The top-5 notebook brands saw their combined shipments slip 14% on month in April, a performance stronger than that of the same month a year ago, as Chromebook demand from North America's education sector had picked up and replacement demand in the enterprise sectors in Europe and Asia remained robust.Lenovo was the largest brand in April, leapfrogging the previous number-one Hewlett-Packard (HP) thanks to its significant Chromebook shipments for procurement orders. The proportion of its orders to Taiwan-based makers also increased, according to Digitimes Research's findings.HP witnessed a nearly 40% on-month decline in April as the company had underperformed its competitors in the enterprise sector and was the worst performing vendor among the top-5.Dell, which also enjoyed high Chromebook shipments in April, only experienced a 1% on-month drop in shipments.The top-3 ODMs' combined shipments dipped 11% on month in April. Of the three makers, Wistron had the smallest on-month decline of 4% in the month, while the leading maker Compal Electronics saw its shipment gap with Quanta Computer significantly widen in April due to more orders from Lenovo.

The global IC packaging and testing market had a scale of US$28 billion in 2018 with the top-10 players commanding a combined 84% share. Three of the top-10 players are based in China. Of the four sectors in China's semiconductor industry, packaging and testing is the one with technologies closest to the worldwide level. This is because Jiangsu Changjiang Electronics Technology began its acquisition strategy early. Jiangsu Changjiang currently generates revenues of around US$3.64 billion a year, holding a global market share of 13%.Joining Jiangsu Changjiang in the global top-10 are Tongfu Microelectronics and Tianshui Huatian Technology. The three of them commanded over 20% of the worldwide packaging and testing orders.At the moment, Taiwan players are still the most competitive in the packaging and testing field. Taiwan-based Advanced Semiconductor Engineering (ASE), SPIL, Powertech Technology (PTI), King Yuan Electronics (KYEC) and Chipbond are all top-10 players. The five firms together are able to satisfy 44% of worldwide packaging and testing demand, and together with other Taiwan-based non-top-10 players such as Orient Semiconductor Electronics and Sigurd Microelectronics, they have controlled over half of the global packaging and testing market for the past 10 years.Taiwan players' control of the back-end process of the semiconductor industry, plus Taiwan's strength in IC distribution, forms a firm support for the competitiveness of Taiwan's IC ecosystem.(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)

Collaborative robots (cobots) are emerging as key automation tool in the Industry 4.0 era and enjoy greater growth potentials than traditional industrial robots, as they are flexible, lightweight and easy to program and move, and can better cater to the automation needs of small- and medium-size enterprises (SMEs), especially those engaged in electronics assembly.Unlike traditional industrial robots, which perform their work in physically isolated places, cobots come into direct contact with their human colleagues for man-machine collaborative operation. Cobots already replaced traditional industrial robots to take center stage at the 2019 Hannover Messe held in early April in Germany.According to the 2018 World Robotics Report released by the International Federation of Robotics (IFR), cobots will see the fastest growth in the future global robot market, with the largest growth momentum to come from the electronics manufacturing sector.This is because flexible production is increasingly needed by manufacturers, and the high mobility and agility of cobots can facilitate their flexible production deployments.To meet the robust market demand, Denmark-based Universal Robots (UR) has rolled out three different cobot sizes with payloads of 3kg, 5kg and 10 kg, which can be easily integrated into existing production environment. The company has sold over 34,000 cobots around the world that are used in thousands of production environments.UR's Greater China Region head BK Su noted that his company hopes to develop customized DIY collaborative robotic arms based on client-conceived ideas about key aspects ranging from assembly to execution command, so as to further boost the market acceptability for robotic arms.Taiwan's Techman Robot, a subsidiary of Quanta Computer, now offers a variety of cobots available in mobile, regular, medium and high payload series, applicable to electronics, food, automobile, semiconductor and panel manufacturing sectors. The firm's cobots can be integrated with pallets into a mobile robotic workstation.

Within China's semiconductor industry, the IC design sector actually achieved the most progress in 2018. But how big exactly is China's IC design industry? There have been many versions of the story.According to IC Insights' figures, the global IC design industry had a scale of US$109.5 billion in 2018. Of the annual orders of US$57.73 billion for foundries, 18.5% came from China-based clients. Judging from the proportion, we can assume that China's IC design industry had a scale of US$20.2 billion in 2018, a level similar to that of Taiwan, but higher than those of Japan and South Korea.Orders for foundry services from China also went up sharply by 41% on year from 2017's US$7.57 billion to US$10.69 billion in 2018.TSMC also saw its orders from China-based clients rise dramatically from 2017's US$3.7 billion to 2018's US$6 billion, up 61% on year. Although TSMC did not process all these orders at its fabs in China, China's IC design houses saw their combined contribution to the worldwide foundry market rise from 2017's 13.8% to 2018's 18.5%, an impressive growth providing key incentives for many to invest in China's foundry sector.(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)

China at the moment has as many as 30 semiconductor fabs under construction - the most ambitious investment plan the global semiconductor industry has ever seen. China's memory industry was originally meant to be a key growth driver, but it has lost momentum after the US ban on exports to China-based DRAM maker JHICC. On the other hand, China's wafer foundry sector continues seeing expansions with at least 13 local fabs eyeing business opportunities in the sector.Of the existing foundry houses in China, SMIC's capacity is the largest, followed by Shanghai Huahong Grace Semiconductor Manufacturing and then Taiwan-based TSMC. However, SMIC's business focus is on the 28nm node, which is a very competitive market segment that offers low profits. However, SMIC has recently obtained a US$10 billion fund for it to invest in 14nm process development. SMIC is now aiming to have its 14nm process begin mass production by the end of 2019 in a bid to break free from the fierce competition in the 28nm segment.TSMC's 200mm fab in Shanghai was not a major production facility for the maker. But the establishment of a new 16nm fab in Nanjing in 2018 helped advance China's semiconductor process. And TSMC's revenues from its China production are expected to grow from 2018's US$950 million to US$1.8 billion in 2023.TSMC originally planned to expand its Nanjing factory with new 7nm capacity, but may switch the expansion plan to a 12nm node due to the US-China trade tensions.(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)

If data collected from production process can be well concatenated, then problems affecting production efficiency can be quickly spotted through big data analysis, according to Alex Hsu, CEO of TAO Info, a Taiwan startup dedicated to offering data analytics to help manufacturers diagnose their production lines and optimize production process.In achieving smart production, Hsu said, data collection and analysis is crucial preparatory work, but Taiwan manufacturers still have much room for improvement in this aspect as many of them are just starting to use data analysis for single purpose such as defect image analysis or predictive equipment maintenance.Hsu stressed that the final purpose of smart production is not to enhance the performance of any single system but to optimize the entire production process and boost yield rates through AI-based analysis of concatenated data.Hsu, who used to engage in the semiconductor sector, said it is a thorny problem for IC engineers to locate production-affecting factors from among thousands of frontend processes, just like looking for a needle in a haystack. But in analyzing big data, he continued, algorithms can be used to define problems through a huge amount of parameters concerning machinery, material, formula, operator and environment and quickly sort out key factors affecting production in accordance with correlation among the parameters. Such a practice is aimed at narrowing the range of possible factors.Hsu continued that most AI or neural network analysis technologies can now be applied to deal with correlation rather than the cause-and-effect relation between process parameters and production problems, and therefore his company can use a search engine to sort out the most likely relevant parameters by conducting a correlation-based sequencing of all the parameters, allowing engineers to quickly address problems.Manufacturers can also incorporate AI to achieve smart product traceability in addition to smart production, Hsu noted, furthering that many consumer electronics vendors including Lenovo, Huawei and Dell have asked their supporting partners to actualize "digital twin" applications, so as to concatenate all the production processes of the entire supply chains.TAO Info CEO Alex HsuPhoto: Chloe Liao, Digitimes, May 2019

The different sectors of the semiconductor industry are clearly defined with specific work, and therefore each sector's self-sufficiency rate must be looked at in their own right. The meaning of "Made in China" would mean little if seen in a confusing perspective. Lumping together the production values of IC design, manufacturing, and packaging and testing can only provide a clue to the entire scale of the semiconductor industry, not to its self-sufficiency.According to IC Insights' numbers, the production value of wafer manufacturing at fabs in China - including those run by local and foreign investors - was US$23.7 billion in 2018. Compared to the worldwide semiconductor market's amount of US$430.8 billion, China's semiconductor industry only had a global market share of 5.5%. Compared to China's overall demand for semiconductor of US$251.1 billion, the local production accounted for only 9.4%. But if only demand from local players such as Huawei, Lenovo and Xiaomi is taken into consideration, the local production's contribution will rise to 15.2%.As the government of China has been aggressively pushing its semiconductor development, the local industry's production value is expected to rise to US$47 billion by 2023 if no major external influences get involved. Compared to the worldwide semiconductor industry's US$571.4 billion, China's share will pick up to 8.23%. However, the research firm indicates that the growths will be driven by Wuhan Xinxin Semiconductor Manufacturing as well as companies in the "Others" section in its findings, and it does not mention how the US-China trade tensions could affect China's semiconductor industry, which suggests that the outcome is still unpredictable.As for China's Made in China 2025 project, which sets the goal of achieving a self-sufficiency manufacturing rate of 40% by 2020 for its semiconductor industry and 70% by 2025, it would be rather difficult to accomplish judging from the current developments.(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)

Undoubtedly the semiconductor industry is a key factor underlying the US-China trade war. However, when we try to understand the strength and progress of China's semiconductor industry, we discover that all the figures seem connected and yet cannot be compared directly. The production value of the wafer manufacturing industry should not be combined with that of IC design, as the two sectors have completely different business structures. Reading the semiconductor industry's figures is like viewing a country's budget plan, both filled with hidden, curious and unanswerable parts.Basically, the semiconductor industry can be categorized into four major areas: wafer manufacturing, IC design, packaging and testing, and upstream equipment and materials. China has been aggressively pushing developments in all four fields, but what the country lacks is also quite obvious.Figures from major research firms were all different, but were not too far from each other. IC Insights estimates that worldwide IC demand was US$430.8 billion in 2018 and will rise to US$571.4 billion in 2023. Meanwhile, China imported US$312 billion worth of semiconductor products in 2018, and its trade deficit in semiconductors amounted to US$227.4 billion in the year. If China's local IC manufacturing industry's production value of US$23.7 billion is included, China's demand for semiconductor totaled US$251.1 billion in 2018, accounting for 58.3% of the worldwide semiconductor consumption.However, the amount should still be divided in terms of usages: consumption by the local semiconductor industries and markets, and by production for foreign clients. Domestic consumption accounted for around 30% of worldwide demand from 2013-2016, but the percentage already increased to 36% in 2018 or an amount of US$155 billion due to the aggressive expansions of China's smartphone vendors globally, according to IC Insights. The four major China-based smartphone vendors, Huawei, Lenovo, Xiaomi and BBK were all in the top-10 rankings in terms of semiconductor purchasing in 2018, together spending as much as US$60 billion.Semiconductor demand mainly coming from Taiwan and non-China ICT players including Foxconn, Pegatron, Wistron, Quanta Computer, Inventec, Sony, Samsung and LG contributed a total of US$96.1 billion. That means, of China's US$155 billion semiconductor demand in 2018, 62% came from local players and 38% from non-China players.(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)

Prior to 2000, the majority of China's industry was basically manufacturing businesses expanding from the Pearl River Delta to the Yangtze River Delta, and then onto Chengdu and Chongqing. However, with the production ecosystem growing mature, many of the supporting sectors also started to take shape, giving a new outlet for China's industry.In 2000, SMIC was founded in Shanghai, becoming the pioneer of China's semiconductor manufacturing industry. In 2002, BOE announced its advancement into the LCD panel manufacturing industry. The two firms were the pioneers of China's key components sectors.The two companies primarily relied on domestic clients initially. With investments from local governments, the two makers were able to quickly expand their production and business model to help local panel and semiconductor industries reach where they are now.China's handset industry that began to develop rapidly around 2000 was initially a sector that focused mainly on copycat feature phones. After going through waves of elimination and innovation, it was able to establish its own ecosystem and competitiveness, forming the foundation of China's dominance in today's smartphone market.South Korea fell victim to the rise of China. Its dominance in the steel industry was broken by China in 2003, and its petrochemical industry was also caught up by China's in 2004. In 2009, South Korea's shipbuilding and car industries both lost out to China. South Korea's shipbuilding industry faced huge losses and pressure to lay off workers. With an economy only one eighth of China's, South Korea could barely fight back.China then surpassed South Korea in the smartphone manufacturing and panel industries. And now South Korea's memory industry - its last lifeline - may also be in danger due to competition from China. In 2018, South Korea's semiconductor exports totaled US$108.9 billion and of Samsung's profit of US$52.7 billion in the year, around US$40 billion was contributed by its semiconductor business.Amid the US-China trade tensions, China is seeking to expand its memory manufacturing and the move will significantly affect Samsung's profitability, which may be halved to only US$20 billion in 2019, according to forecast from South Korea.(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)

Shipments of large-size (9-inch and above) LCD panels by Taiwan's makers (excluding Sharp) are set to expand 4.9% sequentially in the second quarter of 2019 despite intensive competition from China-based rivals, Digitimes Research estimates.The sequential gains will come after Taiwan makers saw their shipments shrink 12.8% sequentially to 54.4 million units in the first quarter, affected by annual maintenance by some makers during slow season and reduced shipments from Chunghwa Picture Tubes (CPT).Additionally, increased TV panel shipments from China-based players, including BOE Technology, CEC-Panda LCD Technology and Irico Electronics, also weighed on the shipment performance of Taiwan's panel makers in the first quarter.Looking ahead, some device brands are likely to step up their purchases of panels in advance on concerns that current shortages of COF substrates for production of 4K TVs and high-end smartphones could worsen in the second half of the year, therefore pushing up Taiwan's shipments of large-size panels in the second quarter.Meanwhile, Digitimes Research believes that the squeezing effect of increasing large-size panels from China's makers will also weigh on Taiwan's shipments of monitor and notebook panels over the long term in addition to the current impacts on TV panels.