China's National Semiconductor Industry Investment Fund (aka the Big Fund) continues to pour money into China's domestic fab toolmakers, looking to rev up the development of China's homegrown semiconductor equipment sector.
Supply-side factors, including particulary shortages of power management IC (PMIC) and other components as well as power cuts in China, are very likely to constrain the overall 5G smartphone shipment growth in 2022 after affecting global smartphone sales in the third quarter of 2021, according to industry observers.
It has been nearly three years since the US-China trade war pushed the electronics supply chain toward Southeast Asia. In addition to the movement of large assembly and installation manufacturers to Southeast Asia, whether or not other component manufacturers would follow has also been a top of discussion.
Samsung's new NAND flash production capacity is coming, which is likely to create oversupply and exacerbate price falls for the memory. Apple has been relyng on Taiwan-based ODMs for producing its Mac devices, but it reportedly is looking to outsource portions of the Mac production to Chinese makers. But Taiwan's IC substrate suppliers have reportedly entered Apple's supply chain for new Mac chips.
With PCB and IC substrate suppliers looking to expand capacity, related equipment suppliers will be busy fulfilling orders that will be ramping up substantially through 2022, according to industry sources.
Equipment makers including C Sun, Group UP Industrial, Symtek Automation Asia (SAA) and Taliang Technology have seen clear visibility of orders extend well into 2022, particularly those from IC substrate and HDI board makers in Taiwan and China aggressively expanding capacity with big capital expenditures, the sources said.
Taiwan-based IC substrate suppliers, such as Unimicron Technology, have reportedly cut into the supply chain for Apple's custom-built silicon powering the next generation Macs, and will have a chance to benefit the most from the new offerings among its component suppliers.
Foxconn Technology (Hon Hai) is well prepared to leverage its software and semiconductor prowess to turn out more EVs with high performance and intelligence in 2022/2023, and will move to promote localized production in different regions to strengthen sales competitiveness in regional markets, according to company chairman Young-way Liu.
Unikorn Semiconductor, a provider of compound semiconductor foundry services, expects its operation to grow by 2-3 times over the next 3-5 years and accordingly is in preparation to expand production capacity and set up production capacity for new products, according to company chairman Wayne Shih and president JS Wen.
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."
Semiconductor materials distributors including Topco Scientific, Wah Lee Industrial and Niching Industrial are all set to see their fourth-quarter revenues stay high despite uncertainty emerging in the outlook for end-market demand, according to industry sources. The distributors have seen clear order visibility through the end of 2021 or even early 2022, allowing them to sustain strong shipment momentum after posting impressive revenue gains in the third quarter.
Supply chains are moving to cope with China's power reductions in one way or another, with the prospect the restrictions may become a long-term policy and will inevitably drive up production costs, according to industry sources.
Fueled by pent-up demand for automotive electronics caused by semiconductor supply chain disruptions, worldwide installed capacity for power and compound semiconductor fabs is projected to top 10 million wafers per month (WPM) for the first time in 2023, growing to 10.24 million WPM (in 200mm equivalents) and climbing to 10.6 million WPM in 2024, according to SEMI.
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.
Tian Zheng International Precision Machinery (TZI), which has a high market share in sorting, packaging and testing equipment for passive components, has seen strong order momentum in 2021, with consolidated revenue from January to September reaching NT$820 million (US$29.1 million) for an on-year growth of 105.22%.
Taiwan-based backend houses continue to land shifted orders for MOSFET and other power ICs from Southeast Asia, where operations at fabs run by international IDMs are being disrupted by a resurgence of COVID-19 infections, according to industry sources.
HDI PCB manufacturers including Compeq Manufacturing and Tripod Technology are expected to sustain strong shipment momentum in the fourth quarter of the year after posting record revenues in the third quarter, but they are also cautious about possible impacts of power cuts in China and shortage of chips, according to industry sources.
TSMC's plans to raise its foundry service quotes have caused a stir among its customers. Wafer foundry and packing/testing production capacity prices have been going up. The price increases have accumulated in the chip end market forcing the selling price of computers, communications, and consumer electronics (3C) to also increase. However, there has been less consumer demand for purchasing, replacing, and upgrading 3C products, resulting in resistance to chip price increases from TSMC customers.
PCB and IC substrate supplier Nan Ya PCB saw its September revenue drop 4.6% sequentially due to the impact of power restrictions imposed by the local government on its plant in Kunshan, China, but the company still enjoyed record-high sales in the third quarter of 2021.
Taiwan-based epiwafer maker Visual Photonics Epitaxy (VPEC) has emerged as the world's top supplier of GaAs epiwafers with its market share in the segment surpassing that of British peer IQE by 14-15%, according to industry sources.
In various electronic equipment, the power component plays a key role. A well-designed power component does not only ensure the stable operation of equipment, but also can provide optimized functions based on the environment. Although this market is mostly dominated by foreign giant companies and even few companies develop the related technologies in Taiwan, Potens Semiconductor Corp, established in 2012, still led this industry to transform the market landscape. In addition to launching general purpose power devices with high quality, comprehensive product line and devoting oversea deployment, Potens is also much actively developing cutting-edge technology. The company was awarded the 22nd Little Giant Award, the 6th D&B TOP 1000 Elite SME Award and other awards in 2019.