The onset of the COVID-19 pandemic in turn generated a high demand for notebook computers. While demand began ramping up in 2Q20, subsequently resulting in a shortage in 3Q20 and 4Q20, the shortage in the notebook market has yet to be resolved even now, according to TrendForce’s latest investigations. The high demand for notebooks is estimated to propel the quarterly shipment of notebook panels to a historical high of 65.3 million units in 1Q21, which is a 3.5% increase QoQ and a 46.5% increase YoY.

With regards to supply and demand, TrendForce believes that the current shortage of notebook panels can primarily be attributed to the soaring market demand for notebooks. In terms of supply, notebook panel shipment underwent YoY increases of more than 20% during each quarter from 2Q20 to 4Q20. At the moment, panel orders from notebook manufacturers still exceed the order fulfillment capacity of panel suppliers by about 30-50%, as panel suppliers are bottlenecked by the shortage of certain semiconductor components, such as DDICs and T-cons.

Given the extremely tight supply of panels relative to demand, notebook panel prices have skyrocketed accordingly. Case in point, quotes for 11.6-inch panels, which are among the mainstream and are widely used for Chromebooks, are now closing in on quotes for 14-inch and 15.6-inch panels. As such, the high profitability of notebook panels have led panel suppliers to set more aggressive shipment targets this year.

In particular, after CEC-Panda sold its Nanjing-based Gen 8.5 fab and Chengdu-based Gen 8.6 fab last year, the company currently possesses a sole remaining Gen 6 fab in Nanjing. While this fab has never manufactured notebook panels in the past, plans for manufacturing 11.6-inch panels are now underway, with mass production expected to start in 2Q21, owing to the extremely high market demand for notebook panels. It should also be pointed out that HKC has been mass producing 11.6-inch panels since February 2021. The company is expected to start mass producing 14-inch panels in 2Q21 and 15.6-inch as well as 13.3-inch panels in 2H21. HKC aims to ship about 10 million notebook panels this year.

TrendForce indicates that the current demand for notebook panels will likely persist through 3Q21. However, as the shortage situation has persisted for more than three quarters since it surfaced in 2Q20, some notebook manufacturers may begin overbooking panel orders due to the expectation of further shortages. Therefore, if the actual market demand were met ahead of expectations, panel suppliers may potentially slow down their panel shipments in 2H21. Even so, the new normal brought about by the pandemic will continue to power the global digital transformation. For instance, in response to the digitization of distance learning, the education sector is expected to generate recurrent demand for Chromebooks. As a result, TrendForce has a positive outlook on the annual shipment volume of notebook panels for 2021, which is expected to reach 249 million units, a 10.5% increase YoY.

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

Owing to high sales of the iPhone 12 series as well as an aggressive device production strategy by Chinese smartphone brands in response to sanctions on Huawei, which has lost considerable market share as a result, global smartphone production for 1Q21 is likely to reach 342 million units, a YoY increase of 25% and a QoQ decline of just 6%, according to TrendForce’s latest investigations. Historically, smartphone production tends to experience a QoQ drop of around 20% for the first quarter as demand collapses from the peak-season level of the fourth quarter of the preceding year. However, the performance of the first quarter of this year is expected to defy seasonality.

Smartphone production for 4Q20 is estimated at 364 million units, while Apple ranked first in terms of production volume

Even though the share of high-end models in global smartphone sales shrank in 2020 due to the COVID-19 pandemic, Apple was able to push through the headwinds and capture market share by introducing 5G models and adopting an aggressive pricing strategy. Apple produced 77.6 million units of iPhones in 4Q20, an 85% increase QoQ, thereby overtaking Samsung and ranking first amongst all smartphone brands. It should also be pointed out that iPhone 12 devices accounted for about 90% of the iPhone production in 4Q20. For 1Q21, sales of iPhone 12 devices remain strong, and total iPhone production is expected to reach 54 million units, with iPhone 12 models again accounting for about 80% of this figure. Looking further ahead, Apple plans to launch four new flagship iPhone devices in 2H21 and is likely to adhere to its aggressive pricing strategy. Regarding hardware advances, Apple will upgrade its mobile SoC to the A15 bionic SoC. Other than that, it will optimize various existing functions of the iPhone device. On the whole, the four upcoming flagship models can be regarded as extensions to the iPhone 12 series.

Samsung posted a QoQ decline of 14% in its smartphone production to 67 million units for 4Q20, thereby taking second place in the quarterly ranking. Its performance was affected by the competition from the new iPhone devices and the end of stock-up activities that were related to the year-end holiday season in North America and Europe. Moving to 1Q21, Samsung has released the new lineup of its flagship Galaxy S21 series in advance so as to maintain its market share in the high-end segment. At the same time, Samsung has adopted promotional pricing to boost the sales of its latest devices. Samsung’s quarterly smartphone production volume will likely reach around 62 million units for 1Q21. For the whole 2021, TrendForce expects Samsung to top the annual ranking of brands by production. Nevertheless, retaining the leadership position will be increasingly challenging for Samsung as it has been losing market share to several Chinese brands that have risen rapidly over these past few years. Regarding product strategy, Samsung will likely combine the Galaxy Fold series, equipped with foldable displays, with the Galaxy Note series, which offer large-sized displays, into the same flagship lineup. The main focus of Samsung’s sales efforts will still be on the Galaxy A series that encompasses models across the high-end, mid-range, and low-end segments of the price spectrum. To effectively compete against Chinese brands that boast better price-performance ratio for their devices, Samsung will maintain high specifications and a price advantage for Galaxy A devices.

OPPO (including OPPO, OnePlus, Realme), Xiaomi, and Vivo produced 50 million, 47 million, and 31.5 million units of smartphones respectively in 4Q20, which placed them at third, fourth, and sixth places. Looking ahead to 1Q21, the three aforementioned smartphone brands are expected to maintain an aggressive production target and actively expand in both the overseas and domestic markets. Nonetheless, potential growths in their actual production volume will be limited by the current shortage of production capacities across the foundry industry. In terms of product strategies, the three Chinese brands will remain aggressive in their R&D activities for high-end models as they seek to take over Huawei’s previous position in this segment. In particular, Xiaomi and OPPO have been seizing market shares with the highly cost-effective Redmi and Realme series, respectively. Notably, Xiaomi is expected to achieve a better performance in terms of market share for the whole year due to its earlier expansion in the overseas markets.

In response to heightened China-U.S. tensions, Huawei maintained a high inventory of components, which allowed it to effectively mitigate the impact of sanctions from the Department of Commerce. As such, Huawei recorded a quarterly production volume of 34.5 million units in 4Q20, a 21% decrease QoQ. This performance was sufficient to land Huawei in the fifth place in the production ranking for the quarter. Going forward, if suppliers of relevant smartphone components are unable to obtain approval to ship to Huawei by the end of 1Q21, then Huawei is expected to experience a noticeable cutoff of material supplies by the end of 2Q21. Furthermore, after being officially sold off by its parent company Huawei in early 2021, Honor is similarly facing the issue of foundry capacity shortage, which is projected to constrain the production volume of new Honor for the entirety of 2021.

2021 Ranking of smartphone brands by market share remains under scrutiny as LG suspends R&D of new products

LG has been considering either closing down or selling off its smartphone business since early 2021 while also suspending the R&D of new models. This has introduced additional uncertainties into the smartphone market following Huawei’s diminished presence. Although LG was relentless in innovating and developing high-end smartphones in the past, its sales performances lagged behind more competitive offerings from Samsung and Apple in the high-end segment. In the entry-level and mid-range segments, LG similarly fell short of Chinese brands, whose products enjoyed a pricing advantage. As a result, LG’s smartphone market share underwent gradual YoY declines since 2016, finally coming to ninth place in the global smartphone production ranking in 2020. Going forward, LG will concentrate its sales efforts in the Americas, while its market share is expected to fall to other brands, including Samsung, Xiaomi, and even certain telecom companies’ in-house brands.

For the rest of 2021, as the pandemic gradually slows down, the smartphone industry, which provides an essential daily necessity for the public, is likely to make a recovery as well. Given the industry’s cyclical replacement demand as well as demand from emerging regions, TrendForce projects the total smartphone production volume for 2021 to reach 1.36 billion units, a 9% increase YoY. It should be pointed out that the recent shortage in foundry capacities has led to a very limited supply of smartphone components, such as AP and TDDI. This means most smartphone brands have to make do with the materials they are able to obtain, even if such materials constitute a bottleneck in the manufacturing process. As a result, the boundaries between what would otherwise be off seasons and peak seasons will be relatively ambiguous this year, resulting in a smaller magnitude of QoQ growths.

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

The major suppliers of WFE (wafer fab equipment) in the US are progressing smoothly in the application for license from the US government for the exportation of equipment systems, equipment parts, and customer services for 14nm and above processes to Chinese foundry SMIC. The US-based equipment suppliers that are applying for the license include Applied Materials, Lam Research, KLA-Tencor, and Axcelis. TrendForce believes that as some support from US-based equipment suppliers is forthcoming, SMIC should be able to continue its efforts in the optimization of the mature process modules and overcoming production bottlenecks to avoid a scission in raw materials and spare parts, and predicts the company to sit at a global market share of 4.2% in 2021. Keeping SMIC in operation will provide a bit of relief to the capacity crunch in the global foundry market, however, the tightening of the available production capacity will remain a challenge that is difficult to resolve for the foundry industry as a whole. Also, the US government continues to prohibit SMIC from obtaining the equipment of the advanced nodes that are 10nm and below, and the particular restriction poses a potential risk for the long-term development of the Chinese foundry.

SMIC Continues to Expand Domestic Demand and Localization under China’s Explicit Direction in Long-Term Development of Semiconductor

As the fifth largest IC foundry in the world, SMIC obtains over 70% of revenue from China and Asia-Pacific. In terms of process node perspectives, 0.18um, 55nm, and 40nm contribute to the majority of revenue that totaled to over 80% from being applied on service platforms such as logic, BCD, eFlash, sensor, RF, and HV, and the coordination with the IC projects listed in the 13th and 14th Five-Year Plan of China will continue to enhance on the assimilation of localized WFE (wafer fab equipment) and raw materials.

The sanctions imposed by the US Department of Commerce that have affected the long-term planning in production capacity and development strategies of SMIC are expected to result in a YoY declination of 25% in the capital expenditure of 2021 for the Chinese foundry. SMIC intends to allocate the majority of its capital expenditure to capacity expansion for the mature nodes and the construction of a new joint-venture fab in Beijing, and is conservative towards investing in advanced process technology such as FinFET. TrendForce believes that geopolitical factors and uncertainties in the WFE section of the supply chain have compelled SMIC to scale back its capital expenditure and shift its development focus to the 55/40nm and 0.18um nodes.

A breakdown of SMIC’s revenue by region shows that more than 50% comes from China, though whether major global clients are willing to continue placing their orders with SMIC under the consideration of foundry selection and long-term cooperation amidst the unabated status in the semiconductor competition between China and the US will be a focus of observation going forward. Pertaining to the return on investment for technology scaling and mature node, the development planning in advanced processes for SMIC no longer succumb to immediacy in demand under restricted client conditions and constraints from subcontractors. On the other hand, the resources for chiplet and specialty IC that exert better functions for the operation of the company are focused on the existing 14nm and above matured processes to enhance on PDK (process design kits) for clients that may create a business model with prolonged profitability, as well as preserve R&D staffs and future growth dynamics.

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

Global sales of NEV (new energy vehicles, which include both BEV and PHEV) skyrocketed in the final two months of 2020, with various models setting historical sales records, according to TrendForce’s latest investigations. TrendForce estimates total NEV sales for 2020 at 2.9 million units, a 43% increase YoY, and further expects yearly sales to reach 3.9 million units in 2021. However, as the current shortage of automotive chips has had a considerable impact on the auto industry, some uncertainties still exist in the forecast of EV sales.

With regards to the BEV market, Tesla primarily focused on marketing the Model 3 as its key model for 2020. The automaker took leadership position with a 24.5% market share last year, while the Model Y is expected to be key to securing its continued leadership in 2021 primarily because China has issued a sales permit allowing the Model Y to be exempt from purchase tax. Furthermore, Tesla was able to catch its competitors off guard by discounting Model Y prices by 30% on the first day of 2021. Volkswagen took second place in the rankings due to not only the excellent market reception of the e-Golf, but also the remarkable sales figures set by the ID.3 in 2H20, which helped Volkswagen stabilize its market share. Incidentally, as the ID.4 is set to hit the market later on, it is expected to make meaningful contributions to Volkswagen’s overall EV sales in 2021 instead of 2020.

BYD derives its competitive advantage from having a comprehensive model lineup. The Chinese company comfortably took third place with a 6.4% market share. Conversely, fourth-ranked Wuling Hongguang became the dark horse of 2020 by fielding a single EV model, the Hongguang Mini. Not only was the Hongguang Mini attractively priced, but the Chinese government also made a heavy push for NEV sales in China’s rural areas. Both of these factors allowed the Hongguang Mini to become one of the global top sellers within six months of its release. Hot on the heels of Wuling Hongguang is Renault, which took fifth place in the ranking. Renault was able to score a 5.6% market share thanks to its longstanding best seller ZOE. Although other models, including the Nissan Leaf and Hyundai Kona, also posted remarkable sales performances last year, their respective automakers did not place on the top five list because these automakers each had total EV sales that fell short of the five automakers on the list.

On the other hand, the top PHEV manufacturers were neck and neck in terms of ranking by market share. BMW and Mercedes-Benz each possessed a 13% market share, followed by Volvo with 12%. Fourth-ranked Volkswagen and fifth-ranked Audi registered a 10% market share and 6% market share, respectively.

TrendForce indicates that China and Europe are perfect examples of EV markets propelled by government policies. For instance, European automakers have adopted a proactive position to expand their EV lineups as a result of the stringent emissions standards set by the EU, and these automakers have subsequently been aiming to achieve zero carbon emissions or increase the share of EVs in their total vehicle sales. Apart from China and Europe, the US is yet another market where policies may have a positive effect on EV sales. After winning the 2020 presidential election, Biden is now set to launch his clean energy proposal, which includes replacing the US government’s existing fleet with EVs, removing the previously set ceiling on federal tax credits for EV purchases, and offering consumer tax incentives to replacing their conventional fossil fuel vehicles with EVs, among other actions. If these proposed actions were eventually implemented, TrendForce believes they would be able to drive up EV sales in the US.