Tight foundry capacity has constrained semiconductor supply, with PWM ICs in particularly serious shortages. The IC shortages are delaying shipments of end-market devices that are badly needed to support stay-at-home activities. In response to the robust demand, Microsoft has increased orders for its Surface series notebooks with its ODMs. In the semiconductor sector, top foundry houses' development of advanced packaging technologies will not undermine their partnerships with backend service providers, according to an Amkor executive.Power management chips in severe shortages: The global supply of ICs demanding 8-inch wafer fabrication services has been tight, with shortages of power management chips (PWM IC) being particularly severe, according to industry sources.ODMs see rising orders for Surface notebooks: Microsoft has placed brisk orders for its Surface series notebooks, but component shortages remain an issue for the supply of the devices, according to sources from the upstream supply chain.Top foundries to maintain tight partnerships with OSATs, says Amkor executive: Leading foundry houses are mostly partners rather than competitors for OSAT firms despite their aggressive deployment in advanced 3D IC packaging solutions, according to Amkor Technology Taiwan president Mike Ma.

Small- to medium-size manufacturers are important to Taiwan's economy, but most of them lack the human resources and cannot afford the expensive equipment and services needed for digital transformation. That is where Analytics-as-a-Service (AaaS) can help them, according to Chien Chen-fu, director for Artificial Intelligence for Intelligent Manufacturing Systems Research Center (AIMS) at National Tsing Hua University.Chien, in a recent interview by Digitimes, explained how AasS is essential for such firms to make flexible decisions and upgrade to smart manufacturing.Q: What is AaaS?A: Manufacturing industries in Taiwan are globally strong. But, with AI and big data analysis as tools, Taiwan-based manufacturers need smart manufacturing, flexible production and smart decision-making. What AaaS provides is algorithms for undertaking digital transformation.For example, TSMC has installed smart manufacturing algorithms on equipment at its wafer fab in Nanjing, China, to completely control manufacturing processes. While large enterprises such as TSMC and AU Optronics (AUO) are capable of establishing their own algorithms for digital transformation, small- to medium-size manufacturers can acquire customized smart manufacturing algorithms from AaaS providers.Q: Taiwan's Ministry of Economic Affairs provides substantial subsidies to government-sponsored organizations to help small- to medium-size manufacturers in digital transformation and smart manufacturing. Why are academics or private consultants still needed?A: Such government-sponsored organizations' help is on a project basis. When the subsidies are used up and the projects expire before the problems in smart manufacturing have been solved, the academics or private consultants can step in, helping address problems such as long-term maintenance of equipment. Therefore, small- to medium-size manufacturers' digital transformation and upgrade to smart manufacturing will eventually rely on private consultants.Q: How is AaaS necessary for smart manufacturing?A: In the electronics sector, Global Unichip and Faraday Technology provide analytical services for small-size IC design houses or companies which need to develop ICs. Even if manufacturers succeed in upgrade to smart manufacturing, they still need AaaS providers for technological maintenance services.Q: How do AaaS providers help small- to medium-size manufacturers? And how can 5G be helpful for Taiwan's smart machinery industry?A: Each AaaS provider has a team of experts separately specializing in IT, stock management, supply chain management, and so forth, and can save companies the trouble of seeking AI and big data analysis talent.Taiwan's manufacturing sectors have rich domain knowledge and experience, which form an advantage for developing software used in smart manufacturing. 5G can lead to faster collection of data. But if there are no algorithms available or existing algorithms are not capable enough, 5G-added value cannot be created.Chien Chen-fu, director for AIMS Photo: Bryan Chuang, Digitimes, November 2020

The US presidential race is still too close to call, but the final outcome of the election will not change Taiwanese ODM's ongoing plans of moving part of their porduction lines out of China, as tensions between the world's two superpowers are unlikely to ease anytime soon. In the semiconductor sector, 8-inch foundries are striving to expand capacity to meet strong demand. In the display sector, touch panel solution supplier TPK is bracing for weak sales in the fourth quarter amid shrinking demand for handset applications.US election outcome not to change ODM relocation plans: Taiwan-based notebook and server manufacturers are sticking to plans of moving production out of China according to customer requests, regardless of the outcome of the US presidential election, though their notebook clients have not yet placed orders with their plants outside of China, according to sources from the upstream supply chain.Second-tier foundries eyeing bigger share in 8-inch foundry market: With 8-inch wafer fabrication demand rising rapidly for chips including ultra-thin fingerprint sensors, power management ICs, MOSFET chips and display driver ICs, second-tier foundries are striving to expand their 8-inch fab capacities, according to industry observers.TPK conservative about 4Q20 amid shrinking demand for handset applications: Touch modules vendor TPK Holding has turned conservative about its fourth-quarter 2020 business results despite impressive revenue and profit gains in the third quarter, and is shifting its focus to medium- and large-size display solutions to counter weakening demand for handset applications.

The foundry sector has seen robust demand this year with fab capacity in tight supply. Taiwan-based VIS, which provides 8-inch foundry services, expect record high sales in fourth-quarter 2020. But in the IPC sector, Advantech expects weak results for 2020, thanks to the impacts of the pandemic. For Wistron, it is looking to increase investment in the promising electric vehicle sector.VIS expects 4Q20 revenue to hit another record high: Eight-inch IC foundry Vanguard International Semiconductor (VIS) expects to post revenue of between NT$8.4 billion (US$293.2 million) and NT$8.8 billion in the fourth quarter of 2020, a record high for the fourth consecutive quarter.Advantech eyeing return to growth track in 2021: Taiwan's leading IPC vendor Advantech may see weak results for 2020 but will seek to return to the growth track in 2021 by stepping up efforts to optimize its product lines and boost operational efficiency, according to Eric Chen, the firm's president of general management.Wistron to beef up CVC investment in EV sector: ODM Wistron will strengthen CVC (corporate venture capital) investment in business concerning electric vehicles (EVs), according to company chairman and chief strategy officer Simon Lin.

Memory spot price rally that had started in September slowed down in October amid growing COVID-19 worries and sluggish demand from the data center sector. Despite a pick-up in demand for consumer electronics applications, the overall memory demand remains slow. But the automotive sector is ganing momentum, as carmakers replenish their inventory. Demand for automotive chips and components is expected to remain strong till first-quarter 2021. For TSMC, clients are scrambling for foundry supply of not only advanced node capacity, but also of mature processes. TSMC has seen 28nm capacity utilization reach almost 100%, thanks to orders switched from China's SMIC. Memory spot prices stop rising: Memory spot market prices have stopped rising since November, probably an indication of demand weakness as a whole, according to sources at memory module makers.Automotive chips, components demand turning strong till 1Q21: Demand for automotive power chips and components has started picking up since the third quarter of 2020 after experiencing almost two years of stagnancy, with sales outlook promising for first-quarter 2021, according to industry sources.TSMC sees 28nm process capacity utilization ramp up: TSMC has seen capacity utilization rates for 28nm process technology surge and come to nearly 100% in the fourth quarter of 2020, thanks to the bulk of orders transferred by Qualcomm and other fabless chip vendors from China's Semiconductor Manufacturing International (SMIC), according to industry sources.

Taiwan's large-size panel shipments (excluding Sharp's) are expected to decline 4.1% sequentially but up 16.1% on year in the fourth quarter of 2020, after growing 11.2% on quarter and 20.7% on year to 71.58 million units a quarter earlier, Digitimes Research figures show.The sequential declines of large-size panel shipments (9-inch and above) in the fourth quarter are likely to result from the short supplies of display driver ICs and power management (PWM) ICs.Digitimes Research expects fourth-quarter panel shipments for tablet and TV applications to stay in high gear. The growth of tablet panels shipped to non-iPad suppliers will be higher than that to Apple in the quarter - a peak season for sales of white-box tablets that will benefit Taiwan's panel makers who are not among the suppliers in the iPad supply chain.Given that TV panel prices already increased 30% in the third quarter and are likely to continue rising in the fourth quarter, Taiwan's panel makers are also likely to relocate more of their capacity previously designated for production of monitor panels to TV applications in order to help them ramp up revenues and profits.Nevertheless, shipments of notebook and monitor panels will remain the mainstream accounting for nearly 60% of total large-size panel shipments in the fourth quarter, up 2.4pp from a year earlier.

Under the efforts of the New South Bound Policy, Taiwan and Malaysia engage in active industrial collaborations to create win-win partnerships that foster the sharing of experiences in industrial, economic and human resource developments. Taiwan has built up a strong competitive edge as a result of its long-term devotion to and achievements in electronics manufacturing, refined agriculture, smart healthcare, biotechnology and particularly eye-catching artificial intelligence (AI) and IoT advances. Taiwan's strength in technology, industry and talent will enable it to play an important part helping drive Southeast Asia's economic growth.The Institute for Information Industry (III) organized the 2020 Malaysia-Taiwan Industrial Collaboration Summit - Smart City Sub-forum under the guidance of Industrial Development Bureau (IDB), Ministry of Economic Affairs (MOEA), with an aim to keep strengthening the integration of the industry value chain under the New South Bound Policy initiative. The two-day event took place on September 17 and 18, 2020 in an online format for the first time due to COVID-19. Participating Taiwan-based firms in IDB's Smart City Development Projects including Papago, MoGaMe Mobile Entertainment, Iscom Online International Information, Avalue Technology, OPEN LiFE, Quadlink, Kiwi Technology and GEOSAT Aerospace & Technology presented their smart applications and services that demonstrate their strong local R&D capabilities built in the three-year engagement in the projects. Malaysian investors and government delegates also joined the event to enhance communication between smart city industries of Taiwan and Malaysia and create matchmaking opportunities.Pingtung Da Long Wang farm uses AI to grow dragon fruitsPingtung Da Long Wang farm makes use of AI technologies to control fruit illumination and integrates AI with augmented reality (AR) smart glasses to build AI models for back-end flower thinning and artificial pollination. It is able to boost pollination success to 70% while lowering the error rate of manual fruit sorting by 20%. On top of that, AI technologies coupled with video cameras can detect the extent of surface damage on dragon fruits within one second. This can significantly help determine the quality and grade of dragon fruits and thereby hoist throughput.Malaysia-based Nexus Union saw the potential of the AI-enabled smart agriculture solution and entered into an agreement at the event to introduce the solution to a 500-hectare farm in Sabah. The deal will be supervised by a Malaysian investment consulting firm. A pilot project will kick off first on a 15-hectare area of farmland. Papago's AI-enabled face recognition solutionAside from the collaboration deal in smart agriculture, the event also successfully brought together Papago and a Malaysian investor. The two parties have signed a memorandum of understanding (MOU) to use Papago's solution combining face recognition and body temperature detection at Kuala Lumpur International Airport to help Malaysia cope with a second wave of COVID-19 outbreak. Papago develops its face recognition platform Face8 on top of a strong AI-based image and face detection core coupled with protection and monitoring by robust information security implementations as well as cross-sector innovative applications enabled by blockchain technologies. Face8 has been widely used in banking institutions, fitness clubs and designated driver services in Taiwan. In the wake of the COVID-19 pandemic, Papago has added infrared (IR) temperature sensors to Face8 to incorporate temperature detection with face recognition. The aim is to drive the adoption of contactless detection solutions to prevent risks of cross infection while implementing real-name registration to allow traceability.MoGaMe develops IoT sensors based on low earth orbit satellite communication Another noteworthy MOU deal reached at the event was the one signed by MoGaMe Mobile Entertainment and Rui-Tang Tsai, director, IoT Technologies and Solutions, Smart System Institute, III. MoGaMe was awarded a tender project from National Space Organization and has since accumulated abundant experiences in developing smart IoT devices, for example, an electronic chart and automatic identification system (AIS) that tracks vessel positions and sends/receives messages via communication payloads on YUSAT. It can also be installed on islands for the purpose of making nautical charts.MoGaMe has also created a sensing device based on NB-IoT communication coupled with eSIM modules. Leveraging its experiences in developing sensors for use on low earth orbit satellites, MoGaMe was able to build an environment sensing device that maintains normal operation under harsh conditions. Powered by solar energy, the device is used in a smart water discharge monitoring system to address challenges arising from dramatic temperature changes in environments such farms, lakes or rivers.III's Smart System Institute has long been committed to the research of forward-looking and critical technologies. By providing a specialized platform for ICT technology and system development, wireless communication protocol technologies, wide-ranging technical spec platforms and assistance with UI/UX interactive app and website interface design, III's Smart System Institute effectively helps manufacturers consolidate their product and service portfolios and enhance their competitiveness. It is making an effort to build a platform bridging Taiwan's and Malaysia's industries, through which Taiwan's AIoT solutions can take root and flourish in Southeast Asian markets. By integrating software and hardware systems, III's Smart System Institute looks to foster engineering teams and actively connect them with the global community.Explosive growth of AIoT applicationsAIoT applications took center stage at this year's event. Apart from AI and IoT integration, the combination of AI with blockchain, big data analytics, image analysis, voice analysis or a slew of sensors gives rise to a diversity of smart applications that address information security. For smart surveillance, Iscom Online International Information built a secure campus solution combining AI-enabled image and voice monitoring. Using voice recognition to help enhance image recognition, the solution stands out from traditional video surveillance applications that only rely on image recognition.Among the AIoT solutions targeting diverse applications in precise agriculture presented at the event was Quadlink's Aquadlink Smart Aquaculture Application System, which makes use of remote monitoring, big data analytics and remote control IoT applications to improve aquafarm management and increase aquaculture production. In addition, an application that uses drones to spray farm chemicals on crops won a partnership opportunity engaging Taiwan-based GEOSAT Aerospace & Technology and Malaysia-based MATA Aerotech, which provides commercial drone services.Kiwi Technology built a smart temperature control solution supporting multiple wireless communication technologies including LoRa for cold chain management of refrigerated goods in transit or in storage. It can be combined with a smart air quality management solution to measure and monitor carbon dioxide levels as an indicator of air quality in buildings.IDB exerts active efforts in guiding Taiwan-based vendors to develop smart city solutions. In collaboration with 22 municipal governments, the central government allocates resources to address local needs raised by the governments of respective municipalities where vendors can test and refine their solutions. IDB has successfully guided 294 vendors who have created 223 smart applications, including AI-based air pollution monitoring and smart parking solutions. By consolidating resources from the government, industry, academia and research and integrating software and hardware systems, IDB aims to team up vendors with promising export potential, expand Taiwan's influence in Southeast Asia and lead the industry toward exporting high value-added integrated systems.The 2020 Malaysia-Taiwan Industrial Collaboration Summit takes place onlinePhoto: IDB

Demand for cloud servers may be rebounding in the fourth quarter of 2020, but the coronavirus pandemic remains a black swan threatening to disrupt components supply and assembly operations at server ODMs. But the long-term outlook for the server sector remains promising, with Microsoft having just announced a plan to build an Azure datacenter in Taiwan, which reportedly will install 15,000 servers. In the semiconductor sector, foundry capacity has been in shortages, and UMC is seeking acquisition targets to increase its 8-inch fab capacity.Cloud server demand picking up, but facing pandemic variables: Cloud server demand has started picking up in the fourth quarter of 2020, but concerns have emerged whether a fresh wave of coronavirus infections in the US and Europe will again hit shipments from the supply chain, according to industry sources.Around 15,000 servers needed for new Microsoft Azure datacenter in Taiwan: An estimated 15,000 servers will be needed to support Microsoft's new Azure datacenter that will be unveiled in Taiwan by the end of 2021 at the earliest, according to industry sources.UMC eyeing idle 8-inch fabs for acquisition: Pure-play foundry United Microelectronics (UMC) is looking at aging and idle 8-inch wafer fabs for acquisitions, according to company co-president SC Chien.

Global server shipments, after reaching the peak of 2020 in the second quarter, are estimated to have slipped 6% sequentially in the third quarter as demand began to weaken, and will drop further in the fourth quarter, according to the latest figures from Digitimes Research's Server Tracker.The shipment declines were a result of several factors including: the high comparison base formed in the second quarter amid clients' earlier-than-scheduled inventory buid-up; the lingering coronavirus pandemic; and delayed releases of Intel's next-generation server CPUs, which caused cloud datacenter operators and server brand vendors to slow down their order pull-ins in the second half of 2020.Global server shipments saw a nearly 20% on-year growth in the first half of 2020. Although the on-year shipment growth in the second half will not be as strong as that in the first, full-year 2020 shipments will still grow annually.US-based cloud datacenter operators and global first-tier server brands, including Microsoft, Google, Facebook, Dell, HPE, Lenovo and Supermicro, will still focus on digesting inventory in the fourth quarter, Digitimes Research believes. Server brands are also facing enterprise clients cutting their server procurement due to the pandemic's impact.Amazon will be the only first-tier cloud datacenter operator to see server shipment growth in the fourth quarter as the company has expanded hardware infrastructure for its e-commerce platform to cater to year-end shopping demand in addition to cloud computing services.In 2021, as the pandemic will continue to undermine the global economy, enterprises are likely to further reduce their capex. The US-China trade tensions may also decelerate Chinese server brands' shipment momentum in 2021.However, as Intel's and AMD's new-generation server CPUs will become widely available in the first half of 2021, a wave of server replacement trend in the enterprise market is to be expected. In addition to rising demand for cloud services from US and Chinese providers, global server shipments are expected to continue growing in 2021.

Shipments of smartphone-use application processors (AP) to China, including those for handset exports, grew 13.4% sequentially but declined 9.5% on year to 192.6 million units in the third quarter of 2020, Digitimes Research has found.The sequential growth comes as Huawei rushed to stock up APs from MediaTek prior to the US imposing fresh trade bans, and other Chinese brands were also ramping up smartphone shipments to India for inventory replenishments by channel operators there.MediaTek managed to maintain its top AP vendor ranking with a 44.9% share in the third quarter, up 6.6pp from a quarter earlier. Qualcomm was second with its share standing flat at 37% and HiSilicon Technologies saw its share slip 8.8pp to 13%.Despite off-peak season effects, smartphone AP shipments to China are expected to only edge down 0.9% on quarter and 2.8% in fourth-quarter 2020, as non-Huawei Chinese brands ramp up shipments to expand their market shares at the expense of Huawei, Digitimes Research estimates.While blocked from shipping 5G APs to Huawei in the fourth quarter by the US trade sanctions, MediaTek's shipments of 4G APs will also be constrained by the tight supply of power management (PWM) ICs, undermining its market share.Qualcomm is expected to outrace MediaTek to become the top smartphone AP vendor in China in the fourth quarter as it will be less affected by the US trade bans, having not yet begun shipping any 5G APs to Huawei. Qualcomm will start ramping up production of both entry-level and high-end 5G APs.