Disconnected ICT Supply Chains: New Power Plays Unfolding written by Digitimes founder and president Colley Hwang has been greeted with overwhelming enthusiasm after its original Chinese edition was published in May 2020. The Chinese edition has had three printings within a little over two months. It is the only book in Taiwan and possibly in the whole world that takes an in-depth look into current global supply chain developments and offers the industry insights into the implications of the COVID-19 pandemic and US-China trade tension.At the request of readers, Digitimes recently organized a series of book reading events where participants could share feedback on the book and views on industry dynamics. The series of events also presented a glimpse into the thinking and practices of different industries amid the current market changes.At one of the book reading events, Hwang stressed he wrote the book out of a sense of social responsibility as a veteran industry analyst in Taiwan. He noted that the high-tech industry is a critical growth driver of the global economy so there is a wealth of in-depth high-tech market research. As Taiwan's high-tech sectors including semiconductor, PC and notebook manufacturing, play a pivotal role in the global supply chain, no one else in the world knows supply chain dynamics better than Taiwanese. With COVID-19 disrupting the global supply chain, the whole world is eager to figure out what is happening and what is lying ahead. Digitimes, as the global IT industry's only source of information about Taiwan's high-tech sectors, feels obligated to voice Taiwan's views to the rest of the world. This is also why Digitimes has made Hwang's book available also in English.Agreeing with Hwang, the host of the booking reading event, Frank Yeh, CEO of WPG Holdings, stated Taiwan-based firms have long focused on manufacturing and sales pitching while paying little attention to brand building. Going forward into the new era, Taiwan-based firms should begin efforts to strength brand building. The thinking is also what drives WPG to work with Digitimes to publish news releases in English, allowing global vendors to gain further insight into WPG's digital "blue ocean" strategies for the next decade.On top of strengthening brand building, Taiwan-based firms also need to unshackle themselves from old thinking and map out new operation strategies in the face of the current challenges in 2020. The participants at the event uniformly consider COVID-19 and US-China trade tension the two major factors dictating the global changes in 2020.First of all, COVID-19 has infected 17 million people worldwide with the death toll coming close to 700,000 as of the end of July. All participants in the event agreed that it is an unprecedented crisis to every firm, and businesses were in chaos in early 2020. Nevertheless, six months into the crisis, businesses are now more or less certain about the changes brought by the pandemic.With governments around the world implementing lockdowns, shipping costs are rapidly on the rise. Usual sea and air freight rates no longer apply, so transportation costs have to be recalculated. As transportation costs affect inventory costs as well, vendors generally keep a minimum inventory level. However, during the COVID-19 outbreak, most vendors ran out of stock and had difficulty getting supply from the market, leaving them with no choice but to shut down production or operation. As such, most participants think keeping a high inventory level will be an essential strategy for manufacturers going forward.Each industry sector has been impacted by COVID-19 in a different way depending on its characteristics. For example, food service and entertainment industries were mandated to shut down business with governments taking measures to control COVID-19 infections and thus they were the most seriously hit. Network communication and healthcare sectors were able to buck the trend during the pandemic and show growth. As firms try to keep business running while preventing COVID-19 from spreading, work-from-home (WFH) and remote monitoring have become critical means to maintain uninterrupted operation, which is not possible without network communication technologies. Healthcare becomes the most vital industry on the front line safeguarding human lives against COVID-19. In handling a large influx of patients during the pandemic, medical professionals have realized the importance of smart systems, so the smart healthcare sector will see rapid growth in the years to come.It remains uncertain when COVID-19 vaccines will be available, so the industries are expected to continuingly experience the changes mentioned above, which may even become the "new normal." However, the participants also noted despite its detrimental effects, COVID-19 will pass sooner or later, unlike the consequences of the US-China trade war that began in 2018.In view of the recent clashes between the US and China, the global industry is definitely moving toward the G2 framework. Going forward, vendors will operate on two systems – one for China and one for the rest of the world. Then, the challenge is how to allocate resources to run the two systems in parallel. How does Taiwan appeal to the global industry with its unique value? Hwang advised business leaders present at the event that Taiwan needs to develop a new market other than the US and China so that firms have a third strategic focus. ASEAN member states including the Philippines and Vietnam, as well as India look like good choices for now. He also pointed out that for their efforts toward ASEAN markets to generate results, Taiwan-based firms must understand and respect the characteristics of Southeast and South Asian countries as they are quite different from the US and China in cultural, industrial and political perspectives.In conclusion, Yeh gave the participants three words as takeaways from the event: reset, reimagine and relearn. He encouraged business leaders to go back to the drawing board, dare to dream big and learn from the future. He said businesses like to talk about the "blue ocean" but in fact there is no blue-ocean market but only blue-ocean strategy. In the face of COVID-19 and the US-China trade tension, Taiwan-based firms have to focus on building customer relationships and bring higher values to customers through differentiating products and services, so as to create win-win or even multi-win situations. By doing so, the Taiwan industry will find a new path to success.Colley Hwang, Digitimes founder & president (left) and Frank Yeh, CEO of WPG Holding (right)

The latest development of large-size panel technology for TV applications still focuses on improving color saturation and dynamic contrast, especially in light of the adoption of mini LED backlight modules, Digitimes Research has found.Judging from the display devices showcased at the recently concluded SID 2020 virtual event, related technology developments for IT applications is focusing on improvement of response speed to meet the needs of e-sports.Products exhibited on the virtual show also highlighted that major panel makers are optimizing TV-use display technologies for developing automotive applications, and are also extending the use of flexible AMOLED panels to IT and TV applications beyond current mainstream handset applications.While previous trial production of micro LED panels had been constrained to small- to medium-size applications, Taiwan-based AU Optronics (AUO) showcased a 12.1-inch micro LED panel and a 9.4-inch flexible micro LED panel, paving the way for developing related panels for large-size applications, Digitimes Research believes.LG Display highlighted its automotive panels built with AMOLED technologies.

The semiconductor industry may be watching closely TSMC's fast expansion of 12-inch fab capacity for advanced-node manufacturing, but supply at 8-inch fabs has been tight. As equipment makers now focus on the 12-inch segment, 8-inch fab tools are now hard to come by. While TSMC's major production base remains in Taiwan, ASE, the leader in the semiconductor backend sector, has also made plans to build a major semiconductor cluster in th southern Taiwanese city of Kaohsiung. ASE has just broken ground for a new plant to be ddedicated to advanced packaging processes. Foxconn is also stepping up investment in Taiwan, planning to build a server component production hub in Taiwan.Eight-inch fab equipment in hot demand: A ramp-up in chip orders for IoT, 5G and automotive electronics applications will be driving 8-inch wafer fabrication demand through the first half of 2021, prompting related foundries to step up their equipment purchases particularly purchases of used equipment, according to industry sources.ASE breaks ground for new advanced packaging fab in Taiwan: ASE Technology has broken ground for a new smart plant in Kaohsiung, southern Taiwan to be dedicated to advanced packaging processes, with annual production estimated at US$500 million after becoming operational in 2023, according to company sources.Foxconn to build server component production hub in Taiwan: Foxconn Industrial Internet (FII), an affiliate of the Foxconn Technology Group (Hon Hai Precision Industry), plans to set up a server component production hub at an industrial park in Kaohsiung, southern Taiwan, according to company sources.

Startup firms CRIS, GoodLinker and Claireye Intelligent Technology have developed AI solutions Industry 4.0.Three key factors of Industry 4.0 APS (advanced planning and scheduling) are coordination between production and shipment, real-time synchronous planning and cross-system resource integration, said CRIS CEO Allen Wang.CRIS has developed IMPACTs, a cloud computing-based smart dynamic scheduling system that exchanges ERP (enterprise resource planning)/MES (manufacturing execution system) data via Excel/API to track planning for material procurement and delivery planning for orders received, Wang noted.Wang indicated that modeling engine for scheduling and cloud-based modular architecture are core technologies of IMPACTs, with the former supporting digital twin modeling which completely simulates production conditions and recommends real-time decisions based on onsite conditions, and the latter directly connected with AWS (Amazon Web Services) for quick integration with other production information systems.IMPACTs can reach inventory turnover rates of 15-35%, complete kit rates of 65-95%, scheduling efficiency of 95-100% and reduce time from receiving orders to delivery by 10-55% and scheduling labor input by 10-55%, Wang said.For general automated production systems, APS is between ERP and MES, but for Industry 4.0-based virtual and physical production systems, IMPACTs interplays with ERP, MES, SCM (supply chain management) and MCS (manufacturing control system) of IoT, Wang noted. CRIS offers MES and APS extended modules to match IMPACTs on a choice basis. CRIS also offers industry-specific kits for makers of home appliances, metal hardware, molds, hand tools, CNC equipment, customized furniture and sheet metal parts.Small- to medium-size manufacturers often face problems looking to adopt Industry 4.0 solutions: It takes a long time developing solutions, the cost is too high, and the solutions may not be compatible with their equipment, according to Ethan Feng, founder of smart machinery upgrading solution provider GoodLinker.GoodLinker has therefore launched LASSIE, an industrial IoT platform for smart monitoring of equipment, Feng said. LASSIE features one-day installation without having to set up supporting facilities. It can be applied to old models of equipment, analyze production capacity utilization and record production conditions. It has a double interface: a SCADA dashboard and a mobile App, Feng noted.Clients only need to choose the types of sensors and locations for installing them, plus wire arrangement. Sensor installation and wire arrangement takes 2-3 hours on average, while users' binding via QR code takes only one minute, Feng said.LASSIE has been adopted for 3D printing, electroplating, production of CNC machine tools, dyeing and finishing, casting and rubber molding. GoodLinker can help integrate IT with OT by virtue of its understanding of industrial protocols and PLC (power line communication) protocols, Feng indicated.Image-based industrial quality inspection quite often relies on human eyes and this causes problems: Standards for determining defects vary from one person to another, inspection performance diminishes due to long time of watching, eyes are not easy to inspect small-size products, and defect rates based on AOI (automated optical inspection) equipment tend to be too high, Claireye Intelligent CEO Shirley Liu indicated.Using AI, image recognition, data analytics and system integration technologies, Claireye Intelligent has developed BailAI, a smart solution for image-based inspection and predictive maintenance, Liu said. Image recognition is through capturing real-time images and interpreting them based on deep learning; data analytics uses machine learning to realize AI through collecting, processing and analyzing data; system integration is to integrate cloud computing with production lines to enhance AI computing and application, Liu explained.Liu said users only have to select types of defects to be recognized and provide sample products or images for Claireye Intelligent to train and deploy inspection models and integrate systems.Actual use of BailAI shows that it is 98% accurate in recognition, captures 30 images per second, takes 30 seconds in interpreting an image and has a misinterpretation rate as low as 0.01%, Liusaid.Claireye CEO Shirley Liu (left to right), GoodLinker founder Ethan Feng, and CRIS CEO Allen WangPhoto: Digitimes, August 2020

Taiwan's PC monitor shipments climbed 25% sequentially and 5.3% on year in the second quarter of 2020, fueled by orders deferred from the previous quarter and ongoing stay-at-home initiatives, according to Digitimes ResearchBut the shipment growth is likely to slow to 1-2% sequentially in the third quarter as an upsurge in demand for TV and other applications has squeezed the production capacity at component makers, causing tight supply for some key components, including LCD panels and scalers.Looking back to the second quarter, shipments of large-size monitors continued to grow, with 27-inch and above sizes accounting for 20% of total shipments, and 20-inch and above sizes exceeding 70% of total shipments. The ratio of the mainstream 23.x-inch models was also rising, Digitimes Research figures show.Most of Taiwan-based monitor makers experienced over 20% sequential shipment growths in the second quarter, with Foxconn posting the highest growth after suffering a significant setback in the March quarter.

The output value of South Korea's memory chip industry surged 22.1% on year and 13.9% sequentially in the second quarter of 2020, when a coronavirus-induced slowdown in smartphone demand was offset by growth in demand for servers and notebooks, according to Digitimes Research.Samsung Electronics and SK Hynix saw their memory businesses generate a combined KRW22.9 trillion (US$20.8 billion) in revenue in the second quarter. Their combined memory business revenue represents the overall output value of South Korea's memory chip industry.Samsung and SK Hynix both remain cautious about spending this year, due to demand uncertainty arising from the ongoing coronavirus pandemic. With the supply side experiencing little growth, Digitimes Research expects promising outlook in the mid to long term.Memory chip demand will remain significant in the third quarter, thanks to recovery in 5G hadnset demand and the availability of new games consoles.

Second-quarter 2020 revenues for TSMC, UMC, VIS (Vanguard International Semiconductor) and other Taiwan-based wafer foundry service providers registered overall growth of 1.3% sequentially and 33.1% on year, according to Digitimes Research.The growth was mainly driven by the IC supply chain increasing inventory bracing for the coronavirus pandemic and meeting strong demand supporting remote working and learning.The foiundry houses' overall sales for third-quarter 2020 will rise 7.9% sequentially and 20.9% on year, Digitimes Research estimates.Demand for ICs used in 5G smartphones, 5G infrastructure and high-performance computing equipment in 2020 has been strong, and the foundries' overall revenues for the year will grow 23.3% to US$49.80 billion.

Oversupply in the memory market is likely to extend downward pricing pressure to the first half of 2021. Memory prices are expected to drop 10% in fourth-quarter 2020. Although demnd for memory products from the PC sector may be flat in fourth-quarter 2020, notebook brand vendors are all-out trying to secure shipments from ODMs to meet strong demand for notebooks in the months ahead. Meanwhile, ASML will soon unveil an EUV technology training center in Taiwan to better serve its major client, TSMC.Memory prices to fall 10% in 4Q20: Prices of memory chips, including DRAM and NAND flash, are expected to fall 10% sequentially in fourth-quarter 2020 with the downward spiral likely to continue into the first half of 2021 due to oversupply, according to industry sources.Notebook vendors all-out trying to secure shipments: Notebook brand vendors are resorting to all possible means, such as giving up attempts to lower ODM quotes, as they seek to secure smooth shipments from suppliers to meet increasingly strong demand in the months ahead, according to industry sources.ASML to set up EUV tech training center in Taiwan: ASML has announced it will set up its first overseas EUV technology training center at Southern Taiwan Science Park (STSP), giving a boost to the EUV technology cluster headed by TSMC.

AI adoption will be wider and inevitable for industry sectors other than software-based ones in the future, according to Andrew Ng, co-fouder of US-based online learning service provider Coursera.AI will bring about revolutionary changes which will be larger for non-software industries than for software-based ones, Ng said during a keynote speech at a recent AI forum hosted by Taiwania Capital Management.Many non-software enterprises, especially manufacturers, still hesitate about adopting AI tools, mainly because software-based companies' approach to adopting AI is not suitable for non-software-based ones, Ng noted. Big software-based enterprises may each have more than one billion service users, allowing them to easily collect big data that can be used to train AI models and develop algorithms. But it is impossible for an individual manufacturer to have one billion clients and use a much smaller volume of data to train AI models.An assembly line turning out a large number of smartphones may only see fewer than 100 with defects, which is insufficient to train AI recognition of defects, Ng said.When there is a lack of large volumes of data, GAN (generative adversarial network) is an alternative method of using a small volume of data for deep learning, Ng said.Based on McKinsey & Company's forecast, the global AI market value will increase to US$1.3 trillion in 2030. Besides software-based sectors, AI will be widely used in retail, tourism, logistics, automobile assembly, metal processing, production of advanced electronics and semiconductors, medical care, telecom, petrochemical production and agriculture. For example, Zoomlion Heavy Industry Science & Technology, a leading China-based maker of engineering and agricultural equipment, has used AI and sensors in grain harvesters to reduce grain leakage, Ng said.Taiwan's semiconductor industry is strong, but will have to maintain competitiveness by using AI, Ng said. For semiconductor firms, AI can be adopted for part of their operations initially, and if proven successful, its adoption can be extended to other parts, Ng said.

As demand for 5G mobile phones increases, the vapor chamber (VC) is emerging to become a key component in 5G smartphone thermal management. Competition is keen among vapor chamber suppliers, and there are at least more than 50 companies involved in this market segment. The ability to provide ultra-thin devices with high yield in mass production is the key to achieving technology leadership and gaining trust from international mobile phone brands.The thickness of VC devices in mass production now by major thermal module makers is at 0.4mm and 0.35mm. But the trend of design has been following smartphone brands' requirements for thinner VC devices with better performance. As a result, vapor chamber makers will be facing a very tough challenge attempting to fabricate ultra-thin high-performance devices.NeoGene Tech, a company headquartered in Guangzhou, China, has been devoted to revolutionizing the way of making ultra-thin vapor chamber devices for 5G smartphone applications. It has unveiled its patented MagicWick-Inside Technology Platform.MagicWick-Inside VC adopts the MagicWick structure and PWS (Print Wick Structuring) approach. By adopting PWS as well as MagicWick-Inside Technology Platform, vapor chamber devices with thickness of less than 0.3mm can be easily made with high efficiency wick structure and device performance.Wick structuring is recognized as a critical issue in ultra-thin vapor chamber fabrication once the device thickness is required to be reduced to only 0.25mm or even 0.2mm to meet further system application needs. The anti-gravity capillary force and the deployment of the wick structure inside an ultra-thin vapor chamber device are very critical to enabling good functionality of the device. Once the spacing in a vapor chamber is at a super narrow level, it will be very difficult for the traditional way of making copper-mesh type wick structure to achieve good capillary force and device performance.Furthermore, handling ultra-thin copper-mesh to make a complex-shape wick structure is also a tough and inefficient process in making vapor chamber devices. It results in a very low yield rate in volume production for vapor chambers with thickness under 0.3mm.According to NeoGene Tech, the MagicWick structure made by MagicWick Paste and PWS approach has excellent anti-gravity capillary force that quickens the transporting of the liquid phase and vapor phase of working fluids among condensers and evaporators, enhancing the thermal performance of the vapor chamber device. The thickness and porosity of the wick structure can be also precisely controlled at a very thin level by leveraging automatic stencil printing and sintering process as well as material characteristic of the Magic Paste.A brand new business model for vapor chamber devices manufacturing in the 5G smartphone supply chain, called PWS Foundry Service, will be launched by NeoGene Tech and its strategic partner in early 2021 to serve thermal module companies looking to volume-produce ultra-thin MagicWick-Inside VC devices. Furthermore, a MagicWick-Inside Technology Platform patent licensing program will be made available to VC device manufacturers as well, according to Jeffrey Chen, CEO of NeoGene Tech.According to Digitimes Research's latest findings, China's consumer market recovered in the second quarter of 2020, with the four major smartphone brands doubling their quarterly shipments, and launching at least 28 new 5G phone models, fueling shipment momentum. In addition, mainstream foreign brands will also be active next year to implement 0.3mm and even 0.25mm ultra-thin vapor chambers to meet application needs.NeoGene Tech unveils MagicWick-Inside Technology Platform for fabricating ultra-thin vapor chamber device used in 5G smartphone thermal management applicationsPhoto: Company