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.
Apple is set to unveil the successors to its current device lineups at this year’s fall product launch on September 14. Please see below for some of TrendForce‘s latest data pertaining to the global consumer electronics market:
Although the tight supply of certain components due to complications resulting from the COVID-19 pandemic remains Apple’s primary production-related challenge, iPhone production will unlikely be drastically affected. Total iPhone production for 2021 is expected to reach 229.5 million units, a 15.6% YoY increase, with the upcoming iPhone 13 models accounting for about 37%-39% of Apple’s annual iPhone production. In addition, iPhones are also expected to account for about 77% of total annual production of 5G smartphones in 2021, making them the market leader in this segment and representing a drastic increase from 39% in 2020.
Regarding technical specifications, the Pro model of iPhone 13 is expected to include 1TB storage capacity as an optional upgrade. Other improvements over previous models include the adoption of A15 processors manufactured with TSMC’s 5nm+ process technology. All four iPhone 13 models will feature flexible AMOLED + On-cell designs for their display panels, while the Pro series will also feature a 120Hz refresh rate as well as LTPO technology for reduced power consumption. Furthermore, all four models’ primary cameras will be equipped with sensor shift image stabilization. The Pro model, in particular, will have its ultra-wide camera upgraded to a 6P lens, with the addition of autofocus capability as well. Much like the iPhone 12, LiDAR functionality is available only for the Pro model of the iPhone 13 lineup.
In view of the lackluster sales performances of the iPhone 12 mini, which reached EOL ahead of time, the iPhone 13 mini is expected to account for less than 10% of total iPhone 13 production, since Apple will focus its sales efforts on the other three models. TrendForce indicates that the global economy, markets, and personal incomes are all still experiencing the effects of the COVID-19 pandemic, which has also led to price hikes for electronic components and transportation services, thereby compounding Apple’s difficulties in setting retail prices for the new iPhone models. TrendForce expects Apple to continue the aggressive pricing strategy that it adopted for last year’s models in order to attract smartphone buyers, raise its revenue from services via increased handset sales, and make up for the aggressive prices via increased service revenue.
The panic buying of chips persisted in 2Q21 owing to factors such as post-pandemic demand, industry-wide shift to 5G telecom technology, geopolitical tensions, and chronic chip shortages, according to TrendForce’s latest investigations. Chip demand from ODMs/OEMs remained high, as they were unable to meet shipment targets for various end-products due to the shortage of foundry capacities. In addition, wafers inputted in 1Q21 underwent a price hike and were subsequently outputted in 2Q21. Foundry revenue for the quarter reached US$24.407 billion, representing a 6.2% QoQ increase and yet another record high for the eighth consecutive quarter since 3Q19.
Revenue growths of TSMC and Samsung were slightly hindered by power outages at their respective fabs
For 2Q21, TSMC once again comfortably dwarfed other foundries with a revenue of US$13.3 billion, a 3.1% QoQ increase. TSMC’s relatively muted growth can be attributed to several factors, the most prominent of which was a power outage that occurred in TSMC’s Fab14 P7, located in the Southern Taiwan Science Park, in April. The power outage subsequently caused some wafers at the 40nm and 16nm nodes to be discarded. TSMC’s fab in the Southern Taiwan Science Park suffered yet another disruption when Taipower’s Kaohsiung-based Hsinta Power Plant temporarily went offline in May. Although the fab immediately resumed operations via its emergency power generators so that no wafers in the production lines were discarded, certain wafers still needed to be reworked. Finally, TSMC maintained its longstanding strategy of giving consistent price quotes for its foundry services. Hence, although the foundry’s revenue for 2Q21 exceeded the upper end of its prior financial guidance, its revenue for the quarter underwent a slightly lower QoQ growth compared to other foundries, and it also lost some market share to competitors.
Samsung’s revenue for 2Q21 reached US$4.33 billion, a 5.5% QoQ increase. After recovering from the winter storm that swept Texas in February, Samsung’s Austin-based Line S2 fab fully resumed its manufacturing operations in April. The fab is now operating at fully loaded capacities by manufacturing for additional client orders in order to compensate for the 1.5-month loss in wafer input from idling as a result of the winter storm. Although the sharp drop in wafer input in 1Q21 somewhat constrained Samsung’s output and revenue growth for 2Q21, the foundry still managed to post a 5.5% QoQ revenue growth thanks to strong client demand for CIS, 5G RF transceivers, and OLED driver ICs. Owing to persistently high demand for PMIC, TDDI, Wi-Fi, and OLED driver IC products, UMC, ranked third on the top 10 list, operated at a capacity utilization rate surpassing 100%, and its output severely lagged behind client demand. In response, UMC continued to raise its quotes. In addition, newly installed production capacities at the 28/22nm nodes, which have a relatively high ASP, gradually became available for wafer input in 2Q21, resulting in a 5% QoQ increase in UMC’s blended ASP for 2Q21. The foundry saw its market share remaining relatively unchanged from the previous quarter at 7.2% and posted a revenue of US$1.82 billion, an 8.5% QoQ increase.
Fourth-ranked GlobalFoundries posted a revenue of US$1.52 billion for 2Q21, a 17.0% QoQ increase. After selling its US-based Fab10 and Singapore-based Fab3E to ON Semi and VIS, respectively, in 2019, GlobalFoundries has been gradually consolidating its existing product lines and focusing on the development of 14/12nm FinFET, 22/12nm FD-SOI, and 55/40nm HV and BCD technology platforms. At the same time, GlobalFoundries has also announced that it will expand its current production capacities by building new US-based and Singapore-based fabs, which are expected to contribute to GlobalFoundries’ earnings starting in the 2H22-2023 period. On the other hand, although GlobalFoundries has already sold its Fab10 to ON Semi, the former continues to manufacture products for the latter at Fab10 across the 2020-2021 period. ON Semi will not independently operate the fab until the transfer of ownership is finalized in 2022. SMIC likewise grew its revenue for 2Q21 by a remarkable 21.8% to US$1.34 billion and raised its market share to 5.3%. SMIC’s growth took place due to strong client demand for various technologies including 0.15/0.18µm PMIC, 55/40nm MCU, RF, HV, and CIS, as well as a continued increase in its ASP. Owing to better-than-expected adoption of its 14nm technology by new clients, SMIC is operating at a fully loaded capacity of 15K wspm at the moment.
While VIS leapfrogged Tower on the top 10 list, HuaHong Group, inclusive of subsidiaries HHGrace and HLMC, took sixth place
HuaHong Group subsidiaries HHGrace and HLMC have been operating Fab1/2/3/7 and Fab5/6, respectively and sharing certain manufacturing resources. Hence, TrendForce will from now on combine the two subsidiaries’ revenues into a single item, listed as HuaHong Group. In particular, capacity expansion at HH Fab7, operated by Hua Hong Wuxi, proceeded ahead of expectations, with client demand for NOR Flash, CIS, RF, and IGBT products remaining strong. Not only is HH Fab7’s production capacity of 48K wspm currently fully loaded, but HuaHong Group’s 8-inch fabs have all been operating at a capacity utilization rate of more than 100%. Thanks to a 3-5% QoQ increase in HuaHong Group’s blended ASP for 8-inch wafers, HuaHong Group’s revenue for 2Q21 reached US$658 million, a 9.7% QoQ increase, placing the foundry squarely in the number six spot.
After leapfrogging Tower in the revenue rankings in 1Q21 for the first time ever, PSMC maintained its strong growth in 2Q21 partially owing to continued wafer starts for specialty DRAM, DDI, CIS, and PMIC in its P1/2/3 fabs. At the same time, there was a massive hike in demand for automotive chips, such as IGBT, manufactured at PSMC’s Fab 8A and Fab 8B. In view of quarterly increases in PSMC’s overall ASP, the foundry posted US$459 million in revenue for 2Q21, an 18.3% QoQ increase, and took the seventh spot in the rankings. VIS benefitted from a host of factors in 2Q21, including persistent demand for DDI, PMIC, and power discretes; newly installed capacities in the Singapore-based Fab3E ready for production; adjustments in the foundry’s product mix; and an overall ASP hike. VIS’ revenue for 2Q21 reached US$363 million, which represented not only an 11.1% QoQ increase, but also the first time VIS overtook Tower in terms of revenue.
Although ninth-ranked Tower benefitted from stable demand for RF-SOI products, industrial PMIC, and automotive PMIC, the foundry’s newly installed capacities were not entirely ready for mass production, and its revenue therefore underwent a modest 4.3% QoQ increase for 2Q21 to US$362 million. On the other hand, DBHiTek had been operating at fully loaded capacities for more than 18 months. While client demand for PMIC, MEMS, and CIS products manufactured with 8-inch wafers made consistent contributions to the foundry’s earnings, most of DBHiTek’s revenue growth for 2Q21 took place due to the rise in its ASP. DBHiTek’s revenue for 2Q21 reached US245 million, a 12.0% QoQ increase.
As of 3Q21, the shortage of foundry capacities that began in 2H19 has persisted and intensified for nearly two years. Although newly installed capacities from certain foundries have become gradually available for production, the increase in production capacity has been relatively limited, and these additional capacities have been fully booked by clients, as indicated by TrendForce’s investigation into orders placed by foundry clients. All major foundries currently operate at fully loaded capacities, though their production still lags behind market demand. Furthermore, wafer inputs for automotive chips have been skyrocketing since 2Q21 due to major pushes by governments worldwide, in turn constraining the available production capacities for other chips. As a result, foundries are continuing to raise their blended ASPs and adjusting their product mixes in order to further optimize profits. TrendForce therefore believes that the combined revenues of the top 10 foundries will reach a record high in 3Q21 by undergoing a wider QoQ growth compared to 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 email@example.com
The inclusion of certain Chinese semiconductor companies on the US Commerce Department’s Entity List in the past few years has created repercussions throughout industries and markets, with the semiconductor industry coming under heavy scrutiny by both China and the US. After SMIC was hit with a string of sanctions last year, including the EAR and the NS-CCMC List, recent rumors of further US actions on China are now once again making the rounds on social media platforms.
In particular, there have been rumors saying that the US has prohibited TSMC and UMC from importing 28nm process technology equipment into China for their fabs there. Conversely, some industry insiders from China point out that, although the US did not impose such prohibition, the export approval process for the aforementioned equipment has been conspicuously lengthy.
In reality, the Department of Commerce has levied procurement restrictions on SMIC specifically, while foundries unspecified on the Entity List have not been explicitly barred from importing semiconductor equipment for use in their China-based fabs. Although some are noting that the approval processes for semiconductor equipment exported to fabs located in China have been unusually lengthy recently, these processes are not specifically aimed at equipment for the 28nm process technology.
Instead, they apply to all semiconductor equipment exported from the US to China. It should also be noted that the approval processes for some exported equipment are currently progressing well, and foundries have already taken the extended lead times into account, according to TrendForce’s latest investigations. Hence, the lengthy approval processes have not been observed to have any negative impact on the semiconductor industry at the moment.
The rise of such products as automotive, industrial, telecom, and networking chips in recent years has resulted in continued advancements in packaging and testing technologies, and the market revenue of these technologies has seen a corresponding rise as well. Demand for advanced packaging has been relatively strong thanks to high demand for 5G smartphones, consumer electronics, and high-performance processors.
In particular, the mainstream development of advanced packaging and testing is currently concentrated on three major fields: HPC chip packaging（2.5D/3D）, FOPLP（fan out panel level packaging）, and SiP（system in package）. Some of the other factors driving forward the technological development of advanced packaging also include improvements in end product functions, advancements in transistor gate sizes, reduction in advanced packaging L/S, and migration of chip interconnect technology from micro-bumping to hybrid bond.
According to TrendForce’s investigations, the advanced packaging market last year reached a revenue of US$31.037 billion in 2020（which was a 13% increase YoY）and accounted for 45.8% of the total packaging market. At the moment, most packaging and testing companies have successively entered the advanced packaging market, with Flip Chip applications accounting for the majority of applications across smartphone AP, WiFi chips, entry-level processors, and high-end PMICs. Flip Chip applications make up more than 80% of the total advanced packaging revenue.
In spite of continued growth, advanced packaging will unlikely overtake traditional packaging in terms of market share within 5-10 years
In spite of the multitude of companies that are eager to enter the advanced packaging industry, not all of them possess the technological competence to progress in R&D, thus making acquisition the fastest path to advanced packaging success. With regards to technological competence, foundries and IDMs are the likeliest candidates to enter the industry, as they already possess ample experience in chip development.
At the moment, TSMC, Intel, and Samsung are the most well-equipped to do so, respectively. With regards to outsourced operations, Taiwanese companies such as ASE, SPIL, and PTI lead the industry in terms of packaging technologies, while U.S.-based Amkor is able to compete for neck-and-neck with ASE. Although these aforementioned companies are not specialists in chip fabrication, they have an extremely strong grasp of the downstream assembly ecosystem, hence their superiority in advanced packaging.
On the other hand, thanks to China’s Big Fund, the trinity of Chinese packaging and testing operators（JCET, TFME, and Hua Tian）were able to acquire major global players, including STATS ChipPac, AMD-SUZ, and Malaysia-based Unisem, respectively, during the 2014-2019 period.
Hence, not only have the Chinese trio been able to raise their market shares and rankings in the global packaging and testing market, but they have also been able to acquire certain competencies in advanced packaging technologies.
The current market would seem to suggest that advanced packaging has been gradually cannibalizing the market share of traditional packaging. However, as applications including home appliances and automotive electronics still require traditional packaging, TrendForce believes that only after 5-10 years will advanced packaging overtake traditional packaging in terms of market share.