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.

With 5G services kicking off in Taiwan in July 2020, cloud applications and IoT innovations are rapidly rolling out. NTPC-AWS Joint Innovation Center founded by New Taipei City Government, Amazon Web Services (AWS), and FCC Partners Inc held its third Demo Day: The Innovators 3 on July 15, with Chee Ching, general manager, FarEasTone (FET) Telecom, delivering a speech shedding light on 5G opportunities, and Unblock Analysis winning The Startup with Most Investment-Potential award for its innovative cloud system Know Your Transaction (KYT).Unblock Analysis said its KYT checks details of every online transaction conducted all over the world using artificial intelligence (AI), providing comprehensive services encompassing everything from basic name verification to client risk identification. It traces blockchain and cryptocurrency transactions to counter against money laundering. Nicknamed "Sherlock Holmes of the digital world," Unblock Analysis will represent Taiwan to participate in the establishment of standards for anti-money laundering at the 2020 G20 Summit.Chee Ching: Unparalleled 5G speed unleashes creativity"3G network is like a highway, 4G a freeway and 5G an overpass. A rapidly increasing number of applications enabling digital living will spur explosive 5G growth," noted Ching. The telecom sector is not the so-called "dump pipe" but a leader that aggregates top-notch efforts to propel the industry forward. The availability of 5G has brought telecom services to a whole new level. How 5G services will invigorate the market will depend on the creativity of startup teams. Ching expects blistering 5G speed to spark limitless ideas for all applications and services whether they are 2B, 2C or B2C. 5G will drive Taiwan's economic growth, allow people to enjoy conveniences brought by technological advances and enable a win-win for all.According to CY Huang, president of FCC Partners, the planning of NTPC-AWS Joint Innovation Center took two years but it has already held three Demo Day events in just a little over a year, with the application for the fourth Demo Day now open. This goes to show Taiwan is quickly building up its startup energy. On top of that, Taiwan stands in an unprecedentedly advantageous position amid the COVID-19 pandemic and US-China trade tension. Global investors are attracted to Taiwan and have begun to make moves toward ICT, biotechnology, renewable energy and electric cars. Huang is optimistic about the prospect of startup funding. Moreover, despite falling behind other Asian countries in 4G deployment, Taiwan will not only catch up in 5G development but will actually turn the tables, wherein its startups will play a pivotal role now with 5G support, said Huang.Ming-Ji Wu, deputy mayor, New Taipei City, pointed out that some entrepreneurs have begun to hand over their businesses to the second or even third generation. This presents a good opportunity for startup teams to make their way into the mainstream and help the industry chain upgrade. AWS representative Nicolas Vautier responded, "Innovation is carved in Amazon's DNA. We have the ability and resources to help startups succeed. More and more startups will benefit from AWS and the community and thereby realize their value in their target market."Teresa Yang, chairman, CardinalRain, summarized that NTPC-AWS Joint Innovation Center has assisted 50 startup teams through the three rounds of Demo Day events since its establishment. More than 30% of the startups have received funding.Unblock Analysis stands outDemo Day 3 attracted a big crowd with the COVID-19 situation in Taiwan easing. More than 100 venture capital fund managers and corporate investment decision makers as well as 23 judges with industry, government, academic and research backgrounds took part in the event. Live webcast of the event was available in Mandarin and English for the first time to engage global viewers. With over 1,000 people watching the session, Demo Day 3 had the highest number of attendees among all three events. At Pitch Time, 14 startup teams shared their innovative and marketable solutions spanning across 5G, finance, manufacturing, tourism, city development, sports, education and retail. Two foreign venture capital funds have expressed interest in making investments.Unblock Analysis, comprising MIT graduates returning to Taiwan, grabbed the US$100,000 prize offered by FCC Partners. CEO Ernie Ho commented that the global market capitalization of cryptocurrencies has come to US$300 billion. Cryptocurrencies are here to stay and they cannot be ignored. When they finally go mainstream, they will be subject to strict government supervision. Designed with unique compliance monitoring technology to trace every transaction, Unblock Analysis' KYT will play an indispensable role.Leveraging AI to address the anti-money laundering challenges arising from cryptocurrency, Unblock Analysis provides comprehensive cryptocurrency investigation software and crypto-asset services to help crypto-asset service providers, banking institutions and government agencies automatically identify high risk transactions from billions of transactions and generate Suspicious Transaction Reports (STR) compliant with anti-money laundering regulations of governments around the world. Unblock Analysis was invited to testify in the US congress in 2018. Japan's Financial Services Agency (FSA) listed Unblock Analysis as a trusted anti-money laundering service provider in 2019. In 2020, Unblock Analysis beat more than 200 teams from all over the world and won the chance to represent Taiwan to take part in the setting of anti-money laundering standards at the G20 Summit, successfully leading Taiwan to foray into the international fintech scene.CodingBar, endeavoring on online education innovations, uses big data analytics to train AI to become teachers helping students learn how to write computer programs. It looks to revolutionize education through technology. CodingBar won both the Most Popular Startup and Corporate Partnership Prize, a booth in AWS Taiwan Startup Day and US$10,000 credit for AWS fee offered by Sysage Technology.Starting with the blue ocean market of teenage education, CodingBar has expanded from Taiwan to Southeast Asian countries. Its Summer 2020 revenue is 2.6 times of last year's. With a long-term goal to transition from physical to online courses, it will be offering online courses to over 100 education organizations, helping address the shortage of computer programming teachers using an AI-based platform and ease teachers' burden of lesson planning and teaching. Its innovations will integrate online and offline education, for example, remote live webcast and self-study, to enable students to learn computer programming anywhere, anytime, like learning English.There were other startup teams participating at Demo Day 3. To mention a few, Authme, GeoThings, Wholesenses and SolutionStor combine cloud storage and AI computing. Wish Mobile develops a mobile member relationship management system that has successfully penetrated into department store chains, retail channels and restaurant brands. Everduit offers solutions for businesses to deploy consumer drones. SELLERLINX and Rosetta.ai target e-commerce. Funliday and MeetAgile focus on leisure and sports. Hardware innovators include Interxie, which develops energy storage management solutions, and Teletrx, which develops optical communication chips.NTPC-AWS Joint Innovation Center welcomes applications for the fourth batch of Accelerator Program"They are not only telling stories of Taiwan but also stories of the whole world," said CY Huang, president of FCC Partners, when concluding Demo Day 3. NTPC-AWS Joint Innovation Center enables vibrant startup teams to disrupt Taiwan using technology. NTPC-AWS Joint Innovation Center is now in search of startup teams to join the fourth batch of Accelerator Program event and welcomes applications from teams working on solutions in smart retail, smart manufacturing, smart healthcare, smart city, smart living and 5G applications. Those interested can submit their applications by July 31 and join NTPC-AWS Joint Innovation Center.Startup teams and guests at Demo Day 3 organized by NTPC-AWS Joint Innovation CenterChee Ching, general manager, FarEasTone Telecom, delivering a speech at NTPC-AWS Joint Innovation CenterPhoto: NTPC-AWS Joint Innovation Center

Datacenter server demand is expected to remain robust in the coming months. And Wiwynn, a subsidiary of Wistron, reportedly will land about half of Microsoft's datacenter server orders for 2021. But for server shipments to brand vendors, Wistron may be affected by Dell's plan to increase orders for Compal in 2021. Datacenter applications remain a source of optimism at a time when the outlook for many other segments looks uncertain. But Micron Technology executive VP Sumit Sadana has told Digitimes that smartphone demand should be picking up later in second-half 2020.Wiwynn obtains major datacenter server orders for 2021 from Microsoft: Wiwynn, a cloud computing server affiliate of Wistron, is expected to secure around half of Microsoft's overall datacenter server orders for 2021, according to industry sources.Dell to ramp up server orders for Compal: Dell is planning to increase its server orders placed with Compal Electronics for 2021, and Dell's other partners such as Inventec, Foxconn Technology Group (Hon Hai Precision Industry) and Wistron are all expected to impacts to their orders, according to sources from the server upstream supply chain.Micron gearing up for handset market boom in 2H21: Micron Technology remains optimistic about its operations in the fourth quarter of fiscal 2020, thanks to continued strong demand for data center applications, and the company's efforts to push toward high value-added products, according to Sumit Sadana, executive VP and chief business officer at Micron Technology.

Demand for TWS earbuds may be robust, but prices for chips supporting these devices have been fallign fast, thanks to keen competition between IC design houses. Pricing for some TWS earbud chips has fallen below US$1. Apple is expected introduce its next-gbeneration AirPods next year, with manufacturing partners ready to gear up production at their plants in Vietnam. While Vietnam is becoming an important production base for AirPods, Apple's bid to diversify production risks could turn India into a hub for making the iPhone, according to some industry observers.TWS earbud chip prices fall below US$1: Unit prices for some SoC chips used in true wireless stereo (TWS) earbuds have fallen below US$1, and are still under downward pressure this year due to fierce competition among China- and Taiwan-based suppliers, according to industry sources.AirPods assemblers gearing up for production in Vietnam: Apple is scheduled to roll out its third-generation AirPods series earbuds in the first half of 2021 followed by the launch of a new-generation AirPods Pro in the second half of next year, with related assemblers gearing up for production at their plants in Vietnam, according to industry sources.Apple diversifying production risks: India could become a major production base for iPhone following a recent shakeup in Apple's supply chain in the form of Taiwan-based Wistron selling two of its China plants to Chinese maker Luxshare, according to industry observers.