The most crucial for electric vehicles (EV) is the external ecosystem, or more precisely the infrastructure which is often closely linked to the government's various supporting measures. India has a FAME-II program, an incentive program aiming to accelerate the spread of eco-friendly vehicles. The program's total budget is INR100 billion (US$1.4 billion), of which 86% will be subsidies for vehicles and 10% for charging facilities.
Makers in Apple's supply chain have seen no major changes to orders for iPhone 13 devices despite speculation about the US vendor looking to cut production for the new smartphones. The memory sector is entering a period of correction, with commodity DRAM prices likely to fall 15-20% in first-quarter 2022. Rising components, production and logistic costs are heaping pressure on notebook vendors.
The car industry has been plagued by component shortages, and automotive IC shortages are likely to last till at least 2023. TSMC's plan to build a mature process fab in Japan comes as good news for a semiconductor sector yearning for more capacity supply. And PanelSemi CEO Ting Chin-lung is making efforts to materialize his concept of "panel semiconductor."
TSMC has narrowed its revenue growth outlook this year to 24%, based on its forecast of 4.5% sales rise at the midpoint of the foundry house's latest guidance for fourth-quarter 2021. Despite a media report's claims that Apple is cutting its production goals for iPhone 13 seies for 2021, components suppliers have disclosed hey have not seen any reductions in orders from the client for the new smartphones. In China, manufacturers are making contingency plans to cope with power restrictions, which they expect will become a long-term policy of the country.
DRAM will continue to see bit growth in 2022, but the growth momentum will be weaker than this year's. Device makers are already slowing down purchases of DRAM, reflecting the disappointing end-market demand. Backend houses in Taiwan are seeing orders from clients who have had to switch production from Southeast Asia due to COVID hitting IDMs' fabs in the region. HDI board makers are expecting strong sales in fourth-quarter 2021, although power cuts in China and chip shortages remain concerns.
Notebook ODMs may not see strong shipment growth in traditional peak season in second-half 2021, but it does not mean that the notebook market is heading for a downturn. Samsung expects to move its 3nm GAA process to volume production in first-half 2022, but it remains to be seen whether the early start will enable it to beat TSMC in the segment. Meanwhile, Taiwan's power management IC vendors have reported strong sales for the third quarter.
Notebook ODMs may experience a weak fourth quarter of 2021 with their feeble sales in China during the National Day holiday and possible low sales momentum during the year-end holidays in Europe and North America. Largan Precision also saw its gross margin hit the lowest in 25 quarters, but the percentage was still well above 59%. PCB maker Zhen Ding is also prepared to start making BT and ABF substrates in China in 2022.
India's per capita income is far lower than China's. Raw materials such as steel, coal and cotton are produced in India and shipped to China with processed products sold back to India. China's mobile phones, TVs and various commodities are sweeping the Indian market, with a trade deficit of more than US$50 billion a year in favor of China, partly fueling the tensions between the two countries.
Tight fab capacity has been sending foundry quotes rising, which is expected to continue boosting profits for foundry houses in 2022. For the backend sector, supply of packaging leadframes is expected to remain tight with order visibility already extending to 2023. Networking device vendors are wary that chip and component shortages could curb their sales growth in the fourth quarter of 2021.
It may be difficult to understand India. I've been to India almost 20 times, but this is the first time that I've tried to explore India from the perspective of electric vehicles (EV). How can we ignore the world's fifth-largest car market, as India looks forward to the opportunities for EVs and V2X?
With foundry supply short of demand at both advanced and mature nodes, TSMC is expected to expand capacity for both its 7nm and 28nm processes, which may further expand its capex for 2021. Power cuts in China look set to last for some more time, as manufacturers in Kunshan were notified on October 5 of new restrictions on electricity use - which took effect immediately - just one day after the last period of restrictions ended. End-market demand in China has been weak during the National Day holidays, and memory module makers are wary that the Single's Day promotions in November may not as sluggish.
The IC industry sees uneven inventory in different segments, with short supply of power management ICs and other mature chips worsening. China's eletricity restrictions policy is creating uncertainty for many manufacturers, but some see it as an opportunity to release inventory pressure. Inventec is stepping up its deployments in the automotive sector, with five plants set to obtain certification for car components produciton.
According to some statistics, China imported US$350 billion of semiconductors in 2020, double the amount of US$176 billion in oil imports. It is estimated that US$450 billion of semiconductors will be imported in 2021. Judging from China's current semiconductor import structure, we can evaluate the strength of China's semiconductor industry at this stage. Taiwan and South Korea will inevitably become China's target of competition in the future.
Despite speculation that TSMC has seen Apple and MediaTek cut orders for its 5nmand 7nm processes, the wolrd's top foundry house should still be able to achieve its sales targets in 2021, sources at its suppliers have maintained. And sources from the PCB sector have disclosed that order momentum from Appel for iPhone 13 remains normal. Meanwhile NOR flash supply is expected to remain tight through 2022.
In 1988, South Korean president Roh Tae-woo proposed the "Northern Policy" under an atmosphere of East-West reconciliation, intending to build ties with the Soviet Union and China, and ease tensions with North Korea to prepare for the reunification of the two Koreas. In those days when the Soviet Union was crumbling, South Korean friends of mine would even ask me what Taiwan's response would be if the two Koreas were reunified.
A new wave of price hikes among chip vendors is looming as STMicro and Xilinx have both told clients their product prices will go up in fourth-quarter 2021. The US government reportedly is demanding foundry houses, including TSMC, provide information concerning their clients, which could force them to break their agreements with clints. In the memory sector, chip vendors are seeing inventory rising, prompting them to ask module firms to accelerate taking delivery of chip shipments.