In this press release, TrendForce details 10 major trends that are expected to take place across various segments in the tech industry, as follows:
Micro/Mini LED display development will revolve around active matrix solutions
A substantial number of technical bottlenecks in Micro LED development will still persist in 2022. While Micro LED manufacturing costs are expected to remain sky-high due to these bottlenecks, companies have not shown decreased willingness to participate in all segments of the Micro LED supply chain. On the contrary, these companies are actively expanding their respective production lines. Regarding the development of self-emitting Micro LED display products, TVs represent one of the major directions of mainstream Micro LED development, primarily because TVs, compared to IT products, have a relatively low technological barrier of entry. In other words, Micro LED TVs are easier to develop than are other Micro LED display products. For instance, after releasing a 110-inch commercial passive matrix Micro LED display, Samsung will likely continue to develop 88-inch (and under) consumer-grade active matrix Micro LED TVs. This extension of Micro LED technology from the large-sized commercial display segment to the household-use segment by Samsung is in turn indicative of the overall expansion of the Micro LED market.
Regarding display products equipped with Mini LED backlights, brands have been raising the number of Mini LED chips used per panel in an attempt to boost the specs of their display products and pursue 1:1,000,000 high contrast ratios that are comparable to OLED displays. As a result, Mini LED backlight panels’ LED chip consumption is more than 10 times higher compared to traditional LED backlight panels, in addition to the fact that Mini LED backplane manufacturing requires SMT equipment with a higher degree of accuracy and production capacity. While Mini LED backlights are primarily based on passive matrix solutions, they will move towards active matrix solutions going forward, with a corresponding surge in Mini LED chip consumption. Hence, the performance and capacity of SMT equipment will also become one of the key criteria in brands’ selection of potential supply chain partners.
More advanced AMOLED technology and under-display cameras will usher in the next stage of smartphone revolution
As the supply of and production capacity for AMOLED panels continue to rise, AMOLED technology has also become increasingly mature. Leading suppliers are still attempting to tack on additional functions and improved specs to their AMOLED panels in order to not only raise said panels’ added values, but also maintain the competitive advantages of the suppliers themselves. The primary value added to AMOLED panels in 2022 will likely continue to be the ever-improving foldable designs, which will feature optimized weight reduction and power efficiency. Apart from mainstream foldable phones that can unfold to reach tablet-like sizes, clamshell-like designs such as flip-up and flip-down smartphone bodies will also emerge as a form factor that more closely resembles the smartphones currently in use. Furthermore, retail prices of foldable phones are expected to generally fall within the price bands of mainstream flagships, thereby generating sales growths for the upcoming foldable models. Other foldable designs, including form factors with even more folds or rollable form factors, are expected to enter production within the near future. TrendForce expects foldable phones to reach a penetration rate of more than 1% in 2022 and 4% in 2024. LTPO panels, on the other hand, are an effective solution to power consumption issues arising from the adoption of 5G technology and high refresh rate displays. Hence, LTPO panels will likely gradually become the mainstream display panel for flagship smartphones. After two years of development and adjustments, under-display camera modules will finally make their appearance in various brands’ flagship models and enable the creation of smartphones with true full-screen displays.
The foundry industry welcomes the arrival of 3nm process technology courtesy of TSMC’s FinFET and Samsung’s GAA technologies
As semiconductor manufacturing processes gradually approach physical limits, chip development must now turn to either “changes in transistor architecture” or “breakthroughs in back-end packaging technology or materials” in order to achieve faster performances, reduced power consumption, and smaller footprints. After incorporating EUV lithography at the 7nm node in 2018, the semiconductor industry will welcome yet another revolutionary process technology in 2022 – the 3nm node. More specifically, TSMC and Samsung are expected to announce their respective 3nm process technologies in 2H22. While the former will continue to adopt the FinFET architecture that it has been using since the 1Xnm node, Samsung will for the first time utilize its own implementation of GAAFET, called MBCFET (multi-bridge channel field-effect transistor) for its 3nm process technology.
In contrast with the FinFET architecture, in which the gate makes contact with the source/drain channel on three sides, the GAAFET architecture consists of a gate that surrounds the nanowire or nanosheet channel on four sides, thus increasing the surface area of contact. The GAAFET design significantly reduces leakage currents by giving the gate a greater degree of control over the channel. Regarding possible applications, the first batch of products mass produced at the 3nm node in 2H22 is expected to primarily be HPC and smartphone chips since these products place a relatively high demand on performance, power consumption, and chip compactness.
While DDR5 products gradually enter mass production, NAND Flash stacking technology will advance past 200 layers
The three dominant DRAM suppliers (Samsung, SK Hynix, and Micron) will not only gradually kick off mass production of next-gen DDR5 products, but also continue to increase the penetration rate of LPDDR5 in the smartphone market in response to demand for 5G smartphones. With memory speed in excess of 4800Mbps, DDR5 DRAM can massively improve computing performances via their fast speed and low power consumption. As Intel releases its new CPUs that support DDR5 memory, with Alder Lake for the PC segment, followed by Eagle Stream for the server segment, DDR5 is expected to account for about 10-15% of DRAM suppliers’ total bit output by the end of 2022. Regarding process technologies, Samsung and SK hynix will kick off mass production of 1 alpha nm products manufactured with EUV lithography. These products’ market shares will likely increase on a quarterly basis next year.
Turning to NAND Flash products, their stacking technologies have yet to reach a bottleneck. Hence, after 176L products entered mass production in 2021, suppliers will continue to migrate towards 200L and above in 2022, although these upcoming products’ chip densities will remain at 512Gb/1Tb. Regarding storage interfaces, the market share of PCIe Gen4 SSDs will likely skyrocket in the consumer PC segment next year. In the server segment, as Intel Eagle Stream CPUs, which support PCIe Gen 5, enter mass production, the enterprise SSD market will also see the release of products that support this interface. Compared to the previous generation, PCIe Gen 5 features double the data transfer rate at 32GT/s and an expanded storage capacity for mainstream products at 4/8TB in order to meet the HPC demand of servers and data centers. Additionally, the release of PCIe Gen 5 SSDs is expected to quickly raise the average data storage capacity per server unit.
Regarding the server market, flexible pricing schemes and diverse services offered by CSPs have directly propelled the cloud service demand of enterprises in the past two years. From the perspective of the server supply chain, the predominant business model has gradually transformed from traditional server brands to ODM Direct, meaning that traditional server brands will see fundamental, structural changes, such as providing colocation servers or full-service cloud migration support, in their business models. This shift also means that enterprise clients will come to rely on more flexible pricing schemes and diverse risk mitigation measures in response to an uncertain global environment. In particular, while the pandemic accelerated changes in work and everyday life in 2020, hyperscalers are expected to account for nearly 50% of total demand for servers in 2022. In addition, the growth in ODM Direct server shipment is expected to surpass 10% YoY as well.
Mobile network operators will undertake more trial projects for 5G SA network slicing and low-latency applications
Mobile network operators have been actively release 5G SA (standalone) networks as the core network powering various services around the world, in turn accelerating the build-out of base stations in major cities, diversifying their network services (via network slicing and edge computing), and delivering end-to-end networks with a high degree of quality assurance. Moving to 2022, applications that are at the intersection of 5G, massive IoT, and critical IoT will emerge in response to enterprise demand. These applications, including light switches, sensors, and thermostats used in smart factories, involve the combination of network endpoints and data transmission. In particular, critical IoT applications include smart grid automation, telemedicine, traffic safety, and industrial automation, whereas critical IoT use cases within the context of Industry 4.0 include asset tracking, predictive maintenance, FSM (field service management), and logistics optimization.
Now that the pandemic has forced enterprises to engage in digital transformation and brought changes to the general public’s lifestyles, the importance of 5G deployment has become increasingly apparent. Private 5G networks, openRAN, unlicensed spectrums, and mmWave developments have also generated a diverse ecosystem that ranges from traditional mobile network operators to other emerging service providers, including OTT media service providers, CSPs, social media, and online businesses. In the future, mobile network operators will likely actively expand their enterprise 5G applications. For instance, O2’s 5G-ENCODE project explores new business models in industrial 5G networks, while Vodafone is collaborating with the MFM (Midlands Future Mobility) consortium to test networks for autonomous vehicles.
Satellite operators will compete over the low-earth orbit satellite market, with 3GPP now supporting non-terrestrial networks
3GPP recently announced that Release 17 Protocol Coding Freeze will take place in 2022. Release 17 represents the first time 3GPP has incorporated NTN (non-terrestrial network) communications into its releases and therefore marks a significant milestone for both the mobile communications industry and the satellite communications industry. 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 and co-create brand new innovations. Regarding the deployment of LEO (low earth orbit) satellites, US-based SpaceX has applied to launch the highest number of satellites among all satellite operators. Other major operators include Amazon, UK-based OneWeb, Canada-based Telesat, etc. Region-wise, US operators account for more than 50% of all satellites launched. Not only do LEO satellites have the advantage of signal coverage that is unaffected by geographical features, such as mountainous regions, oceans, and deserts, but they are also able to synergize with the 5G network. The ability of LEO satellites, as part of the NTN, to enhance 5G communications makes them a crucial component in the 3GPP Release 17. TrendForce therefore forecasts an increase in global satellite revenue in 2022.
While smart factories are among the first to leverage digital twins, IoT technologies are expected to become the backbone of the metaverse
The new normal that emerged in the wake of the COVID-19 pandemic continues to propel demand for contactless devices and digital transformations. As part of this evolution, IoT development in 2022 will likely focus on CPS (cyber-physical systems), which combines 5G, edge computing, and AI technologies to extract and analyze valuable information from vast data streams for the purpose of smart automation and prediction. A current example of CPS applications is the digital twin, used for such verticals as smart manufacturing and smart cities; while CPS integration for the former facilitates design, testing, and manufacturing simulations, the latter make use of CPS to monitor significant assets and assist in policymaking. Now that industrial realities have become more complex, and the interplay between usage cases and equipment have increasingly demanded attention, digital twins will subsequently be deployed to a wider range of applications. Paired with 3D sensing, VR, and AR capabilities, IoT-based metaverse will likely emerge as a smart, complete, real-time, and safe mirror to the physical world, and the first application of IoT-based metaverse is expected to be smart factories. Ultimately, technological innovations in data collection (including visual, auditory, and environmental data via sensors), data analysis (via AI platform integration), and data integrity (via blockchains) will also emerge as a result of IoT development.
AR/VR equipment manufacturers aim to deliver fully immersive experiences via integration of additional sensors and AI processing
The COVID-19 pandemic has fundamentally changed the way people live and work. For enterprises, the pandemic not only accelerated their pace of digital transformation, but also increased their willingness to integrate emerging technologies into their existing operations. For instance, AR/VR adoption for applications such as virtual meetings, AR remote support, and virtual design has been on the rise recently. On the other hand, companies will likely focus on various remote interaction functionalities in virtual communities and online games as an important AR/VR market segment. TrendForce therefore believes that the AR/VR market will expand by a considerable margin in 2022 due to the falling retail prices of AR/VR hardware as well as the growing adoption of such hardware for various use cases. Furthermore, the market will also continue to pursue more realistic AR/VR effects, such as applications that feature more realistic images constructed by software tools or the creation of virtual responses from real-world data assisted by either AI processing or the integration of various sensors. For instance, eye-tracking functionalities will become an optional feature of consumer products released by Oculus and Sony. Apart from these examples, AR/VR solutions may even evolve to the point where they are able to provide partial haptic feedback to the user through controllers or other wearable devices in order to deepen user immersion.
A natural extension of autonomous driving technology, automated valet parking is set to resolve drivers’ pain points
As part of autonomous driving technology’s implementation aimed at improving everyday life, AVP (automated valet parking), an SAE level 4 driverless parking service, is expected to become an important optional function of high-end vehicles beginning in 2022. Relevant international standards are currently being drafted and are expected to facilitate the adoption of AVP going forward. However, since AVP systems differ according to vehicle specifications, they are subject to various restrictions related to driving conditions, including fixed/unfixed routes and private/public parking spaces, while parking lot conditions such as wireless network connectivity and the comprehensiveness of traffic markings can also affect the viability of AVP. The distance between people and the vehicle during AVP use, on the other hand, is governed by domestic laws. In view of automakers’ diverse technological roadmaps, AVP parking routes are generated by either local computing on the vehicle end or cloud computing, the latter of which requires sufficient network connectivity in order to function. The former is therefore expected to see usage in a wider variety of use cases. Alternatively, some vehicles may be equipped with both computing solutions. With other such factors as V2X and high-definition maps affecting the range of AVP applications, TrendForce expects an increasing number of different AVP solutions to be under development at the moment.
The third-generation semiconductor industry will move towards 8-inch wafers and new packaging technologies while expanding in production capacity
The gradual phasing out of ICE vehicles by various governments across the 2025-2050 period is set to both accelerate the pace of EV sales and increase the penetration rate of SiC and GaN devices/modules. Energy transition activities worldwide as well as the rapid growth of telecom applications such as 5G technology have also led to a persistent bull market for third-generation semiconductors, resulting in strong sales of SiC and Si substrates. However, as current efforts in substrate production and development are relatively limited, suppliers are able to ensure a steady yield of SiC and GaN substrates only by manufacturing them with 6-inch wafers. Such a limitation has, in turn, led to a long-term shortage in foundries’ and IDMs’ production capacities.
In response to this quandary, substrate suppliers, including Cree, II-VI, and Qromis, are now planning to not only expand their production capacities in 2022, but also migrate their SiC and GaN production to 8-inch wafers, in hopes that these plans will gradually alleviate the prevailing shortage in the third-generation semiconductor market. On the other hand, foundries such as TSMC and VIS are attempting to shift to 8-inch wafer fabrication for GaN on Si technology, while major IDM Infineon is releasing products based on the latest CoolSiC MOSFET, delivering trench designs that enable significant power efficiency for semiconductor devices. Finally, telecommunication component provider Qorvo has also released a new GaN MMIC copper flip chip packaging architecture for military applications.
The global smart manufacturing market is expected to welcome a golden period of growth across five years, starting with annual revenue of US305 billion in 2021 and surpassing US450 billion in annual revenue in 2025 at a 10.5% CAGR, according to TrendForce’s latest investigations. This growth can be attributed to several factors, including the accelerating digital transformation efforts from enterprises, the increased demand from industrial automation and WFH applications, and the emergence of 5G, advanced AI technologies, and other value-added services.
Looking ahead to 2022, TrendForce believes that the outlook of smart manufacturing has evolved from such conservative strategies as improving the resilience of the manufacturing industry itself, to increasing the industry’s production capacity as well as efficiency while reducing both energy expenditure and carbon emissions. These advantages are expected to serve as the main drivers propelling the growth of the smart manufacturing market next year.
Smart manufacturing development will revolve around 5G, edge computing, and carbon footprint reduction going forward
The core feature of smart manufacturing lies in its ability to deliver instant feedback through the integration of virtual data and real, physical equipment. Hence, low latency, high security, and fast computing power have become increasingly important for smart manufacturing development, which will revolve around edge computing and 5G applications, including AR/VR, machine vision, digital twins, and predictive maintenance, all of which will experience considerable upgrades in functionality thanks to smart manufacturing.
Furthermore, as the issue of global warming gains more and more media coverage, 137 countries have now committed to achieving carbon neutrality. This pursuit of environmentally friendly outcomes is also reflected in the current state of industry 4.0 development. For instance, companies including Henkel, Johnson & Johnson, Siemens, and Tata Steel all operate manufacturing facilities that qualify them for membership in WEF’s Global Lighthouse Network. The aforementioned companies have ensured their facilities operate with optimized energy consumption, highly effective manufacturing processes, and reduced carbon emissions through the adoption of computer simulation/modeling and smart management. TrendForce expects the future design of smart manufacturing equipment and factories to center on the use of environmentally friendly IoT technologies.
Taiwanese manufacturers are likely to seize shares in the niche market in light of the rise of domestic micro-factories
It should be pointed out that the Taiwanese manufacturing industry possesses certain competitive advantages in the global market, including a highly consolidated supply chain, a relatively comprehensive smart manufacturing value chain, and the ability to deliver highly customized solutions. In particular, various Taiwanese manufacturers specialize in full-service, integrated smart solutions that feature equipment health monitoring and machine vision functionalities, thereby significantly lowering the barrier for adoption. Assuming that the domestic industry is able to continue leveraging their existing competitive advantages and furthering their current developments, TrendForce expects micro-factories to become the key factor through which Taiwanese companies can find commercial success in the global smart manufacturing industry.
Although the smart manufacturing value chain has historically had its various verticals spread throughout the world, recent trends such as a return of domestic manufacturing and tectonic shifts in the manufacturing industry have resulted in the rise of shortened supply chains as well as localized operations. These developments have led to the recent surge of micro-factories. TrendForce’s investigations indicate that, in addition to their high degree of automation and analytical accuracy, micro-factories deliver improved manufacturing outcomes while minimizing resource consumption and yielding such benefits as a flexible supply chain, lean human resources, and low initial cost. Micro-factories have already seen widespread usage in the global automotive and electronics industries in light of these benefits. Likewise, TrendForce believes that Taiwanese manufacturers of bicycle chains, steel nuts/bolts/screws, and suitcases will likely succeed in their respective niche markets by upgrading their manufacturing operation with micro-factories.
The arrival of the COVID-19 pandemic last year prompted enterprises to accelerate their digital transformation efforts. As such, the year 2020 marked the turning point for the AR/VR industry, with an increasing number of global enterprises now paying close attention to AR/VR headsets and applications. Two such applications which show the most significant short-term growth are “virtual collaboration platform” and “remote support”, particularly in the relatively small-scale AR headset markets.
TrendForce indicates that annual AR headset shipment is expected to increase from 580,000 units in 2020 to 1.3 million units in 2021; on the VR headset front, annual shipment is expected to increase from 4.43 million units in 2020 to 5.65 million units in 2021, with the key enablers of these shipment growths being entertainment applications from the consumer side and commercial applications from the enterprise side.
It should be noted that, however, as VR headsets have lower prices and technical barriers to entry compared to AR headsets, many companies are opting to purchase consumer VR headsets for use in commercial applications. Despite the growth of the AR/VR headset market in recent years, the ongoing shortage of semiconductor components is expected to put some downward pressure on these headsets’ shipments this year.
Enterprise demand is the primary driver of telecom companies’ efforts to combine 5G with AR/VR applications
With remote commercial applications generating an increasing demand for AR/VR headsets, use cases such as remote interaction and real-time sharing of 3D objects will require an enormous amount of network bandwidth. Likewise, the demand for low-latency and smooth user experiences will continue to drive 5G demand from the commercial sector, thereby compelling major telecom companies such as Ericsson, China Mobile, NTT DoCoMo, and Chunghwa Telecom to release dedicated 5G plans geared specifically for AR/VR applications in order to ensure the highest quality connections for these applications.
For telecom companies, building 5G infrastructure demands an enormous cost, but the current use of smartphones is unable to completely saturate the total 5G bandwidth. In other words, telecom companies are unable to recuperate their 5G investment costs, and this predicament is what led them to seek out other applications/products that can potentially make use of 5G connectivity, such as IoT, video streaming, and AR/VR.
What should suppliers that aim to enter the AR/VR markets pay attention to?
TrendForce believes that suppliers wishing to enter the AR/VR markets must take into consideration two factors, which are “cost” and “profit distribution”. First of all, both AR/VR headsets and dedicated 5G connections require enormous investment costs. Most companies involved in these applications are therefore still in the small-scale trial period at the moment.
Given the limited funding that these companies are allocating, real-life user experience has suffered as a result, leading to a reduced willingness by potential clients to continue adopting AR/VR solutions going forward. For instance, if network infrastructures do not provide sufficiently comprehensive coverage or sufficiently high bandwidth, the resultant latency or signal loss can lead to poor remote collaboration experiences on the user side.
The second issue that suppliers must confront has to do with profit distribution. Most AR/VR solutions are provided to users at a flat subscription fee which covers the costs of AR/VR headsets, 5G network connections, and software platforms. This type of flat fee structure is attractive for customers as it is relatively simple and straightforward.
However, on the supply side, the fair distribution of profits among AR/VR headset suppliers, telecom companies, and software platform vendors remains a critical issue. In particular, since AR/VR headsets and 5G networks are all extremely costly, along with the fact that the 5G rollout is still in its infancy, unfair distribution of profits can potentially lead to certain suppliers being unwilling to participate in the AR/VR market in the long run.