TSMC is giving priority to expanding its 12-inch fab capacity to ease supply. Now clients stand a better chance of having their orders squeezed into TSMC's production schedule in the second quarter of 2021. Taiwan's inductor makers are also keen on expanding production capacity to meet robust demand from the autmotive and handset sectors. Global smartphone shipments are expected to grow almost 50% in first-quarter 2021, according to Digitimes Research.TSMC prioritizes 12-inch fab expansion: TSMC has prioritized expanding 12-inch fabs over 8-inch ones, and it may be easier for the foundry house to squeeze in extra orders from some clients its 12-inch fabs in the second quarter, according to industry sources.Taiwan inductor makers keen on capacity expansions: Taiwan makers of inductors are keenly enforcing capacity expansions to meet increasingly strong demand for automotive, handset and other consumer electronics applications, according to industry sources.Global smartphone shipments to grow 50% in 1Q21: Global smartphone shipments are likely to grow nearly 50% on year to 340 million units in the first quarter of 2021, driven by robust sales of Apple's iPhone 12 Pro and iPhone Pro Max as well as a ramp-up in shipments by Chinese brands to grab the market share relinquished by Huawei, according to Digitimes Research.

With its advantages in edge computing and mobile device applications, Arm has been expanding its server solution offerings, heading towards high performance computing instead of staying on the traditional route of further lowering power consumption, according to Digitimes Research's observation.Adoption by cloud computing datacenter operators such as Amazon and Microsoft as well as chip designers including Marvell and Ampere is expected to help Arm expand its presence in the large-size cloud datacenter and HPC markets, enabling it to obtain a 10% market share in the server CPU market.Arm-based servers are attractive particularly to large-size cloud computing datacenter operators with Amazon being the keenest in procuring the products, since Arm-based architecture, comparing to x86 one, feature lower cost and lower power consumption.Large-size cloud computing operators have been expanding their datacenter infrastructure in a bid to satisfy increasing demand for cloud computing services, AI and HPC applications and therefore have rigid demand for lowering hardware expenses and power consumption. Arm-based CPUs will allow the operators to provide services with high price/performance ratios and more flexible combinations.However, to survive in the server market, Arm still faces many difficulties: it lacks support from the software ecosystem; related server motherboard and rack system design are not yet mature; and there is fierce competition from other open-source camps such as RSIC-V.Digitimes Research expects Arm to focus on expanding in the cloud computing datacenter and HPC server markets. If Nvidia is able to complete the acquisition of Arm, the GPU giant will then be able to offer server solutions that combine Arm CPU and Nvidia GPU that will expand Arm's reach in the AI cloud computing market.

Global smartphone shipments are likely to grow nearly 50% on year to 340 million units in the first quarter of 2021, driven by robust sales of Apple's iPhone 12 Pro and iPhone Pro Max as well as a ramp-up in shipments by Chinese brands to grab the market share relinquished by Huawei, according to Digitimes Research. Apple's iPhone shipments are expected to total over 60 million units in first-quarter 2021, having seen such shipments reach over 90 million units a quarter earlier, Digitimes Research estimates.Apple is likely to be the top vendor for a six-month period that ends March 31, 2021, with total shipments of over 150 million units, up 38% from the same period of a year earlier.Samsung Electronics will rank second and see its shipments decline slightly in the six months, or roughly 60-65 million units each for fourth-quarter 2020 and first-quarter 2021.Xiaomi will be in third place with its shipments totaling 90 million units in the six months, representing an increase of over 80% from a year earlier.Huawei will ship less than 20 million smartphones to be in sixth place in the first quarter of 2021. Global shipments of 5G-enabled phones are expected to reach over 600 million units in 2021 compared to 280 million units shipped a year earlier, Digitimes Research estimates.Huawei, Apple and Samsung were the top-three 5G phone vendors in 2020, accounting for over 70% of global 5G phone shipments.Digitimes Research also revises upward the annual growth of global smartphone shipments for 2021 to 10-13% for a total of over 1.4 billion units.

In the first half of 2020, the automotive industry took a hard hit from COVID-19 with demand nosediving, production shutdowns and allocation shifts focusing on telecommunications and industrial automation. As a result, sales went down a whopping 34%.By the end of the year, demand for automobiles began to mend as sales improved by 19%. Though this is lower than previous years, some car manufacturers have already started to see the effects of this rebound and are predicting sales to reach that of 2019 - one of the best years in the industry.Despite the automotive industry expecting to see explosive growth, its recovery is already being hindered by widespread electronic component shortages that are predicted to last until 2023. A dominating factor is the limited supply of raw materials, such as glass substrates, 8-inch wafers and ABF substrates, that are causing production and global supply to continue to narrow.The most common affected automotive components include MCUs, MLCCs, resistors, DRAM and FLASH memory, LPDDR4s, accelerometers, converters, regulators and MOSFETs. In response, many automotive electronics suppliers, including NXP, Renesas and Microchip, announced price increases and extended lead times. For example, NXP's lead times have increased to 52 weeks for its automotive MCUs.With foundry capacities experiencing a 100% utilization rate, the automotive industry is competing with telecommunications and consumer electronics for limited supply. As a result, automakers like Volkswagen, Nissan and Toyota, are cutting production and idling plants.As 2021 progresses, more shortages are on the horizon, including LPPDR5s used in automotive applications, SSDs used in electric vehicle applications, and precious metals, which are needed for catalytic converters. The impact of the current shortages is exponential. General Motors Co. and Ford Motor Co., for instance, are potentially facing $61 billion in lost revenue for the year due to difficulty securing needed chips.Due to its effect on the industry, automakers are looking to their governments for support. This has led the U.S., Japanese and German governments to ask Taiwanese officials for aid in convincing TSMC to re-prioritize its capacity and focus on automotive-grade parts. The European Union has also approached Taipei for support. In response, TSMC announced its plan to reallocate its wafer capacity to pump out auto-related products as it works toward increasing production capacity altogether.Because of the time and resources required to expand capacity, not all manufacturers are following in TSMC's footsteps. Infineon and Renesas have stated they will adjust production based on demand with no specific plans while NXP has not shown any indication of increasing its capacity.Unfortunately, the situation could get worse if semiconductor manufacturers forecast based on immediate need only. The growing demand for electric vehicles and autonomous capabilities will require twice as many semiconductors as internal combustion engine automobiles."In order to fulfill their needs, automotive manufacturers are starting to approve multiple manufacturer part numbers for certain builds and are incorporating VMI programs with various suppliers," states Jair Cruger, Fusion Worldwide's Purchasing Director, EMEA.As the automotive evolution progresses, automakers are focusing on further integrating technology in automobiles like Bluetooth connectivity, driver assistance, navigation and hybrid electric systems, which require more chips and components. This is trend is expected to continue because of growing demand for big data and analytics, cloud computing and digital services to increase vehicle connectivity with owners and dealers - all of which will also add pressure to limited component supply.With over 40% of the cost of a new car attributing to semiconductor-based chips and the demand of semiconductors in other sectors also growing, the global market is expected to be worth $129 billion in 2025 - triple the size it was in 2019."Increased competition for technology allocation will mean that automakers have to plan even further ahead and think more strategically to ensure their supply chains are stable," Cruger continues.This overlap between both the automotive and technology industries will result in bottleneck allocation issues in semiconductor products for technology manufacturers. Simultaneously, automakers will require a complete overhaul of their vertical supply chains to rely on strategic partnering with specialty technology firms."To prepare supply chains for the massive growth, having an accurate forecast, keeping enough buffer stock and planning inventory for at least 6 months to a year will be key. By doing so, companies will be better prepared for lead time stretches and other unpredicted events," says Dylan Chew, Fusion Worldwide's Global Director of Purchasing.Additionally, by incorporating multiple sources into supply chains and strategically utilizing the open market, companies will have multiple opportunities to cover their supply chains. As we have learned over the past few years, companies who put all their eggs in one basket don't have a safety net when supply chain disruptions occur.

TSMC is fast expanding capacity for 5nm process to meet strong demand from a host of heavyweight clients, including Apple, AMD and MediaTek. The foundry house's capacity for 5nm process is expected hike by one third in second-half 2021 compared to that in the last quarter of 2020. MediaTek has also obtained more capacity support from TSMC for chip production at 6nm and 7nm to facilitate its 5G chip shipments. Meanwhile, ODM Wistron and Taiwan's Chunghwa Telecom have teamed up eyeing the 5G and AI services sectors.TSMC 5nm process capacity to top 120,000 wafers monthly in 2H21: TSMC is poised to scale up its 5nm process manufacturing capacity to 105,000 wafers monthly in the first half of 2021, up from 90,000 units in fourth-quarter 2020, with plans to further expand the process capacity to 120,000 units in the second half of this year, according to industry sources.MediaTek wins more TSMC support to boost 5G chip shipments: MediaTek has obtained sufficient 6nm and 7nm process capacity at TSMC, which will allow the mobile SoC specialist to boost its 5G chip shipments in 2021, according to industry sources.Wistron, Chunghwa Telecom team up to tap 5G, AI service sectors: Wistron Group has forged a strategic alliance with Chunghwa Telecom (CHT) to jointly tap business opportunities arising from proliferating 5G and AI applications.

IC manufacturing capacity has been tight, resulting in chip shortages that some expect to last into 2020. Shortages amid strong demand are sending product prices up - one of those being MOSFET whose suppliers are set to hike pricing sharply in the months ahead. Demand for passive components is expected to remain strong through second-half 2021, with currently inventory at ODMs and distributors dropping to very low levels. Chip shortage likely to persist through 2022, says Silicon Motion: Foundry and backend capacity constraints resulting in a global shortage of semiconductors will likely persist through 2022, according to Silicon Motion Technology, a Taiwan-based NAND flash device controller specialist.MOSFET prices poised to rise on worsening shortages: Prices for MOSFET chips are set to rise significantly in the months ahead thanks to worsening shortages arising from persistently tight 8-inch foundry capacity and rapid increases in demand for graphics cards and automotive electronics applications, according to industry sources.Passive component makers see clear order visibility stretch into 2H21: Yageo and Walsin Technology have seen their visibility of orders for MLCCs, chip resistors, inductors and capacitors extend to the second half of 2021 thanks to ODMs and distributors strengthening order momentum to replenish their inventories, according to industry sources.

Unusually low rainfalls in Taiwan over the past year have resulted in water shortages, particularly in the southern parts of the country. Some companies at the Southern Taiwan Science Park, including TSMC, have started buying truckloads of water to make up for the shortfall from reservoirs, apart from stepping up conservation measures. TSMC is set to move 4nm process to volume production in 2022, which may prompt Qualcomm to place foundry orders for its next generation mobile chips. Stronger-than-expected demand from 5G and automotive chip segments is sending MLCC pricing up.Taiwan chipmakers moving to counter water shortages: Chipmakers including TSMC and UMC have started buying water by the truckload for their foundries in Southern Taiwan Science Park (STSP), as reservoirs in southern Taiwan face dwindling water levels following months of scant rainfalls, according to industry sources.Qualcomm may switch to TSMC 4nm node in 2022: Qualcomm will continue to fabricate its next-generation 5G mobile chip, tentatively dubbed Snapdragon 895, at Samsung Electronics built using an upgraded 5nm process, but may switch to TSMC in 2022 using its 4nm process, according to industry sources.High-capacitance MLCC prices set to rise: MLCC vendors including Samsung Electro-Mechanics (Semco) and TDK are likely to raise their quotes for high-capacitance MLCCs in response to stronger-than-expected demand for 5G handset and automotive applications, according to channel distribution sources.

Tesla is expected to sell 800,000 electric vehicles (EV) globally in 2021, increasing 60.1% on year, and the more price-friendly Models 3 and Model Y will together take up 90.4% of the volume, Digitimes Research forecasts.Tesla sold nearly 500,000 EVs for a global market share of 16% in 2020. Nearly 140,000 units of Model 3 were sold in China for a EV market share of 11% and nearly 88,000 units in Europe for a 6% in 2020.Tesla has brought in handsome revenues from sales of software consisting of FSD (full self-driving) kits, payable OTA (over the air) functional upgrades, subscription-based infotainment services.For FSD, the major source of software sales revenues, Tesla initially offered hardware/software-integrated ADAS kits in 2014 and had kept upgrading them until it offered initial FSD in early 2019. FSD/AP HW3.0, the latest FSD version featuring support to Level 5 autonomous driving, was launched in October 2020.In line with autonomous driving technology development, Tesla plans to establish Robotaxi Network to operate rental self-driving taxicabs, as its new business model.

The frigid weather that halted production in the US state of Texas may prompt IDMs to mull adjusting outsourcing strategies. Seeking more support from manufacturing partners, particularly those in Taiwan, may be a way for IDMs to diversify risks in an IT sector that has been haunted by uncertainty and tight supply. Fabless IC vendors have been troubled by insufficient supply from foundry partners, but some of them who have backing from well-established parent cormpanies, such as UMC-affiliated IC design houses, have been better off than others. In the notebook sector, the top-5 brands and top-3 ODMs saw shipments drop in January due to seasonality and components shortages, according to Digitimes Research. IDMs may evaluate more outsourcing: IDM vendors may consider outsourcing more of their production starting 2022, with Taiwan-based contract chipmakers being among the beneficiaries, according to industry sources.IC design houses with strong backing more capable of winning foundry support: Taiwan-based IC design houses backed by large-scale and well-established parent companies, such as LCD driver IC firms Fitipower Integrated Technology and Raydium Semiconductor, will be more capable of mitigating the impact of increasingly tight capacity at foundries in 2021, according to market sources.Top brands and ODMs see January notebook shipments decline: After hitting a new high in monthly shipments last month, the global top-5 notebook brands saw their combined shipments slip more than 10% sequentially in January due to seasonality and the fact that component shortages have shown no improvement.

The application of Open RAN (O-RAN) networks is gaining popularity worldwide, offering plenty of opportunities for Taiwan-based makers to tap into the niche market by optimizing their capabilities in the manufacture of semiconductor and electronics products.The impetus pushing forward to using O-RAN networks in Europe comes after Vodafone, Deutsche Telekom, Telefonica and Orange signed an MoU in mid-January to promote the O-RAN. Telecom Italia also joined the initiation in early February.The initiation, which also calls for support from the EU and other governments, aims to build a local O-RAN industry supply chain and an ecosystem that will include testing laboratories and demonstration fields to incubate innovative O-RAN applications.Most European telecom players favor releasing relevant orders to established telecom equipment suppliers and 5G software companies through biddings, and therefore, Taiwan's O-RAN device makers may cut into related supply chains by cooperating with telecom equipment providers, Digitimes Research believes.There is already an established O-RAN supply chain in the US. The supply chain players include: RAN software providers Altiostar and Mavenir; cloud platform management firms Red Hat and VMWare; and hardware and software system provider Cisco Systems. They also include chipmakers Intel, Xilinx and Nvidia as well as cloud operators such as Facebook, Google and Microsoft.By optimizing their manufacturing capabilities, Taiwan's firms can complement US firms to realize related product development and solutions.In Asia, NTT Docomo is teaming up with NEC and Fujitsu to tap the enterprise private O-RAN network market.The NTT Docomo team is tying up with Thailand-based AIS and a number of Japan-based firms to form a 5G Global Solution Consortium (5GEC) to promote the use of O-RAN and related 5G applications by Thailand's manufacturing and construction firms initially.Taiwan's firms can cooperate with the 5GEC to help build enterprise private O-RAN networks, optimizing Taiwan's large-scale manufacturing capacity and its digital application technology and Japan's expertise in high-precision machinery, components and materials.