The latest study by TrendForce shows that demand for large-size and mobile driver ICs will steadily grow as various applications recover. However, the speed of capacity supply adjustment and competition among different technologies will remain the key focus in the next few quarters.

Another thing worth noting is that the US chip ban has led to a trend of independent development between Chinese and non-Chinese supply chains. While this may increase production time and cost, it also presents opportunities for individual Chinese domestic suppliers and Taiwanese wafer foundries to acquire fresh orders.

Observations by TrendForce on each sector of driver ICs are summarized below-

• Large-size panel driver ICs: demand is expected to recover gradually and stabilize prices, but suppliers are cautious about inventory, which could lead to a supply shortage if demand surges too quickly.
• TDDI for mobile devices: prices and inventory have reached a low point, with a small rebound expected. In the long run, AMOLED panels are expected to dominate, so IC suppliers will need to explore new applications for medium-sized panels.
• AMOLED driver ICs: UMC’s 28nm high-voltage process is producing AMOLED driver ICs. If Apple shifts all 40nm AMOLED driver IC production to 28nm, TSMC’s 28nm capacity availability will be crucial to the market’s supply-demand balance.
• RAM-Less AMOLED driver ICs: RAM-Less AMOLED driver ICs with Chinese flexible AMOLED panels are gradually taking shape due to China’s domestic policy. However, the rapid price drop of Full-Ram AMOLED has caused brands to hesitate on adopting Ram-Less AMOLED.

The demand situation of the global car market deteriorated in 2022 due to the impacts of the Russia-Ukraine military conflict and the ongoing COVID-19 outbreaks across China. However, the demand for automotive lighting products during the same year was propped up by two developments. First, the penetration rate of LED headlights (headlamps) rose further. Second, there were significant advances in technologies related to smart headlights, marker lights (lamps), and smart ambient lights.

Furthermore, costs surged for plastics during 2022, so suppliers for automotive lighting products had the opportunity to keep their prices steady or raise them. Hence, TrendForce estimates that the value of the global market for automotive lighting products has come to US$32.68 billion for 2022, reflecting a YoY growth of 4%.

Looking ahead, development trends in the automotive lighting market include personalized products, communication displays, solutions for ADAS, and improvements related to safety functions. TrendForce currently forecasts that the market value will scale up to US$34.314 billion for 2023, showing a YoY growth of 5%.

In addition to improvements in adaptive headlights and tail lights (lamps), TrendForce points to several other product categories that have gained greater importance and captured the attention of carmakers, automotive lighting suppliers, LED suppliers, and drive IC suppliers. Examples include marker lights, (smart) ambient lights, and solutions for light-signaling projection. The aforementioned market participants have been proactively developing offerings under these categories. Going forward, carmakers will continue to bring surprising and innovative ideas to the development of automotive lighting. This, in conjunction with the promotion of ADAS and automotive driving technologies, will create limitless market potential for automotive lighting suppliers.

Driven by forces such as the pandemic, geopolitics, and the digital transformation of everyday life, there has been a shortage of global foundry production capacity for nearly two years and shortages have been especially severe for mature 1Xnm~180nm nodes, according to TrendForce’s investigations. Although all foundries are furiously increasing capital expenditures to expand capacity, unrealized future expansion does not ease existing supply issues. In addition, the uneven distribution of supply chain resources that has exacerbated the shortage of parts and components has yet to be definitively alleviated. Circumstances as a whole will continue affecting shipments of related whole devices. Only the PC category is expected to emerge largely unscathed in 1Q22.

Moving into 1Q22, TrendForce states, due to the limited increase in production capacity, the market’s supply situation is expected to be approximately the same as in 4Q21. However, some end products have entered their traditional off-season cycle and the slowdown in demand momentum is expected to alleviate the immediate pressure on OEMs and ODMs regarding supply chain stocking.

In terms of the whole servers, the FPGA delivery cycle is currently at over 50 weeks at most, while the delivery cycle of Lan chips has improved significantly, from the original 50+ weeks to approximately 40 weeks. However, escalating purchase order activity caused by the uncertainty of the pandemic combined with an accumulated backlog of demand (Back order/backlog) have pushed the SMT capacity of ODMs to full load in general. The aforementioned phenomenon have not only accelerated the consumption of ICs such as FPGA and PMIC, but the demand for additional purchase orders of FPGA, PMIC and MOSFET is still compelling. The overall market remains tight and the production of server motherboards in the future may face hidden issues. TrendForce has ascertained a more crucial matter. Taking the L6 server as an example, its production scale in 1Q22 will be roughly the same as the previous quarter. However, whole server shipments will show a seasonal decline with a decrease of approximately 8% QoQ.

In terms of mobile phones, material shortages have gradually eased from the second half of 2021 partly due to the discretionary adjustment of mobile phone specifications. Mobile phone brands can adjust their specifications and configurations based on available materials. Currently, the supply of four components remains relatively tight. Among them, 4G SoC (30-40 weeks) and OLED DDIC/Touch IC (20-22 weeks) have a significant impact on the market. The former will affect brands that focus on selling 4G mobile phones. The latter is affected by oligopolistic market structure and the adjustment of foundry capacity. Thus, there are rumblings of insufficient supply. Though the supply of the remaining two items, PMIC and A+G Sensor, remains tight, material shortage risk can be largely mitigated through alternative material replacements or the adjustment of specifications and configurations. In terms of production, the 1Q22 supply chain will essentially carry on its performance from the previous quarter. However, due to disappointing holiday demand at the end of 2021, mobile phone brands must adjust the distributed inventory level of finished products in a timely manner. Combined with uncertainty caused by disruptions stemming from a winter-time pandemic, 1Q22 production performance is estimated to fall by approximately 13% QoQ.

In terms of PCs and laptops, starting from November 2021, material shortages have been partially alleviated. Therefore, the shipment volume of PC ODMs in 4Q21 has been revised upwards. Compared with mobile phones and whole servers, the impact of under/oversupply of materials on end PCs and notebooks is relatively minor. Except for the SSD PCIe 3.0 controller, current tightness exhibited in component supply is due to delays in the transition of Intel’s new platform. This temporary shortfall has led to a delivery cycle of approximately 8-12 weeks while any tightness in the supply of Type C IC, WiFi, and PMIC is gradually abating. TrendForce expects that, as overall supply chain stability recuperates, notebook shipments from ODM brands in 1Q22 will only decrease by 5.1% QoQ. However, if the component shortage factor is discounted, subsequent sales originating from various distribution channels will be another major variable TrendForce must consider.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Display panels contain certain semiconductor parts, including driver ICs, TCONs, and LCD PMICs; the price trends of these ICs used in different applications depend on their respective supply and demand situations. Not only has demand for driver ICs used for TVs, Chromebooks, and consumer IT displays declined ahead of other applications, but panel suppliers have also accumulated a considerable inventory of driver ICs for these aforementioned products, according to TrendForce’s latest investigations. Hence, these driver ICs may see their prices stagnate in 4Q21. Nevertheless, although driver IC suppliers will not be able to offload the foundry costs for driver IC manufacturing to panel suppliers entirely, panel suppliers are still expected to procure additional driver ICs in order to avoid possible shortages, since demand for commercial IT displays and driver ICs used in these displays still exists. TrendForce therefore expects driver IC prices to experience a minor price hike in 4Q21.

It should be pointed out that certain TCONs and LCD PMICs are experiencing either shortages or excessive lead times. Furthermore, TSMC will raise the prices of their mature foundry process technologies in 4Q21 by a relatively high margin. Taking these factors into account, TrendForce expects TCON and PMIC prices to remain in an uptrend for the quarter. With regards to smartphone TDDI, the decline in client orders for 4Q21 means that smartphone TDDI will not continue to undergo a price hike in 4Q21. Conversely, smartphone OLED DDIC prices are likely to remain bullish in 4Q21 for the following reasons: First, foundries’ production capacities for smartphone OLED DDIC are currently insufficient. Second, this product category involves a high level of technological barrier to entry in terms of IC design, meaning there are very few IC design companies capable of offering a stable supply of OLED DDIC; smartphone manufacturers are therefore scrambling to book OLED DDIC orders for next year’s handsets.

On the other hand, IC design companies have traditionally sold driver ICs, TCONs, and PMICs as a bundle to panel suppliers during shortages because bundling these components not only increases their sales volumes, but also ensures that panel suppliers receive these components in matching inventory levels. Despite rumors pointing to a possible price hike of driver ICs, TrendForce believes that, given the ongoing shortage of TCONs and PMICs, products sold as a bundle are likely to undergo successful price hikes.

After experiencing component shortages for more than a year, panel suppliers are projected to more carefully address issues of IC procurement and inventory management. On the whole, driver IC prices for 4Q21 will likely remain relatively unchanged from the previous quarter. Looking ahead to 2022, TrendForce expects the demand for display panels to trend downwards during the cyclical downturn of 1H22. This bear market, along with the fact that display manufacturers still need to use up their existing inventory of display panels, means that panel suppliers will almost certainly revise down their driver IC procurement. At the same time, as certain foundries gradually ramp up their driver IC production, the gap between supply and demand of driver ICs will in turn diminish. In other words, potential risks of driver IC shortage will also become slowly mitigated. For driver IC suppliers, their primary challenge for 2022 will be the ability to dynamically adjust their operations between peak demand and low demand periods. Consequently, IC suppliers that possess more robust operations and more diverse product portfolios will also hold the competitive advantage.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at vivieliu@trendforce.com

The current state of the notebook panel market shows that prices of notebook panels are likely to follow the same trend set by TV panels and monitor panels in 4Q21. In other words, notebook panels may see their prices plummet from the previous uptrend during the quarter.

Notebook brands are confident that a wave of demand for commercial notebooks will take the place of the prior demand for consumer notebooks. Objectively speaking, however, as soon as enterprises return to pre-pandemic business operations, they are unlikely to immediately spend a considerable amount of their budget on refreshing their existing hardware, including notebook computers.

On the other hand, although consumer purchases comprised most WFH demand for notebooks within the past year, these notebooks were purchased with subsidies funded by the buyers’ workplaces. Once consumers return to physical offices for work following the termination of WFH, their purchased notebooks will then be returned to the workplaces as well. Hence, notebook brands which previously anticipated an upcoming wave of replacement demand for business notebooks may be overly optimistic in their expectations. As such, although notebook shipment has remained bullish in 3Q21, notebook sales are likely to gradually slow down going forward, meaning notebook vendors and brands alike may enter into a key period of inventory adjustment in 4Q21. At the same time, notebook manufacturers will also decelerate their procurement activities for panels across their entire range of notebook computers.

The four largest notebook panel suppliers still exert significant influence over the market’s overall supply of notebook panels, although newcomer HKC is not to be underestimated in terms of its potential to do the same, even pertaining to quotes. While HKC did not ship a single notebook panel in 2020, the company has ambitiously targeted an annual shipment of 10 million units this year in light of the expanded production capacity for IPS panels at its Mianyang fab. In 1H21, however, the display industry suffered a severe shortage of driver ICs, whose manufacturers first sought to ensure a steady supply of driver ICs for their more established clients. Being a notebook panel supplier that had had no business foundation, HKC, as was typical of such upstart companies, had its supply of driver ICs accordingly “adjusted” by driver IC suppliers. HKC was hence unable to effectively raise its shipment for 1H21.

As the demand for panels from various end-product segments slows down in 2H21, the shortage situation of driver ICs is also expected to either lessen somewhat or even turn into a supply-demand equilibrium. As such, HKC is likely to procure more driver ICs from its suppliers and subsequently step up its notebook panel shipment to 3.5 million units in 3Q21 and 4 million units in 4Q21. HKC’s increase in panel shipment for 2H21, if proven successful, will place downward pressure on notebook panel prices, thereby weakening said prices going forward.

TrendForce believes that 11.6-inch panels, the market for which has been relatively bearish, will most likely experience a decline in quotes starting in early 4Q21. At this size, even Full HD/IPS products, quotes for which have been relatively high in 3Q21, are likely to see their quotes hold flat in November 2021 and experience a sudden downward pressure on prices at the end of the year. Should the COVID-19 pandemic be brought under control on a global scale, demand for consumer electronics would likely return to its cyclical downturn in 1Q22, and the notebook panel market, despite its relatively robust supply chain, would see a more severe overall price accordingly.

（Cover image source: Unsplash）