Smartphone shipments to the China market are expected to decline both sequentially and annually in the third quarter of 2020, after experiencing a robust on-quarter growth in the previous quarter, according to Digitimes Research.Smartphones sales in China surged 104.6% sequentially in the second quarter thanks to the easing of the coronavirus impacts, economic stimulus measures and the launch of new hanset models, Digitimes Research has found.Second-quarter smartphone shipments in China also represented a mild 1.4% growth from a year earlier.Huawei, Vivo, Oppo, Xiaomi and Apple were the top-five handset vendors in China in the second quarter, with their combined market share reaching 98.1%, up 1.4pp from a quarter earlier.As the current strength of components pull-ins by Chinese handset brands is not as strong as expected for the third-quarter traditional peak season and the effects of some stimulus measures are beginning to wane, smartphones shipments in China are expected to contract 7.9% on year in the third quarter, Digitimes Research estimates.But shipments from Huawei are expected to remain robust in the third quarter, allowing the vendor to eventually take up a nearly 50% market share in the third quarter.

There are many social networking platforms, but they have been unable to fill the very gap left wide open by the ongoing coronavirus pandemic that has been barring people from face-to-face physical interactions.Virtual reality (VR) may be the best option, enabling interactions almost as real and conveying emotions much better than just words, stickers and voices, according to XRSpace president Sting Tao, who recently talked to Digitimes in an interview.Q: How do you view development of social platforms amid the coronavirus pandemic?A: As the pandemic has separated people and restricted social activities, lack of face-to-face social interactions has made life lonely and uncomfortable despite communication via the phone and messaging apps.Interactions come in various forms: verbal expressions, emojis, and face-to-face physical meetings. More real interactions can lead to more emotional satisfaction.VR technology features immersive experience and along with 5G connectivity, gesture-based operation and technological development of virtual personification (avatar) can bring brand-new experience for social application.Q: In terms of social platforms, what has changed and what remains unchanged?A: Since social platforms are for interactions among people, the ability to convey expressions, emotions and feelings is the core value that cannot be changed. There are different ways of expression enabled by different technologies, but the key is faithful transmision of the messages and feelings.XRSpace thinks that VR bring better experience in emotional exchange and thus will become the technological mainstream in social application. In a bid to keep upgrading its XRSpace Manova, XRSpace has been constantly asking itself: Can our new services meet users' demand? Can the new functions make users feel easy to use and want to use them every day?Q: While other VR platforms focus their applications on entertainment, education, training or industrial purposes, why does XRSpace focus on social networking?A: VR gaming is exciting and VR video is interesting, but such applications lack emotional connection, making VR merely an entertainment tool and commercially a production tool.For emotional connection, VR cannot be used to only entertain individual users and instead has to enable individual users to connect with others.XRSpace Manova enables users to interact with their favorite characters from movies or animations. There can be other virtual scenarios where company managers, fitness coaches, teachers or tour guides can interact with the users.XRSpace has Manova-specific revenues coming from three sources: Sales of Manova hardware; sales of virtual items; sharing of revenues from partners marketing on the Manova platform. XRSpace will develop an online transaction mechanism on Manova for partners to sell online videos, educational courses, and tickets for concerts and sports events, etc. XRSpace will provide tools and management functions to help partners develop software, content and services on Manova.XRSpace president Sting TaoPhoto: Michael Lee, Digitimes, July 2020

HwaCom Systems, a Taiwan-based provider of system integration services, will be in charge of an experimental field for testing 5G IoV-based smart transportation solutions, according to company chairman and president Gary Chen.Under the transport ministry's planning, HwaCom will cooperate with the Taiwan branch of Germany-based Siemens Mobility and several local transportation research organizations, universities and enterprises to set up the experimental field in Tanhai New Town in northern Taiwan, Chen said.The experimental field is intended to become a framework for mutual Internet-based communications among vehicles, roads, people and networks, Chen said. HwaCom will match smart transportation solutions with the experimental field, enabling startup developers of such solutions to test technological and commercial feasibility of their ideas, Chen noted.As developers of smart transportation solutions may have difficulties accessing testing resources, HwaCom will simplify the application process for developers looking to use the experimental field, Chen indicated.Being a supplier of IoV equipment for the experimental field, Siemens Mobility will provide roadside and in-car C-V2X devices, road controllers such as smart traffic lights and Omniflow smart street lamps, said Thomas Stein, CEO of Siemens Mobility's Taiwan branch. Autonomous cars will share the use of roads with conventional cars and this will pose big challenges to IoV, Stein noted.The field will start operation in January 2021, said HwaCom.Tanhai New Town in Northern TaiwanPhoto: HwaCom Systems

Taiwan is becoming a hub for the server industry, with HPE, currently th esecond largest server brand worldwide, reportedly planning to move its server hardware R&D resources to Taiwan. In the PC sector, demand for Microsoft Surface devices is picking up thanks to growig stay-at-home economy. Judging from components orders, Microsoft Surface device shipments are expected to 30% growth in 2020. In the Apple supply chain, Chinese firm Luxshare reportedly is making aggressive moves, looking to become the top assembler for the iPhone.HPE reportedly to move server R&D to Taiwan: Hewlett Packard Enterprise (HPE) is reportedly planning to shift its server hardware R&D resources to Taiwan and is scaling down its existing operations in Houston, according to industry sources.Protective component makers see additional orders for Microsoft Surface series: Following a wave of rush orders in April-May, Taiwanese suppliers of protective components for notebooks and tablets have seen orders pick up again starting July, as brand vendors including Microsoft have moved to place additional orders to support increased shipments for remote work and education applications in the second half of the year, according to industry sources.Luxshare aims to lead in iPhone supply chain, say sources: With the acquisition of Wistron's plants in China, Luxshare aims to take over Foxconn's position as the largest iPhone manufacturer, according to sources from the upstream supply chain.

Taiwan-based TV makers saw their shipments surge 33.8% sequentially to 6.22 million units in second-quarter 2020 as demand from clients in North America remained strong despite the coronavirus impacts, according to Digitimes Research.In the second quarter, shipments of below 45-inch TV models expanded significantly, with those in the 32- to 39-inch segment showing the strongest growth and accounting for 28% of the total shipments. Meanwhile, the ratio of 4K models dropped to 44% in the quarter.TPV Technology was the top vendor in the second quarter, accounting for over 50% of total shipments. Fellow company Amtran Technology also performed robustly, buoyed by steady orders from clients in China and Korea.Thanks to prevailing stay-at-home activities, makers are expected to see the shipment momentum continue into the third quarter, with their combined shipments growing 20% sequentially in the quarter and also exceeding the amount shipped a year earlier, Digitimes Research estimates.Besides, the shipment ratio of above 60-inch models against total shipments is likely to climb to over 10% in the third quarter and those shipped to the North American market will account for nearly 50%.

China's upcoming 14th five-year plan (2021-2025) will continue to highlight technology and capacity upgrades as the core of its semiconductor self-sufficiency strategy, with foundry capacity projected to expand 40% from the preceding plan and fabrication process expected to advance to 7nm, according to Digitimes Research.Bolstered by national policies in the 13th five-year plan, China's IC manufacturing industry is expected to see combined revenues double to CNY240 billion (US$34.28 billion) in 2020 from 2016, and may also move 12nm to production by the end of the year after having volume produced 14nm process.But China's IC self-sufficiency rate is still far lower than the goal of 40% set in the 13th five-year plan, and its chip fabrication technology still lags behind international peers by three generations. This, coupled with the US-China trade war, will add uncertainties to the future development of China's IC manufacturing industry.Digitimes Research believes that the lingering US-China trade tensions will prompt China to step up efforts in boosting its IC self-sufficiency, including leveraging the National IC Industry Investment Fund (Big Fund) to develop its 7nm and specialty processes and expand its monthly capacity to an equivalent of one million 12-inch wafers, sharply up from its 13th five-year goal.

With Intel planning to outsource parts of its processor production to outside foundries, TSMC will not place extra effort to handle the CPU giant's orders if they come as TSMC believes these orders will not be for the long term. However, Taiwan's backend houses are optimistic about Intel's outsourcing and expect their operations to benefit from the orders. Meanwhile, Foxconn is stepping up its effort in striving for more orders from first-tier datacenter operators including Facebook and Google as the server market is now driven primarily by the cloud computing business.TSMC unlikely to build additional capacity for Intel orders: TSMC internally does not consider orders for Intel's processors as long-term ones, and therefore is unlikely to build additional production capacity for the new contract if it comes, according to industry sources.Taiwan OSAT providers expect Intel to step up outsourcing: Intel is expected to step up its outsourcing of chips and processors, particularly GPUs and IoT chips, for years to come, according to sources at Taiwan-based outsourced assembly and test (OSAT) providers.Foxconn revving up to expand presence in cloud server sector: Having obtained orders from Amazon Web Services (AWS) and Microsoft, Foxconn Technology Group (Hon Hai Precision Industry) is gearing up to win orders from Facebook and Google seeking to further expand its presence in the cloud server sector, according to industry sources.

China's handset vendors as a whole are expected to see their combined shipments experience a double-digit decline annually in the second half of 2020 as their export shipments would be still constrained by the persistence of the coronavirus pandemic in some overseas markets, while domestic demand has yet to recover its momentum, according to Digitimes Research.China's smartphone shipments expanded strongly by 43.3% sequentially to 157 million units in second-quarter 2020 thanks to inventory build-ups by channel operators and a low base recorded in the previous quarter, although the figures were still down 15.2% from a year earlier, Digitimes Research's figures show. The top-4 vendors – Huawei, Oppo, Vivo and Xiaomi – accounted for 82.3% of China's domestic smartphone shipments in the second quarter as they were forced to focus on shipments in the domestic market due to constraints at exports.Huawei saw its second-quarter shipments grow 2.1% on year, while Oppo, Vivo and Xiaomi all suffered on-year shipment declines, with Xiaomi experiencing a steep fall of 27.1% due to a significant setback in its overseas shipments.Although China's handset vendors are expected to roll out 5G phones priced roughly at CNY1,000 (US$143) in the second half to ramp up sales, weak domestic economy and job market and a lukewarm prospect for global economy will hurdle their shipments in the latter half of the year.

As Intel is facing troubles to improve its manufacturing processes, the CPU giant is now seeking outside help in production of some of its processors with TSMC having a high chance to be one of the partners. Meanwhile, PCB makers Zhen Ding and AT&S now together supply 60% of SLP used in iPhones and Apple Watch, leaving about 40% shared among smaller suppliers. Because of the uprising opportunity of 5G, ASE has been increasing its capacity of FC-AiP packaging and is looking to stay at the top of the industry for the 5G sector.TSMC EUV nodes to attract orders from Intel, sources say: Intel at its recent earnings call disclosed that its next-generation 7nm processors, including the company's first 7nm datacenter GPU design, would rely on external and internal process technologies, sparking speculation about TSMC being its potential foundry partner.Zhen Ding, AT&S lead in SLP mainboard supply for iPhones, Apple Watch: SLP (substrate-like PCBs) makers in the supply chain of Apple devices have ended their first wave of competition, with Taiwan's Zhen Ding Technology and Austria's AT&S each absorbing 30% of orders for iPhone and Apple Watch applications, according to industry sources.ASE ramping up FC-AiP packaging capacity: ASE Technology Holding has continued committing equity investments to build up its FC-AiP (flip chip-antenna in package) packaging capacity seeking to maintain its leading position in the sector, according to industry sources.

Memory demand for smartphones remains sluggish, and demand from the data center and server segment is slowing down, pushing up inventory levels at memory chip makers. But midrange smartphone chips from MediaTek are still expected to see significant demand, driving up output for the IC designer's backend service partners. Suppliers of ABF substrates also see strong order visibility, partly thanks to robust orders supporting 5G infrastrucutre construction.Memory chipmakers see inventory piling up: Memory chipmakers have seen their inventory levels start swelling amid continued weak demand for smartphones, according to industry sources.Backend houses ramping up output for midrange 5G handset chips: Taiwan-based backend houses and IC test interface solutions providers have started scaling up their output for midrange 5G smartphone chips designed by MediaTek for the China market, according to industry sources.ABF substrate suppliers see clear order visibility through 2021: ABF substrate suppliers including Unimicron Technology, Nan Ya PCB and Kinsus Interconnect Technology have all seen their order visibility extend into 2021, thanks to continued robust demand for HPC (high performance computing), 5G infrastructure and networking chips solutions, according to industry sources.