Taiwan tech firms have made considerable achievements in the EV sector, having entered the supply chain of Tesla. But as the car market is still dominated by traditional marques who are now also keen to continue the market of future cars, Taiwan tech firms face quite some hurdles to entering the supply chains of these major car vendors. With the easing of the pandemic possibly slowing demand for devices supporting stay-at-home needs, chip vendors are now said to be expecting Chromebook shipments to grow at a slower pace in 2021. Corning has announced a moderate price hike to its display glass substrates in third-quarter 2021 to reflect rising production costs.
The top-100 tech firms in Asia are mostly based in Japan, China, Korea and Taiwan, with the car and tech products/equipment sectors making up the two largest groups, according to Asia Supply Chain 100 (ASC 100), the freshly released research results by Digitimes. The ASC 100 study, based on the companies' revenues, profit and market cap, wil be renewed annually. In the notebook industry, makers are using more aluminum-alloy components to replace copper ones, as copper prices stay at high levels.
Intel has announced two new Tiger Lake-U Refresh processors at Computex 2021, but tight supply of the latest CPUs is undermining notebook vendors' plans of launching devices using the new offersings from the US chip giant. In China, LCD panel maker BOE Technology reportedly has plans to build its third 10.5G line, which could send the global market in the direction towards oversupply. In the semiconductor sector, Taiwan-based IC distributors are set to see significant sales in 2021, particularly those with a significant presence in the memory segment.
Notebook ODMs still see robust orders from clients, but productions have been seriously hampered by component shortages, with notebook shipment results vary from maker to maker in May. In the memory market, NOR flash prices are expected to surge in third-quarter 2021, stimulated by smartphone spec upgrades. According to Digitimes Research, global smartphone shipments are set to grow in 2021.
The PC sector has endured months of shortage of components, and the recent surges in COVID infections in Taiwan and Malaysia are threatening to worsen the component shortfall. Demand for notebooks is expected to remain robust through the end of 2021, and Taiwanese notebook and graphics card makers have reported strong sales for May. And foundry service supply is expected to remain extremely tight throughout 2021, with some clients having already booked capacity for next year and even 2023.
Taiwan's tech firms have intensified coronavirus-prevention measures after COVID-19 hit some local semiconductors plants, with KYEC bearing the brunt of the impacts, raising concerns about the stability of IC supply that has already been troubled by capacity shortage for months. In the IT market, despite speculation that demand for notebooks may weaken in second-half 2021 as a result of easing of the pandemic, ODMs are still confident about notebook orders throughout the year. In India, Lava International reportedly is preparing for IPO, as it seeks to reclaim lost ground in the local handset market.
Taiwan's ICT supply chain, especially semiconductor backend houses have seen rising COVID-19 infections among their workers. Around 180 employees of KYEC had been diagnosed for being infected with the coronavirus as of June 5. However, MediaTek is still optimistic about its sales for the second quarter, despite KYEC, a major backend services partner of the chip supplier, had closure of production lines for two days. MediaTek is working closely with KYEC to mitigate the impact. On the other hand, demand for miniLED backlighting boards has been picking up as miniLED-based gaming and creator notebooks have seen rising sales.
Components shortage has been troubling the PC sector for months. PC brand vendors, seeking to secure components supply, have moved to directly place orders with IC design houses, skipping their ODMs. Apple is expected to unveil two miniLED-backlit MacBook Pro devices later this year. As its present supplier of miniLED backlighting applications is unlikely to be able to fully support the production for the new devices, Apple reportedly has enlisted Osram Opto as a second supplier. Qualcomm is gearing up its deployment in the notebook processor market. Its 5G PC processors are targeting the high-end commercial segment and the lower-end consumer/education segment.
With AMD and Nvidia debuting their new gaming GPUs, the DIY PC market particularly the high-end segment is poised to grow in the second half of the year when the latest flagship graphics cards hit market shelves. In the handset market, Apple is keen on pushing 5G mmWave technology. Over 50% of the shipments for the next-generation iPhones to be launched later this year will come with mmWave support. And TSMC has unveiled its tech development in an online symposium.
The number of Chinese makers in Apple's top-200 supplier list for 2020 is comparable to that of Taiwanese firms. But industry observers believe Taiwanese suppliers' manufacturing flexibility still give them some advantage in the Apple supply chain over their Chinese competitors. GigaDevice, who in 2020 unseated Taiwan's Winbond Electronics as the sole NOR flash supplier for Apple's AirPods, is eyeing a bigger share in the TWS device market. The annual IT tradeshow Computex has kicked off its 2021 edition - a month-long virtual event.
The car industry, hit hard by chip shortages, has been scrambling for foundry capacity support. UMC's latest US$3.5 billion fab expansion project has already obtained pre-payment commitments from chip vendors, the latest reportedly being NXP. Notebook vendors do not expect demand to weaken much in 2020, with current notebook supply remaining far short of demand amid serious component shortages. For Acer, PC sales are booming, but its non-PC business has seen even stronger growth.
Demand for ABF substrates from chip vendors has been strong, wiht new orders placed now unlikely to be delivered until 2023. Some chip vendors have offered higher prices trying to jump the queue, but ABF substrate suppliers have had to turn them down because of their tight capacity. Chipmakers are also striving to secure supply for aQFN leadframe, with the segment's order visibility already extending to February 2022. Memory prices are poised to rise in third-quarter 2021, with NAND flash pricing to climb faster than DRAM.
Chinese handset vendors are turning pessimistic about shipment prospects amid tumbling demand in India where COVID cases have been soaring. Chinese handset vendors have now further cut their overall shipment goals for 2021. In China, LCD panel makers are increasing capacity at their existing 8.6G and 10.5G lines, rasing concerns about oversupply. In Taiwan, Micron is set soon to ramp up production at a new fab for DRAM built using 1-alpha-nm node.
Apple's supply chain is gearing up for the upcoming iPhones. Apple is expected to adopt flexible AMOLED for all of its next-generation iPhones to be launched later this year and will outpace Samsung to become the top buyer of AMOLED smartphone displays this year. TSMC has kicked off production for the A15 processors. Meanwhile, chip shortages are expected to undermine server production at ODMs through the end of the year.
Pure-play foundry houses are requiring fabless chip vendors to prepay for the capacity bookings or to co-fund their capacity expansion projects. One of such cases is Qualcomm striking a six-year deal UMC in order to secure foundry support. Supply in the semiconductor sector is expected to remain tight in the foreseeable future, with IC substrate supply unlikely to see major improvements until late 2021 or 2022.
Memory prices have been rising, and contract quotes for DRAM and NAND flash are expected to see double-digit increases in the third quarter of 2021. Backend service providers are also looking to raise fees in the third quarter to reflect rising material costs. In the handset market, sales in China and India may be weak, but the makers in the handset supply chain are still optimistic about the market in the second half of 2021.