Input 2021.01.21 10:54 | Revision 2021.01.21 11:33
Supply problem doesn’t seem to be resolved in the first half
Even if 100% of the world’s semiconductor factories operate… “I can’t keep up with demand”
Semiconductor industry increasing facility investment… Concern about oversupply
Display companies that manufacture liquid crystal display (LCD) panels are revising their production strategies to focus on high-profit monitors and large TV panels in order to reap maximum profits from insufficient DDI. However, there is considerable fear of not knowing when DDI will drop. There are also voices mixed with concerns that the TV and monitor market, which is booming due to demand for pent-ups after the Corona 19 crisis (which explodes from repressed consumption), is being cut down by a disruption in semiconductor supply.
Semiconductor production industries such as foundries (consignment production of semiconductors) are raising their capacity to 100%, but it is difficult to properly respond to explosive demand. Some companies have already raised semiconductor prices due to increased demand and supply shortages, or are considering raising them. Investments related to facilities to solve supply are expected to increase a lot this year, but there is an analysis that the current increase in demand is’excess demand due to Corona 19′, so a cautious attitude is also required.
◇ “DDI shortage” soared monitor and large TV shipments… The industry “can stop production”
According to the market research firm Trend Force, shipments of TVs over 65-inch last year increased 23.4% from the previous year (2019), and shipments of TVs over 70-inch increased by 47.8%. However, last year’s total TV shipments decreased by only 0.3% compared to the previous year to 217 million units. In a situation where the market is stagnant, sales of large-sized TVs have increased a lot.
This year, TV sales are also likely to grow large-scale. Trend Force predicts that shipments of 65-inch TVs from major global TV manufacturers will grow by more than 30% from last year. However, it is predicted that the 2nd and 3rd class TV makers that make mid-sized TVs will not have little difficulty due to insufficient capacity and a disruption in DDI supply.
The purchasing department of domestic home appliance and display companies is truly’super emergency’. Although it is not currently disrupting production, it is because it is not known when semiconductor supply will be stopped. In the display, not only DDI required for driving, but also integrated circuits (PMIC·Power Management IC) that control power are important, and there are signs that semiconductor inventory will soon drop in all core semiconductor fields.
An official in the home appliance industry said, “It is a situation where semiconductors are not supplied as much as desired from all product lines.” “The shortage situation is expected to continue, so we are planning a related strategy, but there is no reasonable breakthrough other than an increase in supply, so production disruption is concerned.” Said.
◇Semiconductor shortage phenomenon that encourages LCD panel price rise… “DDI problem will not end within the first half”
The problem of shortage of semiconductors used in monitors and TVs such as DDI is believed to occur mainly in LCD panels. It is analyzed that the recent panel price increase is also continuing in this trend.
LCD panel prices have steadily declined since 2018 due to the low price of Chinese companies, and due to poor profitability, Samsung Display and LG Display have also declared’market withdrawal’. However, as display demand increased after Corona 19, the price rose for 5 consecutive quarters until December last year, approaching the level in the fourth quarter of 2017. Samsung Display and LG Display delayed the withdrawal of business at the request of Samsung Electronics and LG Electronics.
The LCD DDI supply problem is expected to continue until the first half of this year, and LCD panel prices will continue to rise for the time being. In addition, the fact that the supply of glass for panels was disrupted due to a power outage at the Takatsuki plant of Nippon Electric Glass (NEG) last month is fueling a rise in panel prices.
Trend Force said, “The continuing shortage of DDI supply could have an impact on the price hike of display panels this year.” “Panel manufacturers need to efficiently operate supply chain and inventory management.”
◇ Cars and mobiles are clamoring for “a little different from semiconductors”… Even if production is fully operational, demand cannot keep up
After Corona 19, the automobile production decreased due to a decrease in demand, and the semiconductor industry has been producing semiconductors for automobiles by converting them to other fields. Then, as the demand for automobiles increases, the demand for automobile semiconductors required is not being received as much as they want. Some production disruptions or delays are occurring at Volkswagen, Toyota, and Ford.
The situation is the same for TSMC, Taiwan, which is the No. 1 foundry in the global market. The industry explains that TSMC, which produces Apple mobile APs, Qualcomm modem chips, and AMD CPUs and GPUs, is difficult to supply peninsula to existing customers, not to attract new customers due to increased demand.
Accordingly, semiconductor prices are expected to rise. TSMC recently ended the ‘3% discount’ policy applied to large customers, and Taiwan UMC and VIS also raised foundry prices by more than 10%.
Pepris and post-processing companies are also planning to raise prices. Dutch NXP, which makes semiconductors for automobiles, plans to announce a price increase to automakers soon. Taiwanese packaging company ASE raised its price by 20% in the fourth quarter and is also considering a price increase in the first quarter of this year.
◇The semiconductor industry increases investment in supply shortages… Even places that are not willing to point out’excess demand’
TSMC announced that it will invest 30 trillion won in Korean money for foundry facility investment (CAPEX) this year. This is based on the judgment that the demand for microprocessing will increase further in the future.
Samsung Electronics is also increasing investment. The stock market predicts that 38 trillion won will be spent on semiconductor equipment alone this year. This is a significant increase from 28.900 trillion won last year. Among them, it is expected to spend more than 10 trillion won on facility investment in system (non-memory) fields such as foundries.
Lee Jae-yoon, a researcher at Yuanta Securities, said, “At the point when the memory and non-memory semiconductor markets are entering a short supply phase, not only Taiwan’s TSMC but also Samsung Electronics will have no choice but to increase their facility investment.” We need to pay attention to earnings momentum.”
DB HiTek, the 10th largest foundry in the world, is also a company that stands out for 200mm wafers. It is currently maintaining full capacity (100% utilization), but there is no clear position regarding future investment plans. In November of last year, there was talk of the factory expansion review, and the company said, “Nothing has been decided.” It is understood that it is not easy to make investments because the expansion of the foundry plant requires trillions of costs.
Some of the industry are concerned that if production is increased with enormous facility investment, it may be rather’oversupply’ after the end of Corona 19. The reason DB HiTek is not making a willing investment decision seems to be the same.
On the other hand, there is a prospect that the semiconductor market will grow even further regardless of Corona 19. The World Semiconductor Market Control Organization (WSTS) predicts that this year’s semiconductor market will grow 8.4% year-on-year to 469.43 billion dollars, which is more than the record high (4687 billion dollars) recorded in 2018.
An industry official said, “The reason why it is difficult to decide on facility investment right now is because it is difficult to determine whether the increase in semiconductor demand is temporary or continuous.” “If it happens, there is a great deal of risk from the semiconductor boom,” he said.