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2021-02-23

Explosive Growth in Automotive DRAM Demand Projected to Surpass 30% CAGR in Next Three Years, Says TrendForce

Driven by such factors as the continued development of autonomous driving technologies and the build-out of 5G infrastructure, the demand for automotive memories will undergo a rapid growth going forward, according to TrendForce’s latest investigations.

Take Tesla, which is the automotive industry leader in the application of autonomous vehicle technologies, as an example. Tesla has adopted GDDR5 DRAM products from the Model S and X onward because it has also adopted Nvidia’s solutions for CPU and GPU. The GDDR5 series had the highest bandwidth at the time to complement these processors. The DRAM content has therefore reached at least 8GB for vehicles across all model series under Tesla.

The Model 3 is further equipped with 14GB of DRAM, and the next-generation of Tesla vehicles will have 20GB. If content per box is used as a reference for comparison, then Tesla far surpasses manufacturers of PCs and smartphones in DRAM consumption. TrendForce forecasts that the average DRAM content of cars will continue to grow in the next three years, with a CAGR of more than 30% for the period.

Based on the existing vehicle models circulating in the global car market, TrendForce estimates that the average DRAM content of cars will reach around 4GB in 2021. The growth in the average DRAM content of cars is expected to be much higher this year than in the past few years. However, car sales are not as great in scale when compared with sales of consumer electronics such as notebook (laptop) computers and smartphones. In 2019 before the COVID-19 pandemic, the annual global car sales totaled around 94 million vehicle units. Also, cars have less DRAM content compared with servers. Looking at the 2019 data, the distribution of the annual global DRAM consumption shows that the automotive memory segment accounted for less than 2% of the total.

Despite high barrier to entry, memory suppliers have been scrambling for automotive market share due to high profit margins

Compared with other application segments, automotive memory has a much higher standard for durability and reliability over the long term. The operating lifecycle of a car starts at 10 years, so DRAM suppliers basically have to guarantee that their automotive memory solutions have a product lifecycle of at least 7-10 years in order to satisfy the needs related to vehicle maintenance and replacements of parts. From the perspective of suppliers, the selection of process technology for product development and manufacturing is a key decision point when it comes to formulating a strategy for the automotive memory segment. Even as suppliers continuously migrate to the more advanced process technology, they have to ensure product longevity and long-term support for their automotive offerings.

Another issue, which is associated with durability, is operating temperature. Given that countries around the world have their own climates and extreme weather events, automotive DRAM products must have a much wider temperature range with a higher threshold and a lower threshold when compared with other categories of DRAM products, in order to ensure that cars do not break down on the road.

Finally, with density and other specifications being the same, prices of automotive DRAM products are at least 30% higher than prices of conventional commercial DRAM products. For the automotive DRAM products that have met some of the most stringent standards set by the industry, their prices can even be several times higher than prices of conventional commercial DRAM products. In sum, although automotive DRAM products are more difficult and costly to manufacture than other kinds of DRAM products, their high profit margins and large potential market have been attracting DRAM suppliers to now scramble for a piece of the automotive memory segment.

Taiwanese manufacturers show great potential as Winbond thrives in automotive OEM market with its comprehensive product portfolio

Currently, Micron is the leader in automotive memory products with a market share of nearly 50%. The supplier first has the geographical advantage. Moreover, its collaborative relationships with tier-1 automotive suppliers based in Europe and the U.S. are longer in duration compared with its competitors. Micron also has a more comprehensive product lineup for automotive applications, ranging from traditional solutions (e.g., DDR2 to DDR4) to LPDDR solutions (e.g., LPDDR2 to LPDDR5) to GDDR6 solutions. Additionally, Micron provides automakers with other types of memory technologies such as NAND Flash, NOR Flash, and MCP.

Apart from the three dominant DRAM manufacturers, Taiwan-based Nanya Tech and Winbond are continuing to release a wide variety of memory products in response to the growing demand of the automotive industry. In addition to possessing a comprehensive product mix ranging from traditional DDR solutions (e.g., up to DDR4) to low-power solutions (e.g., LPSDR to LPDDR4X), Nanya Tech has also adopted the 20nm node for a significant portion of its manufacturing processes, which are relatively stable in terms of yield rate. On the whole, automotive applications account for nearly 15% of Nanya Tech’s specialty DRAM revenue, while specialty DRAMs account for more than 60% of the company’s total revenue.

Winbond, on the other hand, has been cultivating its presence in the automotive market for more than 10 years. Although the three dominant DRAM manufacturers are ahead of Winbond in terms of process technologies, Winbond’s extensive product portfolio, which includes specialty DRAM, mobile DRAM, NOR Flash, SLC NAND, and MCP, represents a competitive advantage over the vast majority of other manufacturers. Given that the automotive OEM market is both relatively stable and profitable, Winbond has been placing a long-term focus on this market; automotive applications now comprise more than 10% of the company’s total memory revenue, and Winbond’s automotive business will likely continue to expand going forward.

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 lattechung@trendforce.com

2021-02-19

Blackouts Affecting Samsung’s Texas-Based Line S2 Fab Expected to Impair 1-2% of Global 12-Inch Wafer Foundry Capacity, Says TrendForce

In compliance with the local policy, Samsung’s Austin-based foundry Line S2 partially suspended operation on Tuesday, Feb 16 due to the winter storm affecting Texas. According to TrendForce’s investigation of the event, as the city’s public utility Austin Energy was able to warn of an impending power blackout ahead of time, the partial shutdown of the plant was not accidental but planned in advance. TrendForce’s data show that the monthly 12-inch capacity of Line S2 accounts for nearly 5% of the global total. While the winter storm is estimated to impair about 1-2% of the global 12-inch wafer foundry capacity, the actual duration of the impact will still depend on the region’s temperature. Assuming that Austin will gradually warm up on Friday, Feb 19, and a phased restoration of power will take place at the fab, TrendForce now expects Line S2 to return to full operation after at least one week.

TrendForce indicates that the main process technologies of the fab are the 14nm and 11nm nodes. These technologies are mainly used to manufacture Qualcomm’s 5G RFICs. The fab’s other production capacity is distributed among production lines that feature nodes ranging from 65nm to 28nm and mainly manufacture products under Samsung System LSI. Additionally, the fab manufactures automotive chips for Tesla and Renesas. Although Samsung had implemented corresponding measures in advance of the blackout, with no silicon wafers reported to be damaged and a mere slight extension in lead times for certain products, Line S2’s increased lead times are still expected to exacerbate the strained semiconductor market in light of the industry’s shortage of production capacities for various semiconductor applications, including automotive products, which remain in extremely high demand.

Despite the blackout’s limited impact on NAND Flash controller manufacturing, urgent orders from SSD purchasers may result in a potential price hike

It should be pointed out that, although Line S2 has stopped manufacturing NAND Flash, Samsung LSI still manufactures 14-40nm NAND Flash/SSD controllers at the fab. Given that the volume of wafer starts for controllers at Line S2 is relatively low, and Samsung had already made emergency response preparations ahead of time, the blackout is expected to result in only a slight extension of lead times, without significant impact on the overall controller output. However, as PC OEMs and CSPs are now starting to negotiate for the procurement of SSDs, major SSD suppliers have taken the strained supply of controller ICs into account when quoting SSD prices. As such, despite the blackout’s relatively low impact on NAND Flash/SSD controller manufacturing, SSD purchasers, including the aforementioned PC OEMs and CSPs, may potentially accept a price hike during the negotiation process due to their urgency in procuring additional SSDs. With regards to 2Q21 prices, TrendForce is currently adhering to the previous forecast of “mostly flat” for client SSDs and “slight decline” for enterprise SSDs, but TrendForce does not rule out the possibility that overall SSD prices may move in a positive trajectory once some purchasers accept a price hike.

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 lattechung@trendforce.com

2021-02-05

NAND Flash Wafer Prices Stabilize Due to High SSD Demand from PC OEMs, Says TrendForce

NAND Flash demand continues to rise as strong sales of notebook (laptop) computers spur PC OEMs to place additional orders for client SSDs, according to TrendForce’s latest investigations. Also, the supply-side inventory for NAND Flash memory has already fallen considerably due to the aggressive stock-up activities of some smartphone brands. With customers in the data center segment expected to ramp up procurement in 2Q21, NAND Flash suppliers have decided to scale back the supply of NAND Flash wafers. Compared with other product categories, wafers have a lower gross margin. As a result of these factors, the decline in contract prices of wafers has been easing over the past two months (i.e., from December of last year to January of this year).

TrendForce indicates that the migration to the 1XX-L processes has not been proceeding as smoothly and rapidly as expected for notebook SSDs during 1Q21. The testing and approval of 1XX-L products by PC OEMs has actually fallen behind schedule, so the bulk of demand is staying with the 92/96L processes rather than shifting toward the more advanced stacking processes. At the same time, customers in other application segments are still focusing their demand on the 92/96L processes as well as the 64L processes. Consequently, the NAND Flash market is now seeing a general tightening of supply. Wafers are the first to be affected by this turn of events since this product category is low on priority for suppliers. As suppliers curb the quantity of wafers in order to meet the growing demand from other applications, contract prices of wafers are starting to display a more stable trend. In fact, some suppliers are raising quotes for wafers this February. Based on this latest development, TrendForce has revised its projection of wafer prices for 1Q21. The previous projection predicted a QoQ decline of 10-15%, whereas the latest projection indicates that prices will hold relatively steady from 4Q20.

Looking ahead to 2Q21, customers in the data center and server segments are expected to generate a stronger procurement momentum. NAND Flash suppliers will therefore concentrate on meeting the demand for enterprise SSDs and pay less attention to the wafer segment. However, the volume of orders from module houses will be somewhat muted due to the influence of the ongoing shortage and price hike for NAND Flash controller ICs. As both supply and demand become weakened, NAND Flash wafer prices are thereby expected to remain mostly flat for 2Q21.

ICs in the upstream supply chain, however, remain in severe shortage. As such, even though NAND Flash suppliers have been putting forth a full effort to fulfill the demand for client SSDs, they will still have to beware of the possibility that actual notebook shipment may fall short of expectations due to an uneven distribution in the supply of raw materials. Furthermore, should the pandemic become gradually alleviated in 2H21, the global notebook demand may begin approaching pre-pandemic levels, in turn leading PC OEMs to revise their business plans accordingly. TrendForce therefore believes that uncertainties will still exist in the NAND Flash market in 2H21.

With regards to the NAND Flash wafer market, the current short supply can be attributed to the fact that demand is mainly focused on certain specific product generations. The decline in NAND Flash wafer prices in 1H21 is thus drastically narrowed, while demand from mostly the server side will also provide some upward momentum for NAND Flash wafer prices afterwards. However, Micron will ramp up its 176L products starting from 3Q21. As these products have been significantly improved in terms of cost, and the main NAND Flash applications will have transitioned to products with higher layer counts by then, the impact on NAND Flash wafer prices in 2H21 remains to be seen.

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 lattechung@trendforce.com

2021-02-02

Panel Prices Will Remain High in 2Q20 Due to the Effect of the Furnace Explosion at AGC Fine Techno Korea, Says TrendForce

AGC Fine Techno Korea, which is a glass substrate manufacturing plant owned by AGC and located in the South Korean city of Gumi, suffered a furnace explosion that also led to injuries of plant personnel on January 29. TrendForce’s latest investigation projects that this incident will affect no more than 1% of the total global supply of glass substrates for display panels. However, demand is rising across the panel market. At this sensitive moment, any event that affects the supply of panel components could exert significant influence on panel prices. In the second half of 2020, glass substrate supplier NEG (that is based in Japan) experienced issues that constrained the supply and thereby fueled the rise in panel prices. TrendForce does not rule out the possibility that this latest incident will also further bolster panel prices to some degree.

Explosion Accident Exacerbates Recent Tight Supply of Glass Substrates

The high demand for various panel applications, together with the issue encountered by NEG in the respective supply of glass substrates, has resulted in the relatively strained global supply of the product. NEG had initially anticipated resuming normal supply starting from the end of 1Q21, though the furnace explosion of AGC has created new variables to the overall supply of glass substrates. The affected furnace was planned to supply substrates for the new production line of G10.5 in China; thus TrendForce believes that AGC is bound to implement scheduling and allocation of production capacity after the furnace explosion, so as to respond to the supply void created by the incident, and the major affected time point will occur during 2Q21. The analysis of TrendForce indicates that a single production line for a single supplier will be affected if the scope of impact is strictly within the supply of G10.5 glass substrates, with implicated dimension as 65” and 75”. Should a scheduling of production capacity be required, the affected range will be enlarged to G8.5, and will include Taiwanese and partial Chinese panel suppliers, where the affected dimension will also expand to below 55”.

Panel Prices Are Expected Be Maintained at a High Level

Prices of TV panels have been climbing over the past several months and are still on the upswing. The excessively high cost of panel procurement is starting to become an issue for branded TV manufacturers.  TrendForce previously forecasted that prices of TV panels would keep rising to the end of 1Q21 and then drop slightly in the second half of 2Q21 due to demand fluctuations. However, TrendForce has modified its projection on account of the furnace explosion at AGC Fine Techno Korea on January 29. Panel prices may continue to stay at a high point through 2Q21 and maintain this trend until late 3Q21 before further adjustments could take place.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at vivieliu@trendforce.com

2021-01-28

Automotive Market Set to Recover in 2021 with Yearly Sales of 84 Million Vehicles, While 12-inch Fab Capacities for Automotive Semiconductor Undergoes Most Severe Shortage, Says TrendForce

Not only did automotive market take a downward turn starting in 2018, but the severe impact of the COVID-19 pandemic in 2020 also led to noticeably insufficient procurement activities from major automotive module suppliers, according to TrendForce’s latest investigations. However, as the automotive market is currently set to make a recovery, TrendForce expects yearly vehicle sales to increase from 77 million units in 2020 to 84 million units in 2021.

At the same time, the rising popularity of autonomous, connected, and electric vehicles is likely to lead to a massive consumption of various semiconductor components. Even so, since most manufacturers in the automotive supply chain currently possess a relatively low inventory, due to their sluggish procurement activities last year in light of weak demand, the discrepancies in the inventory levels of various automotive components, along with the resultant manufacturing bottleneck, have substantially impaired automakers’ capacity utilization rates and, subsequently, vehicle shipments.

The recent shortage situation in the IC supply chain has gradually extended from consumer electronics and ICT products to the industrial and automotive markets. In the past, manufacturers in the automotive semiconductor industry were primarily based on IDM or fab-lite business models, such as NXP, Infineon, STMicroelectronics, Renesas, ON Semiconductor, Broadcom, TI, etc. As automotive ICs generally operate in wide temperature and high voltage circumstances, have relatively long product lifecycle, and place a heavy demand on reliability as well as longevity support, it is more difficult for the industry to alternatively transition its production lines and supply chains elsewhere.

Automotive semiconductor remains in shortage as production capacities remain fully loaded across the global foundry industry

Nevertheless, given the current shortage of production capacities across the foundry industry, wafer capacities allocated to automotive semiconductor components have been noticeably crowded out by other products. Some of these examples include automotive MCU and CIS manufactured in 12-inch fabs, as well as MEMS, Discrete, PMIC, and DDI products manufactured in 8-inch fabs. TrendForce indicates that automotive semiconductor products manufactured at the 28nm, 45nm, and 65nm nodes in 12-inch fabs are suffering the most severe shortage at the moment, while production capacities at 0.18µm and above nodes in 8-inch fabs have also been in long queue by other products.

As in-house IDM fabrications have relatively high CAPEX, R&D expense, and operating overhead, automotive IC vendors have in recent years outsourced some of their products to TSMC, GlobalFoundries, UMC, Samsung, VIS, Win Semiconductor and so on. In particular, TSMC specifically indicated during its 4Q20 earnings conference that wafer starts for automotive semiconductors reached rock bottom in 3Q20, while additional orders began arriving in 4Q20. As such, the company is currently considering allocating some of its production capacities from logic ICs to specialty foundry, in order to meet sudden demand from its long-term customer relationship.

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 lattechung@trendforce.com

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