Disconnected ICT Supply Chains: New Power Plays Unfolding written by Colley Hwang, founder & president, DIGITIMES, is among the very few books available at present that take an in-depth look into current global supply chain developments. It immediately grabbed industry attention after publication in late May 2020. A group of industry leaders gathered at a book reading event at the end of July to share their experiences in coping with COVID-19 impacts over the past six months and validate the visions given in the book.In his opening remarks, the event host, Winston Hsu, professor, Department of Computer Science and Information Engineering, National Taiwan University, noted the enormous impacts COVID-19 is exerting on industries worldwide. The US-China trade tension that started in 2018 also has far-reaching implications for global industries. The two factors have fundamentally changed the world economy and industry dynamics going forward. However, not all are suffering from the changes.The industry leaders taking part in the event agree with Hsu. They generally think it is imperative that corporations stay on top of current trend of events whether it's COVID-19 or US-China trade tension. The firms that are able to turn crisis into opportunity and benefit from the situation are those well prepared at the onset of the trade tension or the pandemic. When faced with the changes, they can immediately implement strategic moves that allow them to reduce dependency on suppliers and maintain normal business operation.From a macro perspective, few companies can take preemptive actions and make the right decision at the right time. Most business operators admit they were taken by surprise when first confronted with supply chain disruptions. However, as they worked hard to address all sorts of challenges over the past six months, most businesses have established contingency measures, the most common among which is the use of wide-ranging remote collaboration technologies to enable uninterrupted communication both inside and outside the company.The participants shared their practices and thinking with respect to teleconferencing and online tools at the book reading event. Businesses have grown accustomed to using remote collaboration platforms over the past few months. However, the challenge is not how to make use of such platforms internally to hold meetings but how to use them to generate sales leads. A corporate leader drew on his company's experience and emphasized the necessity to adopt new thinking and new practices. For example, his team set up a live webcast studio in the company and produces online content in a systematic approach, which presents product information to customers clearly and efficiently. More than that, it also provides a means for delivering customer care and maintaining customer stickiness, free of COVID-19 influences.Talking about COVID-19 impact on the industry as a whole, the participants uniformly pointed out that businesses scrambled to grab supplies from the market out of a strong sense of crisis in the first and second quarter. This even resulted in record-breaking revenue for some vendors in the first half of the year. Going forward into the second half of 2020, the outlook does not seem promising with COVID-19 still going strong. A participant raised a different point of view, saying that the pandemic will fall under control sooner or later, possibly by 2021 when vaccines become available. As consumers and businesses reduce spending in the wake of COVID-19, they keep a large sum of cash on hand. As such, after COVID-19 passes, the market will enjoy a strong rebound. Businesses need to start planning in the second half of 2020 if they want to capture opportunities coming up in 2021. For example, the participant's company plans to move from defense to offense starting in the third quarter while picking up the pace with its undertakings. In sum, COVID-19 will spur a market reshuffle and businesses that are hunkering down also need to closely watch market changes and act swiftly when opportunities arise.Industry changes occurring at present include not only those to internal corporate operations but also those in external industry environments. Following a disconnected supply chain, deglobalization is definitely coming. Corporations' global operations must take localization into consideration, leverage local workforces and adapt to local cultures and policies. For example, in China, the government will impose more rigorous standards toward IT equipment purchase in view of the US-China trade tension, making it difficult for firms with American affiliations to do business in China if they continue with their old sales approach. They will have a better chance if they transition from selling hardware systems to providing software services. Such a business model will work not only in China but also in the rest of the world.Aside from the pandemic, 5G and AI are also major trends dictating industry changes. According to Hsu, the industry has been treating the two technologies individually. A look into market dynamics over the recent two years indicates that 5G and AI developments will integrate. More than AI, 5G will be combined with a slew of other new technologies including big data analytics, cloud computing and block chain. 5G- and AI-enabled devices will become standard equipment to all sorts of industrial systems. Commenting on industrial applications, a participant noted smartization is well underway across different industries and called on vendors to keep a close watch on developments in various fields. Healthcare and manufacturing are the two focus areas at present. AI applications in healthcare may be catching more attention but there are high barriers across different medical specialties, which prevents the sharing of AI training models and thus slows down AI popularity. To address this, industrial alliances should be formed to share R&D results. Manufacturing, on the other hand, is among the very few areas where profit has been made with AI implementations. Nevertheless, vendors looking to expand into AI for manufacturing are advised to develop products with differentiating features so as to successfully tap smartization opportunities.Colley Hwang, president, DIGITIMES (left), and Winston Hsu, professor, Department of Computer Science and Information Engineering, National Taiwan University (right)Winston Hsu analyzing the influences of COVID-19 and US-China trade tension on Taiwan's industries

The US trade sanctions on Huawei are expected to hit consumer confidence further, sending memory chipmakers bracing for weak shipments in second-half 2020. Despite the US-China trade rows and the coronavirus pandemic, Taiwan's PCB production managed to record a 3.4% onyear growth in sales value in second-quarter 2020, thanks to makers' shipments for high-end applications. And Taiwanese PCB makers are keen on developing applications for niche market segments, with the satellite sector being a promising one for them.Memory shipments likely to disappoint in 2H20: DRAM and NAND flash shipments are likely to disappoint in the second half of 2020, due to weakening demand for Huawei smartphones, as well as shipments for notebooks hit by several component shortages, according to industry sources.Taiwan PCB output value up 3.4% in 1H20 despite headwinds: Taiwan's PCB industry recorded production of NT$298.1 billion (US$10.15 billion) in the first half of 2020, growing 3.4% on year despite impacts of the coronavirus pandemic and US-China trade tensions, according to data compiled by Taiwan Printed Circuit Association (TPCA).Taiwan PCB makers eyeing satellite applications: Taiwan PCB makers are eyeing new business opportunities associated with low earth orbit (LEO) satellites, especially those for ground supporting equipment, in the wake of SpaceX successfully launching over 600 Starlink internet satellites into the orbit, according to industry sources.

US electric vehicle (EV) startup Canoo has attracted investments from two Taiwanese companies - touch module maker TPK Holding and passive component maker Yageo.TPK will invest US$100 million in Canoo, while Yageo will participate in the equity investment of Canoo through its subsidiary Yageo Bermuda for an of US$10 million.Canoo, based in Los Angeles, focuses on EV design and development. Canoo has designed a modular skateboard to deliver the maximum vehicle interior space per footprint area while, through its proprietary skateboard technology, offering low development cost and design flexibility for its internal B2C car models and its B2B strategic partners, according to Yageo.Canoo is now projected to start its mass production in first-half 2022, said Yageo.Canoo has also announced a planned merger with Hennessy Capital Acquisition Corp IV (HCAC), a special purpose acquisition company, seeking to make Canoo a publicly listed company.Yageo said it has paid close attention to the development of automotive electronic technology in recent years, and has also continued to expand its global presence of automotive electronic components.Following the acquisition of wireless and automotive component maker Pulse Electronics in 2018, Yageo has just completed the merger of Kemet, an automotive passive components supplier in 2020.

The mounting US trade sanctions are driving HiSilicon to the brink, and many engineers have left the Huawei IC design arm's team in Taiwan. Huawei, struggling to survive the US trade ban, reportedly is looking to build its own 45nm chip fabs without using US technology, a move industry observers describe as "mission impossible." But in the device manufacturing sector, Chinese makers, reportedly with strong support from Apple, is fast expanding their presence in the US tech giant's ecosystem, the latest being Lens Technology's planned acquisition of smartphone chassis plants in China from Taiwan-based Catcher Technology.HiSilicon team in Taiwan shrinking: Huawei's chipmaking subsidiary HiSilicon has seen many of its staff in Taiwan leaving amid increasingly tough trade sanctions from the US on the Chinese tech group, according to industry sources.Huawei reportedly looking to build 45nm chip fabrication lines without US tech: China's Huawei reportedly is looking to build its own 45nm chip fabrication lines without US technology this year, which industry sources believe is "mission impossible."Catcher to sell smartphone chassis plants to Chinese firm: Catcher Technology has announced it plans to sell two of its smartphone chassis plants and related facilities in China to Lens Technology, a Chinese firm which is reportedly a cover glass supplier for iPhone devices.

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.