TrendForce’s IT Industry Forecast for 2018 at Shanghai

Estimated reading time: 11 minutes

Themed as “development trends and opportunities of components industry” and “outlook on industrial innovation and application trends,” the IT Industry Forecast for 2018 was held by TrendForce at the Jumeirah Himalayas Hotel Shanghai on October 26, 2017. The event was attended by 500 professionals ranging from talents of such high-tech industries as semiconductor, artificial intelligence (AI) and network communications to representatives of financial institutions and mainstream media. The symposium was kicked off by an opening speech delivered by Dr. C. L. Liu, president of TrendForce. Also, Dr. Yan Xiaolang, vice chairman of China Semiconductor Industry Association (CSIA) and head of professionals group on the construction of demonstration microelectronics college in China, participated in the conference and shared his insights on the global technology industries.

The event covered a wide range of hot topics including memory, semiconductor components, displays, LED, 5G, Internet of Things (IoT), AI, self-driving cars and new energy vehicle batteries. Here are the key excerpts from the presentations:

Tight supply to persist in DRAM market

The latest analysis of the DRAM market by applications forecasts that PC DRAM prices will increase by 60% on average in 2017 compared with 2016. Thanks to the strong shipments of smartphones worldwide, mobile DRAM has already claim the largest market share among the different categories of DRAM products. As for server DRAM, this category has seen the fastest demand growth driven by cloud computing and big data.

Ken Kuo, research vice president of TrendForce’s memory division DRAMeXchange, pointed out that the global DRAM bit output is estimated to grow by nearly 20% for 2017, lower than the average level of recent years. DRAM supply has been tight on account of the slowdown in technology migration and the conservative stance towards capital spending as DRAM suppliers aim to keep their profits high. TrendForce expects the DRAM industry in 2018 to be dominated by Samsung, SK Hynix and Micron. Since none of these three top suppliers intend to significantly expand their production capacity, high prices will also continue next year and provide them with healthy profits.

AI’s influence on the semiconductor industry expands

The global top three smartphone brands and major suppliers of mobile SoCs all have offered hard- and software products including AI accelerators ICs and application development kits.

“AI will have a major impact on the semiconductor industry in 2018,” said Jian-Hong Lin, TrendForce’s research manager. Lin believes AI would affect the semiconductor industry through two aspects. On one hand, AI would bring sales opportunities as related applications emerge with new products and technologies such as sensors, hardware accelerators, memory solutions and networking architectures. The arrival of these technologies would also spur upgrades for data centers and servers. On the other hand, AI is also being introduced into semiconductor fabrication as part of the transformation of manufacturing under the concept of Industry 4.0.

Technology will play an increasing role in the manufacturing of various semiconductor products in 2018. Suppliers will have to employ new production models and differentiate themselves with advanced processing methods as they seek additional market opportunities and face various operational pressures.

Rise of China’s semiconductor sector will bring new opportunities 

The global semiconductor industry is developing by leaps and bounds, and China is no exception. As the world’s largest semiconductor market, China since the issuing of its National IC Industry Development Outline has been energetically building domestic IC manufacturing capability. Furthermore, the establishment of the National IC Industry Investment Fund has also led to a wave of investments that has taken the domestic IC supply chain to the higher level of expansion.

“China’s IC industry has made great strides following three years of intensive and focused efforts,” said Dawn Guo, TrendForce’s semiconductor industry analyst. “The basic foundation for a domestic supply chain has been laid and the entire industry structure will continue to be built up and improved. Furthermore, the market atmosphere has become brighter as industry clusters are formed across the country, working on applications such as memory chips, compound semiconductors, AI and IoT.”

Numerous wafer fabs in China will be entering mass production during 2018, coinciding with the start of operation of many newly established domestic companies that focus on specific IC markets. The rise of Chinese IC suppliers will generate opportunities in CIS, driver ICs, memory, power semiconductor devices, MEMS and compound semiconductor chips. As Chinese enterprises make headways in these application markets, their compatriots in the upstream of the supply chain – including material and equipment providers – will also benefit.

TrendForce’s Breakdown Analysis of the China's Semiconductor Industry is published with the interest of those wanting to know more about the booming growth of China’s IC supply chain. This report contains detailed analyses on the related policies, fundraising programs and representative enterprises. The report serves as a comprehensive reference for enterprise clients when making strategic decisions.

Key trends in the display industry

The large-size panel market was on the seller’s side from the third quarter of 2016 through the second quarter of 2017. However, supply began to noticeably outpace demand starting this third quarter, leading to falling quotes.

“As BOE begins to mass produce LCD panels using its Gen-10.5 process, the global large-size panel market is forecast to see a glut ratio of around 8.5%, up by 2.5 percentage points compared to the projected 6% of 2017,” noted Eric Chiou, research vice president of WitsView, TrendForce’s display research division.

The recent survey of various display technologies shows that OLED has gained significantly in the TV market this year as major brands such as SONY have opted for this technology in their high-end offerings. Chiou said that OLED TVs are going to be in a dominant position in the high-end segment. OLED TV set shipments are forecast to jump from 1.5 million units in 2017 to 2.4 million units in 2018, while the penetration rate of OLED in the smartphone market is forecast to advance from 28% in 2017 to 33% in 2018.

In addition, 18:9 aspect ratio is expected to enter a period of widespread adoption in the smartphone market. Based on Chiou’s projection, device models featuring 18:9 screens are going to make up 9.6% of this year’s total smartphone shipments worldwide. This penetration rate would then soar next year, coming to around 36.2% of the global annual shipments. The increase in screen-to-body ratio will become a major trend not only in the high-end and mid-range market segments but also in the market segment of entry-level devices.

5G to begin its global expansion

5G is able to expand the coverage of wireless communications, provide faster data transmission speed and decrease network latency. This next-generation networking standard will find applications beyond the consumer market to include vertical markets such as transportation, manufacturing and healthcare. Kelly Hsieh, research director of TrendForce, pointed out that 2018 would mark the dawn of the 5G era as South Korea will be presenting related solutions in the 2018 Winter Olympic Games at Pyeongchang. It is expected that mobile carriers worldwide will also become more receptive in 5G adoption.

On the technology side, 5G technology employs multiple-input multiple-output (MIMO) antennas and transmissions in millimeter wave (mmWave) frequencies to achieve breakthroughs in the integration and framework development of wireless technologies. The higher frequencies inherent to 5G pushes up the demand for radio frequency components with higher power density and better performance. For instance, the gallium nitride (GaN) market is of huge potential since this material meets the high frequency requirement of 5G for power amplifier (PA) applications.

Moreover, the deployment of 5G MIMO technology in base stations increases the number of antennas in each station. This in turn will promote research and development of core technologies related to antenna systems and device-to-device (D2D) solutions. After mobile networking made the general transition to the 5G standard and the related applications have been established, specifications of smartphones and other end devices will be raised to support higher carrier frequencies. The total value of the global market for RF front-end components used in cell phones is forecast to grow from US$11 billion in 2017 to around US$26 billion in 2022.

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