments’ crackdown on illegal indoor marijuana cultivations have also impacted the shipment of these end-products, thereby leading certain horticultural LED lighting suppliers to slow down their production plans and component procurement activities. Even so, LED suppliers are still optimistic towards the current market. Although changes in the global environment are expected to hinder market demand in the short run, LED suppliers believe that such hindrance will likely be ameliorated by the end of 3Q21.
TrendForce’s investigations indicate that horticultural lighting LED package suppliers include ams-OSRAM, Samsung LED, CREE LED, Seoul Semiconductor, Lumileds, Everlight, LITEON, and lightning. On the other hand, horticultural LED chip suppliers include Epistar, San’an, HC Semitek, HPO, and Epileds. The vast majority of the aforementioned companies were able to benefit from the horticultural lighting market and posted remarkable earnings performances in 1H21.
Looking ahead, the demand on food safety will bring about a shortened food supply chain via such developments as indoor farming and build-outs of vertical farms, with a corresponding rise in the global horticultural lighting LED market. In addition, TrendForce believes that, as operators of greenhouses or emerging vertical farms continue to adopt LED lighting equipment in the long run, and LED lighting costs continue to decline, more and more indoor farmers will be convinced to replace their traditional lighting equipment with LED lighting equipment. The replacement demand from these operators will, in turn, become the key driver of the horticultural lighting LED market’s future growth.
For more information on reports and market data from TrendForce’s Department of Optoelectronics Research, please click here, or email Ms. Grace Li from the Sales Department at firstname.lastname@example.org
In the global satellite market, LEO (low earth orbit) satellites currently hold the most significant advantage in terms of developmental potential due to their closer proximity with earth and their relatively lower latency, radiation, and cost compared to HEO (high earth orbit) and MEO (medium earth orbit) satellites, according to TrendForce‘s latest investigations. Furthermore, not only do LEO satellites not require base stations, but they can also receive signals in difficult-to-reach and rural areas. As their signal coverage is not constrained by such geographical features as mountainous regions, oceans, and deserts, LEO satellites can synergize with 5G mobile communications by reaching areas that lack 5G coverage. After SpaceX generated much attention for LEO satellites, an increasing number of satellite operators have, in succession, applied to launch their own satellites. TrendForce expects annual satellite revenue for 2022 to reach US$295 billion, a 3.3% YoY increase.
With Europe, the US, China, Japan, and Korea participating in LEO satellite and 5G development, challenges still remain with respect to costs and long-term prospects
Regarding the deployment of LEO satellites by country, Asian countries, including China, differ from other major countries in terms of primary applications. Whereas non-Asian countries generally adopt LEO satellites for commercial purposes, Asian countries primary gear their deployment toward “national security” purposes. Some of the major developments in national security applications include AviChina’s Hong Yun project and CASC’s Hongyan constellation, both of which are expected to complete periodic missions in 2022. While policies relevant to the Chinese satellite industry are set by the Ministry of Industry and Information Technology, the industry itself is regulated by the Radio Association of China. In Japan, NTT DoCoMo oversees the development of 6G communication, with an emphasis on NTN technology, which works in tandem with LEO satellites. Finally, Korea’s MSIT recently unveiled its “6G R&D implementation plan”, which includes the launch of 14 LEO satellites by 2031.
Between LEO satellites and 5G telecommunications, the European and US markets are prioritizing ground-based 5G telecommunications first and finalizing the release of all frequency ranges in the 5G spectrum. While the number of ground stations and residents located in regions with 24.75-25.25GHz frequency bands are limited, LEO satellites shoulder the responsibility of preventing signal disruption. On the other hand, certain European organizations, such as the ESA and the European Commission, have established the SaT5G (Satellite and Terrestrial Network for 5G) consortium in order to drive forward the application of and integration between satellite and 5G communications.
In the industry’s current infancy, major satellite operators have launched more than a thousand small LEO satellites. In consideration of these satellites’ less-than-five years’ lifespans, operators will most likely focus on low-cost manufacturing and launching solutions in order to minimize CAPEX, in turn accelerating the pace of satellite adoption and lowering the overall cost of satellites. More specifically, not only have SpaceX and Amazon respectively engaged in vertical integration and streamlined their corporate structures, but they are also aligned with the demands of clients ranging from enterprises, governments, and consumers. As a result of these efforts, SpaceX and Amazon have effectively lowered the costs involved with collaborating with other suppliers.
Satellite recycling and space materials are two major sources of revenue auxiliary to the LEO satellite industry
The 3GPP recently announced that it will finalize Release 17, which for the first time will include NTN (non-terrestrial networks), in 2022. Prior to this, mobile communications and satellite communications had been two separate, independently developing industries. That is why companies working across the two industries in the upstream, midstream, and downstream supply were generally different as well. After 3GPP includes NTN in its upcoming release, the two industries are likely to generate more opportunities for collaboration. At the moment, Tesla subsidiary SpaceX has applied to launch the most satellites among all satellite operators, which include Amazon, Britain-based OneWeb, and Canada-based Telesat, among others. Notably, US operators have launched more than 1,000 satellites, which represent more than 50% of the global total.
Signal transmission and reception between satellites and ground stations are relatively limited. As such, four major satellite technologies, including collision prevention, management, communications, and ground base-satellite transmission, represent four major areas in which potential suppliers can participate. However, given the intense competition among satellite operators, once LEO satellite deployment reaches a global scale in the future, issues such as light pollution may begin to adversely affect planetary and other astronomy research. TrendForce therefore believes that companies capable of supplying materials that can lower satellite reflectivity are likely to experience considerable growth going forward. In addition, small LEO satellites’ lifespan of less than five years will also result in space debris issues. Hence, effectively recycling satellites back to earth is yet another potential commercial opportunity in the space industry.
Starlink is partnering with Taiwanese telecom companies for the first time and is expected to expand these companies’ services areas starting from ground stations
At the moment, one of the pain points associated with LEO satellites is the difficulty for ground stations’ antennas to track satellite signals. Hence, Taiwanese companies that primarily specialize in base station building are therefore likely to benefit from potential partnerships with LEO satellite operators. Although satellite-related companies in Taiwan traditionally focused on manufacturing equipment and components for MEO and HEO satellites, the rise of the LEO market has now persuaded these companies (including MTI, WNC, Kinpo, UMT, Tong Hsing, GPI, WIN, Chicony, EMC, Compeq, and Shenmao) to become suppliers for SpaceX’s Starlink satellite internet system.
Having taken notice of Taiwan’s strategic position that connects northern Asia with Southeast Asia, US-based SpaceX has reached out to Taiwan’s National Communications Commission (NCC) and Chunghwa Telecom, with the latter subsequently confirming its partnership with SpaceX. Chunghwa Telecom is now looking to extend this partnership to a comprehensive business relationship that goes beyond base stations. As the Starlink internet service is expected to be available in Taiwan next year, Chunghwa Telecom will become the sole distributor of Starlink in Taiwan. Now that SpaceX has launched more than 1,800 satellites, Chunghwa Telecom will likely facilitate increased internet connection speed for Starlink via its 18,000 base stations located throughout Taiwan, which synergize with the satellites for better, more comprehensive coverage.
Despite the intensifying COVID-19 pandemic that swept Taiwan in 2Q21, the domestic OSAT (outsourced semiconductor assembly and test) industry remained largely intact, according to TrendForce’s latest investigations. Global sales of large-sized TVs were brisk thanks to major sporting events such as the Tokyo Olympics and UEFA Euro 2020. Likewise, the proliferation of WFH and distance learning applications propelled the demand for IT products, while the automotive semiconductor and data center markets also showed upward trajectories. Taking into account the above factors, OSAT companies raised their quotes in response, resulting in a 26.4% YoY increase in the top 10 OSAT companies’ revenue to US$7.88 billion for 2Q21.
TrendForce indicates that, in light of the ongoing global chip shortage and the growing production capacities of foundries/IDMs in the upstream semiconductor supply chain, OSAT companies gradually increased their CAPEX and expanded their fabs and equipment in order to meet the persistently growing client demand. However, the OSAT industry still faces an uncertain future in 2H21 due to the Delta variant’s global surge and the health crisis taking place in Southeast Asia, home to a significant number of OSAT facilities.
Regarding the performances of individual OSAT companies in 2Q21, market leader ASE and Amkor each recorded revenues of US$1.86 billion and US$1.41 billion, which represented YoY growths of 35.1% and 19.9%, respectively, for the quarter. Both companies benefitted from strong demand for 5G smartphones, notebook computers, automotive chips, and networking chips. In particular, ASE allocated some of its capacities to KYEC (which suffered a drop in its IC testing capacity due to the pandemic) and therefore experienced a surge in its revenue. Also posting a revenue growth in 2Q21 was Amkor, which took second place on the top 10 list owing to the high demand for automotive chips, HPC chips, and 5G handsets released by Apple and other smartphone brands.
SPIL’s revenue for 2Q21 reached US$931 million, a modest 2.3% YoY increase. The company’s relatively muted growth can be attributed to the fact that smartphone IC packaging demand from Huawei, one of SPIL’s major clients, had plunged, while other smartphone brands did not place orders sufficient for making up for this plunge. As previously mentioned, some of KYEC’s testing capacities were adversely affected by the COVID-19 pandemic, resulting in a 6.8% YoY increase in KYEC’s revenue to a mere US$274 million for 2Q21. PTI gradually recovered from difficulties resulting from the closure of its Japanese and Singaporean subsidiaries. For 2Q21, PTI’s revenue reached US$742 million, a 14.3% YoY increase.
Regarding Chinese OSAT companies, JCET and Hua Tian both expanded their capacities in order to meet the massive demand from the domestic 5G telecom, base station, consumer electronics, and automotive markets. While JCET and Hua Tian continue to operate in accordance with China’s goal of achieving domestic semiconductor substitutes, the two companies’ revenues for 2Q21 reached US$1.1 billion and US$467 million, which represented YoY growths of 25% and 64.7%, respectively. It should be pointed out that TFME also benefitted from the aforementioned market demand. TFME’s revenue reached US$591 million, a 68.3% YoY increase, which was the highest increase among the top 10 OSAT companies in 2Q21. TFME’s impressive growth took place primarily because the company is the main OSAT provider for AMD. As AMD captured some of Intel’s market share, both AMD and, by extension, TFME, experienced a resultant revenue growth.
Finally, ChipMOS and Chipbond, which specialize in panel driver IC packaging and testing, benefitted from major sporting events such as the Tokyo Olympics and UEFA Euro 2020. Given the skyrocketing demand for display panels, IC testing demand for driver ICs, including TDDI and DDI, also underwent a corresponding rise. Notably, due to a shortage of packaging materials, ChipMOS raised the price of its packaging services for memory products and subsequently registered a spike in both revenue and gross profits. While both companies’ revenues reached US$251 million, ChipMOS and Chipbond each registered revenue growths of 38.4% YoY and 49.6% YoY, respectively.
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 email@example.com