Intel


2021-06-02

MCO 3.0 Lockdown in Malaysia, Hotspot for Packaging/Testing and Passive Component Manufacturing, Projected to Have No Effect on Semiconductor Companies, Says TrendForce


National governments in Southeast Asian countries, including Thailand, Vietnam, and Malaysia, have been instituting increasingly stringent pandemic control measures in response to the intensifying COVID-19 pandemic in these countries. Remarkably, these countries are all hotspots in the electronic component supply chain, and Malaysia, home to many semiconductor packaging and testing facilities as well as passive component fabs, has now come under the international spotlight as a result. In particular, Malaysia’s MCO 3.0 (Movement Control Order 3.0) lockdown, which was extended on June 1, specifically excludes the semiconductor industry, as this industry boasts relatively high market revenue. As such, packaging and testing facilities are currently operating normally in Malaysia, according to TrendForce’s latest investigations.

On March 18, 2020, the Malaysian government first implemented similar pandemic control measures, under which only about 50% of private businesses were allowed to operate. The semiconductor industry and medical services were notably excluded from the restrictions at the time, given the former’s high revenue and the latter’s critical importance during emergencies. Despite the heightened lockdown of the MCO 3.0, under which only certain essential economic activities are allowed to function, some aspects of the MCO 3.0’s restrictions are relatively more lenient, as this policy specifies only 40% of private business employees must adopt WFH. Incidentally, as previously mentioned, the MCO 3.0 does not apply to the semiconductor industry.

As manufacturing operations and lead times of passive components become constrained, end clients’ procurement activities remain uncertain in 2H21

On the other hand, TrendForce indicates that the passive component market, which is also a key industry in Malaysia, will likely face supply-side bottlenecks as a result of the MCO 3.0, affecting such suppliers as Taiyo Yuden, Walsin Technology, NDK, and Epson. Under the latest restrictions, product lead times in the passive component supply chain, along with the state of the transportation industry (which determines shipping and delivery schedules of passive components), will become key determinants of whether client orders can be fulfilled on time.

In addition, brands in Europe and North America will begin adjust their orders for late-3Q21 in June and July. Notebook brands including Dell and HP are not only expected to maintain their orders for 2H21, but also taking measures to ensure a steady supply of IC components, while Apple will begin procuring components for its upcoming iPhone 13 from the passive component supply chain in July. Although these orders are expected to provide upward momentum for the passive component market in 2H21, the resurgence of the pandemic in Southeast Asia, as well as whether the shortage of semiconductor components will be alleviated going forward, will affect clients’ procurement activities for MLCC (multilayer ceramic capacitors) in 2H21.

On the whole, although the packaging and testing operations of major IDMs (Intel, Infineon, and Texas Instruments) and OSAT operators (ASE, Amkor, TFME, and Hua Tian) in Malaysia remain unaffected for the time being, TrendForce believes that the MCO 3.0 will likely have an impact on the supply and demand of the global passive component market in 2H21.

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

2021-03-18

Intel Responds to AMD’s Challenge with Ice Lake CPUs as Competition in Server Market Intensifies, Says TrendForce

The x86 architecture remained the mainstream server architecture at the end of 2020, according to TrendForce’s latest investigations. In the x86 server segment, Intel took the lead with a 92% market share thanks to the wide-ranging positioning of its solutions. On the other hand, AMD saw its market share rise to nearly 8% in 4Q20, which represents a 3% growth compared to 4Q19. Other server solutions, based on non-x86 architectures, comprised an insignificant portion of the market. TrendForce projects total server shipment to increase by 21% QoQ in 2Q21 owing to the release of Intel’s new Ice Lake platform.

Notably, edge computing, which involves low-latency data processing, has risen to the forefront of server applications in response to the rise of AI and 5G networks. Ideal use cases of edge computing include autonomous driving, IIoT, and other proprietary commercial applications, with relevant vendors already scrambling to deliver solutions aimed at these use cases. With regards to architecture, ARMv8-based solutions are the most suitable for edge computing applications in terms of both cost and power consumption. With the ongoing 5G commercialization, ARMv8 solutions have been occupying a growing share within the total shipment of all ARM solutions, and North American data centers have been the most aggressive in adopting these solutions. TrendForce expects ARMv8 solutions to occupy a respectable share of the low power consumption edge computing market in 2023-2025.

With the upcoming ramp-up in production, Intel’s new Ice Lake CPUs will likely account for 40% of Intel CPU shipment in 4Q21

As previously mentioned, Intel’s x86 CPUs are the mainstream among server platforms. With regards to Intel’s server roadmap, the company has started shipping a small batch of Whitley Ice Lake CPUs to its clients in the data center segment in 1Q21, while bulk shipment to branded server manufacturers is expected to take place in 2Q21. At the same time, Intel expects Whitley Ice Lake CPUs to account for about 40% of Intel’s CPU shipment in 4Q21, although adoption by buyers remains to be seen.

In terms of specifications, the Whitley platform allows Ice Lake CPUs to be compatible with the fastest DDR4 standards and therefore provides a major improvement in both data transfer rate (MT/s) and maximum capacity of DRAM supported per CPU. The Whitley platform will effectively increase the average DRAM storage capacity of servers, leading to faster and more advanced virtualization applications while improving data streaming performances in data centers. On the whole, not only does the Whitley platform increase the Ice Lake CPU’s cloud computing capabilities, but it also allows Intel to catch up to AMD’s Rome platform, in turn further strengthening Intel’s leadership position in the server market. As such, buyers will likely adopt the Whitley platform given the increased server demand generated by the post-pandemic new normal. Incidentally, although AMD’s mass-produced server solutions are slightly superior to competing offerings from Intel in terms of specs and pricing, AMD will not make significant adjustments in its upcoming Milan platform. AMD will therefore unlikely be a factor that propels the overall bit demand for server DRAM.

In the competition among server CPUs with respect to the data transfer rate, the Whitley Ice Lake is Intel’s first server processor platform that supports PCIe Gen 4. Although AMD was already mass producing server CPUs featuring PCIe Gen 4 support in 2020, Intel will likely be more effective in leveraging this advantage across the application ecosystem. The reason is that Intel is the long-time leader in server CPUs and controls the lion’s share of the market. Furthermore, Intel aims to synergize its latest server CPUs with the second generation of its Optane SSDs. Working together, they are expected to significantly enhance the computing performance of servers for the applications that will become mainstream in the future (e.g., AI and machine learning). TrendForce believes that the penetration rate of PCIe Gen 4 will rise rapidly in 2H21 as Intel and AMD step up shipments of CPUs that support this interface.

Regarding the implementation of the support for DDR5 and PCIe Gen 5, both Intel and AMD have already begun sending samples of related products to their clients in 1Q21. Intel plans to begin mass production for server CPUs belonging to the Eagle Stream platform at the start of 2022. Since the Eagle Stream is designed to support PCIe Gen 5, it will provide another significant boost to the data transfer rate. As for AMD, it plans to commence mass production for server CPUs based on the Genoa platform in 2Q22.

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

2021-03-17

NAND Flash Contract Prices Projected to Increase by 3-8% QoQ in 2Q21 Due to Easing of Oversupply, Says TrendForce

With Samsung, YMTC, SK Hynix, and Intel leading the charge, NAND Flash suppliers will maintain an aggressive effort to expand their production capacities throughout 2Q21, during which NAND Flash bit output will likely increase by nearly 10% QoQ, according to TrendForce’s latest investigations. On the other hand, orders from PC OEMs and Chinese smartphone brands since 1Q21, as well as recovering procurement activities from clients in the data center segment during 2Q21, will generate upward momentum propelling NAND Flash bit demand. Furthermore, buyers are actively stocking up on finished products, such as SSDs and eMMC, due to persistently limited NAND Flash controller supply. TrendForce therefore expects NAND Flash contract prices to increase by an average of 3-8% QoQ in 2Q21 after experiencing a 5-10% decline QoQ in 1Q21. In particular, as Samsung’s Line S2 fab in Austin has yet to resume full operation after the Texas winter storm, the supply of NAND Flash controllers going forward may be at risk, and Samsung’s ability to manufacture client SSDs will be further constrained as a result. In light of these factors, TrendForce is not ruling out the possibility that NAND Flash contract prices may increase by even more than current forecasts.

Contract prices of both client SSDs and enterprise SSDs are projected to rise due to delayed resumption at Samsung’s Line S2 fab

With regards to client SSDs, the persistent stay-at-home economy generated by the COVID-19 pandemic will likely result in strong demand for notebook computers in 2H21, while PC OEMs have raised their client SSD inventories as they manufacture more notebooks to meet demand. Given the high volumes of client SSD orders from PC OEMs, inventory level of NAND Flash suppliers is therefore likely to remain healthy. However, the shortage of NAND Flash controllers has yet to be resolved. Suspended operations at the Line S2 fab disrupted Samsung’s production of NAND Flash controllers, meaning some client SSD orders will not be fulfilled in 2Q21. Hence, the tight supply of finished products (i.e., client SSDs) will be further exacerbated. As such, client SSD contract prices are projected to increase by 3-8% in 2Q21.

With regards to enterprise SSDs, demand is expected to rebound from rock bottom in 2Q21, primarily because clients in the data center segment will ramp up their procurement activities after undergoing a period of inventory adjustment. In addition, demand for IT equipment from the governmental, healthcare, and financial services sectors will also gradually emerge. Other factors contributing to enterprise SSD demand include bids from Chinese telecom operators and increased IT equipment purchases from small and medium businesses globally. On the other hand, NAND Flash suppliers are no longer under pressure to destock via low prices, since their inventory levels have improved thanks to high demand from notebook manufacturers and smartphone brands. As the overall demand for NAND Flash rises, enterprise SSD contract prices are in turn expected to stabilize and experience a 0-5% growth QoQ in 2Q21.

High demand for Chromebooks will provide upward momentum for eMMC quotes, while contract prices of UFS are projected to undergo the lowest growths among NAND Flash products

eMMC contract prices will likely remain, for the most part, higher than expected despite the cyclical downturn in 1H21. In particular, strong demand from Chromebook manufacturers will provide upward momentum for eMMC quotes. Likewise, under the influence of NAND Flash controller shortage, eMMC buyers such as consumer electronics manufacturers will expand their procurement activities in order to build up their inventories. As a result, the overall eMMC demand will gradually ramp up in 2Q21. Conversely, the supply of eMMC controllers is still in shortage due to the fully loaded capacities across the foundry industry. Also, eMMC products under 32GB exclusively feature 2D NAND or 64L 3D NAND. Because production capacities allocated for these types of NAND Flash memories have been either reassigned to other 3D NAND products or scaled down, the oversupply of eMMC has been alleviated, and the long-term price drop of eMMC has subsequently come to a halt. In the short term, the shortage of controller ICs will result in a shortage of finished eMMC products. eMMC contract prices are therefore projected to increase by 3-8% QoQ in 2Q21.

Demand for UFS, which is primarily used for smartphones, is expected to remain high through 2Q21 because OPPO, Vivo, and Xiaomi have been aggressively procuring UFS since 4Q20, and Huawei spun off its Honor smartphone business unit. Buyers have also been anticipating an upcoming shortage of controller ICs and NAND Flash memory, leading them to build up their UFS inventories and therefore further driving up the overall UFS demand. On the supply side, inventory levels of suppliers have dropped significantly due to smartphone brands’ large-scale procurement activities previously. Although Chinese smartphone brands have yet to ramp up their bit demand, their existing level of demand still remains strong. Furthermore, clients from the data center segment are expected to increase their SSD procurement in 2Q21, and suppliers will maintain an aggressive approach regarding quotes in response. Even so, because smartphones account for the highest bit consumption share among all NAND Flash applications, NAND Flash suppliers are unlikely to significantly adjust their UFS quotes. As such, UFS contract prices are expected to increase by 0-5% QoQ in 2Q21, which is relatively lower compared to other NAND Flash products.

NAND Flash wafer contract prices are projected to increase by 5-10% QoQ as NAND Flash suppliers lower their bit shipment to the wafer market due to its lower profit margins

With regards to the NAND Flash wafer market, TrendForce has yet to observe an obvious improvement in the retail sales of end products such as SSDs, memory cards, and USB flash drives. However, as NAND Flash suppliers have been unable to make their scheduled delivery dates to OEMs due to an insufficient supply of controller ICs, module makers may stand to benefit from this and obtain more orders from OEMs, subsequently driving up the demand for NAND Flash wafers within the next one to two quarters, but the actual procurement of NAND Flash wafers will depend on whether the tight supply situation of controller ICs can be alleviated. On the other hand, inventories of NAND Flash suppliers have now fallen to mostly healthy levels thanks to procurement activities from smartphone brands since 4Q20. Suppliers have accordingly lowered their bit shipments to the NAND Flash wafer market (which yields a relatively lower profit margin compared to other product categories), due to the rising demand from notebook manufacturers and the expected recovery of the data center segment in 2Q21. On the whole, given the bullish market of mainstream products, such as smartphones and notebooks, TrendForce expects NAND Flash wafer contract prices to once again increase by 5-10% QoQ in 2Q21.

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

2021-03-03

Owing to High Demand from Smartphone Manufacturers, NAND Flash Revenue Undergoes Mere 2.9% QoQ Decline in 4Q20, Says TrendForce

The quarterly total revenue of the NAND Flash industry came to US$14.1 billion in 4Q20, showing a QoQ drop of 2.9%, according to TrendForce’s latest investigations. The total bit shipments of the NAND Flash industry in 4Q20 registered a QoQ increase of nearly 9%. This gain for the most part offset the negative impacts brought about by the QoQ decline of nearly 9% in the overall ASP of NAND Flash products, as well as by the unfavorable exchange rates that impaired some suppliers’ performances. At the same time, clients in the server and data center segments continued their inventory reduction efforts that had begun in 3Q20. Since their procurement drive remained fairly weak, contract prices of NAND Flash products continued their decline as well. However, NAND Flash suppliers were receiving substantial orders from OPPO, Vivo, and Xiaomi. On the whole, the strong demand in the smartphone segment mostly compensated for the weak demand in the server and data center segments. In the notebook computer segment, Chromebook devices were the primary sales driver, but the storage components of most Chromebooks are low-density solutions, meaning related NAND Flash demand is somewhat limited.

Turning to 1Q21 (this quarter), the bit output of the NAND Flash industry continues to grow significantly due to two factors. First, Samsung and YMTC are actively expanding production capacity. Second, all suppliers are eager to migrate to the more advanced stacking process. On the demand side, PC and smartphone brands have kept stocking up on components. However, they have also slightly corrected down their demand as the first quarter is the traditional off-season. As for clients in the server and data center segments, they have yet to restart large-scale procurement even though their inventories have generally returned to a healthy level. As such, during price negotiations, NAND Flash suppliers still expect the oversupply situation in the market to intensify and thereby further drive contract prices of NAND Flash products downward. Therefore, NAND Flash suppliers’ revenues are projected to undergo a QoQ decline in 1Q21.

Samsung

Two factors helped Samsung’s performance in the NAND Flash market during 4Q20. First, Chinese smartphone brands (with the exception of Huawei) continued to aggressively build up their component inventories so as to fight for more market share. Second, PC OEMs released more upside orders than anticipated because of the further demand growth for notebook computers. Samsung’s NAND Flash bit shipments in 4Q20 rose by 7-9% QoQ as a result of the strong procurement momentum in the smartphone and PC segments. However, the ASP of its NAND Flash products dropped by more than 10% QoQ for the same period. Although clients in the data center segment did begin sending out orders for servers and components at that time, their demand was still very limited. As for clients in the enterprise server segment, they were mainly focused on inventory reduction. With the market leaning toward oversupply, Samsung had to lower prices and thereby experienced a revenue decline. Compared with 3Q20, Samsung’s NAND Flash revenue fell by 3.4% to US$4.644 billion.

Regarding production and technology plans, Samsung this year will be the leader among NAND Flash suppliers in raising production capacity. Besides continuing to expand the production capacity of the Xi’an Fab 2, Samsung will also set up a production line for 3D NAND Flash at P2L (in the Pyeongtaek campus). Most of Samsung’s NAND Flash products are still based on the V5 (92L) process at this moment. However, the supplier will significantly raise the output share of NAND Flash from the V6 (128L) process this year. The application of the V6 process technology will expand to more of its offerings for SSDs and UFS solutions.

Kioxia

Following the end of Huawei’s stock-up activities, Kioxia was unable to fully regain the demand for its mobile NAND Flash products through orders from other Chinese smartphone brands in 4Q20. At the same time, the supplier was affected by the weak demand for enterprise SSDs. On the other hand, there were other sources of demand such as notebook computers and game consoles. Consequently, Kioxia’s bit shipments in 4Q20 still registered a small increase. As for the ASP, Kioxia experienced a QoQ decline of 8-10% because of the general oversupply situation. On account of these factors, Kioxia’s NAND Flash revenue slid by 11.4% QoQ to US$2.749 billion for 4Q20.

Regarding production and technology plans, Kioxia will gradually expand the production capacity of K1. As for the construction of new fabs, Kioxia is staying with its plan to begin building Fab 7 in Yokkaichi and K2 in Kitakami in 1Q21. These fabs, which will be producing BiCS6 or more technologically advanced products, are expected to start contributing to the supplier’s output sometime in 2022. Technology migration will also be the main driver of its bit output growth. Currently, the majority of Kioxia’s NAND Flash products are still manufactured with the 96L BiCS4 process. Going forward, the supplier intends to raise the shipment share of 112L BiCS5 products this year.

Western Digital

Western Digital saw the ASP of its NAND Flash products drop by 9% QoQ for 4Q20 as its clients in the server segment were reducing their inventories. On the other hand, the sales of its channel-market products continued to grow, and the robust demand for notebook computers led to an impressive shipment result for its client SSDs. Western Digital’s bit shipments in 4Q20 increased by 7% QoQ. This roughly compensated for the decline in the ASP. All in all, the supplier posted a QoQ drop of just 2.1% in its revenue to US$2.034 billion.

Concerning its activities, Western Digital will be collaborating with Kioxia in the construction of Fab 7 and K2. The additional production capacity from these two plants will help the allied suppliers to deal with market competition in the future. The 96L BiCS4 process will be Western Digital’s primary technology for NAND Flash production this year. Additionally, Western Digital will be providing OEMs with samples of TLC and QLC products that are manufactured with the 112L BiCS5 process sometime between 2Q21 and 3Q21. Western Digital’s next-generation BiCS6 process is also set to enter the production stage in 2022.

SK Hynix

SK Hynix benefited from the aggressive stock-up activities of Chinese smartphone brands in 4Q20. Its bit shipments rose by 8% QoQ, but its ASP also dropped by 8% QoQ due to the general oversupply situation. With the decline in the ASP being canceled out by the increase in bit shipments, SK Hynix kept its NAND Flash revenue relatively constant for 4Q20. It posted a miniscule QoQ decline of 0.2% to US$1.639 billion.

This year, SK Hynix will rely on technology migration as the primary means of increasing bit output. The share of 128L products in its bit output came to around 30% at the end of 2020 and is expected to keep growing to surpass the output shares of 72L and 96L products in 2021. The supplier has also scheduled the launch of its 176L products for 2H21. Regarding the acquisition of Intel’s NAND Flash plant in Dalian, the transfer of the ownership of the plant along with Intel’s SSD assets is expected to be completed by the end of this year as originally planned.

Micron

Thanks to stock-up activities of smartphone brands and the growing demand for QLC SSDs from PC OEMs, Micron posted a significant QoQ increase of 17-20% in its bit shipments for 4Q20. However, like other suppliers, its ASP fell in the same period due to the general oversupply situation and registered a QoQ decline of 10-13%. In terms of revenue, Micron posted a QoQ increase of 2.9% to US$1.574 billion.

On the technology front, Micron has 128L products, but unlike other suppliers’ strategies, Micron will not ship 128L products to its main clients. Instead, Micron is focusing on the development of the second-generation 176L products that will serve as its main offerings in the future. Its clients will thus bypass the 128L process and advance directly to 176L process. OEMs are expected to begin receiving samples of 176L products from Micron in 2Q21 in accordance with the supplier’s schedule. With respect to the cell type, Micron is raising the shipment share of QLC products. Currently, more than 50% of supplier’s NVMe SSD shipments (in bit terms) are QLC products.

Intel

Intel made a recovery in its bit shipments in 4Q20 after inventory adjustments in the data center and enterprise server segments had caused a QoQ decline of nearly 25% in 3Q20. The procurement momentum of its clients was still fairly weak in 4Q20, but it did pick up somewhat compared with the previous quarter. Additionally, the demand from PC OEMs continued to rise. Consequently, Intel’s bit shipments grew by nearly 25% QoQ for 4Q20. Again like other suppliers, Intel saw its ASP drop in 4Q20 because of the general oversupply situation. The QoQ decline came to almost 20%. On balance, Intel’s NAND Flash revenue went up by 4.8% to US$1.208 billion for 4Q20.

Intel will probably not make any significant changes to its existing plans for production capacity and product mix as it has sealed the deal to sell its NAND Flash business to SK Hynix. It will continue to leverage its advantage in the enterprise SSD market to push its clients to adopt 144L products. Regarding the distribution of its product shipments by technology, Intel will be raising shipment share for the 144L stacking process and the QLC architecture. To increase the output of 144L products, Intel will expand the production capacity of the Dalian plant this year. From a long-term perspective, SK Hynix will be the main beneficiary of this capacity expansion effort.

On the whole, TrendForce’s investigations find that PC OEMs have been releasing a substantial amount of upside orders since the start of 1Q21. Although the oversupply situation is worse compared with 4Q20, it has become more moderate than expected. Moreover, the market is anticipating that clients in the data center segment will reinitiate large-scale procurement in 2Q21. The sentiment has thus turned more positive with respect to contract negotiations, and the general price decline has also begun to ease earlier than expected. Suppliers’ sales performances are projected to rebound rapidly in 2Q21.

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

2021-01-13

TSMC to Kick off Mass Production of Intel CPUs in 2H21 as Intel Shifts its CPU Manufacturing Strategies, Says TrendForce

Intel has outsourced the production of about 15-20% of its non-CPU chips, with most of the wafer starts for these products assigned to TSMC and UMC, according to TrendForce’s latest investigations. While the company is planning to kick off mass production of Core i3 CPUs at TSMC’s 5nm node in 2H21, Intel’s mid-range and high-end CPUs are projected to enter mass production using TSMC’s 3nm node in 2H22.

In recent years, Intel has experienced some setbacks in the development of 10nm and 7nm processes, which in turn greatly hindered its competitiveness in the market. With regards to smartphone processors, most of which are based on the ARM architecture, Apple and HiSilicon have been able to announce the most advanced mobile AP-SoC ahead of their competitors, thanks to TSMC’s technical breakthroughs in process technology.

With regards to CPUs, AMD, which is also outsourcing its CPU production to TSMC, is progressively threatening Intel’s PC CPU market share. Furthermore, Intel lost CPU orders for the MacBook and Mac Mini, since both of these products are now equipped with Apple Silicon M1 processors, which were announced by Apple last year and manufactured by TSMC. The aforementioned shifts in the smartphone and PC CPU markets led Intel to announce its intention to outsource CPU manufacturing in 2H20.

TrendForce believes that increased outsourcing of its product lines will allow Intel to not only continue its existence as a major IDM, but also maintain in-house production lines for chips with high margins, while more effectively spending CAPEX on advanced R&D. In addition, TSMC offers a diverse range of solutions that Intel can use during product development (e.g., chiplets, CoWoS, InFO, and SoIC). All in all, Intel will be more flexible in its planning and have access to various value-added opportunities by employing TSMC’s production lines. At the same time, Intel now has a chance to be on the same level as AMD with respect to manufacturing CPUs with advanced process technologies.

(Cover image source: Taiwan Semiconductor Manufacturing Company, Limited )

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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