침체의 시작인가? 아니면 황금 시대의 시작인가?

2022.06.30

IC 50: Beginning of downturn or start of golden era? (digitimes.com)

 

DIGITIMES released the IC 50 2022 ranking on June 30 as the semiconductor industry is sailing into a sea of uncertainties. The stellar performance of semiconductor industry companies in 2021 was reminiscent of a two-year bull market while ebbing demand in some sectors in Q2 2022 marked the imminent correction of the over-heated business cycle.

 

The 2021 revenue of the top 50 semiconductor companies in Asia (i.e. IC 50) totaled US$348.99 billion, up 29.3% on year. If compared to the semiconductor industry output value of the world and Asia respectively, the aggregated sales of these top 50 Asia semiconductor companies take up 39.1% of the global share, and 78.8% in Asia, respectively.

 

In the IC 50 ranking, Samsung's device solutions division, which includes memory, system LSI and foundry businesses, took No. 1 place in terms of revenue and operating profit, while TSMC, SK Hynix, MediaTek, and Tokyo Electron took the second to fifth place. Japanese integrated device manufacturers (IDMs) Kioxia, Sony's imaging and sensor solutions, and Renesas grabbed 6th, 8th, and 9th place, respectively. Taiwan's outsourced semiconductor assembly and testing (OSAT) service provider Advanced Semiconductor Engineering (ASE) ranked the 7th, while Taiwan's second-largest pure foundry manufacturer United Microelectronics Corporation (UMC) took the 10th place.

 

Samsung is the world's No.1 memory maker, while TSMC is the largest pure foundry manufacturer. MediaTek is Asia's largest fabless company, and Tokyo Electron is the No.1 semiconductor production equipment manufacturer in Asia, while ASE is the largest OSAT in the world.

 

Asia's important role in the global semiconductor industry is indisputable. SIA/BCG had pointed out in its 2020 report that the East Asia region (including Japan, South Korea and Taiwan) and mainland China concentrate about 75% of the world's total semiconductor manufacturing capacity – including all the leading-edge capacity at 7 nanometers and below currently in operation, and its share is expected to continue rising over the next decade.

 

Over the past 30 years, the semiconductor manufacturing ecosystems in Asia have supported the development of the fabless industry and eventually nudged the IDMs to transform towards fab-lite operations.

 

"The fact that the 4 fabless companies, including MediaTek, are among the world's 10 largest semiconductor companies by revenue reflects the contribution of professional foundry service and OSAT service providers that helped them achieve significant growth over the years," said Eric Huang, DIGITIMES VP, in charge of the research department. He added that even though the US and EU are trying to move some advanced fabs to their continents, the highly efficient division of labor model of Asia is difficult to replicate in their environment. "It's unrealistic trying to solve the supply-chain problem by just moving one or two advanced fabs to the US or Europe," said Huang.

Note: The figures are compiled from the IC 50 Ranking, conducted by DIGITIMES Asia in June 2022

 

 

Huang also shared three findings from this year's IC50 report:

First of all, IC 50 companies in East Asia dominate the world's main production activities in the semiconductor manufacturing processes, including memory, silicon wafer, IC substrates, foundry, assembly and testing. This dominant position of Asian companies in manufacturing has continued for more than 30 years and is still going strong due to the cluster effect.

 

Secondly, the revenue and operating income growth of Singapore, China, Japan and Korean companies all caught up with Taiwan. Due to the high growth enjoyed in 2020. Taiwan's consolidated growth in 2021 slowed down to 27.4%. South Korea, Japan and China saw revenue grow by 31%, 28.5%, and 28.4%, respectively. 2021 was the peak year for the business environment of the semiconductor industry, said Huang. Singapore's consolidated revenue growth grew by triple digits mainly because they added one company in the ranking.

 

Last but not least, China is catching up. Although none of the Chinese companies made it into the top 10 this year, they already got 10 companies in the IC 50 list, reflecting their growing competitiveness with the backing of the state capital. The most competitive among them are SMIC (foundry), JCET (OSAT), and Will Semiconductor (Fabless), which took 11th, 14th, and 17th place.

Note: The figures are compiled from the IC 50 Ranking, conducted by DIGITIMES Asia in June 2022

 

Notes about IC 50 Ranking: DIGITIMES tries to cover all companies that disclose revenues from semiconductor products or services in the IC 50 survey. However, readers might find that some of the familiar names, such as Shin-Etsu, the largest wafer manufacturer in the world, are not included in the IC 50 list. That is because the company does not disclose semiconductor-related business revenues and income in its financial reports. Private companies such as HiSilicon, a subsidiary of Huawei, are not included due to the fact they do not disclose their financial results, either.

Cyclical adjustments

DIGITIMES Research has just readjusted its forecasts for 2022 global smartphone shipment from a 3.1% increase on year to a decline between 5-10%. China's strict pandemic control measures in second quarter were cited as the main reason for the demand decline for consumer electronic products. Owing to China's central position in global value chains, the production of smartphones, laptops, and desktops was disrupted, too. Inflation in the US and Europe has driven up prices to multi-year highs. Higher prices also may have affected consumers' interest in purchasing new gadgets.

 

The market is also having misgivings lately over the inventory adjustment of consumer electronic products such as desktop PCs, laptops, and flat-panel TVs.

 

Companies have started to see orders for chips made with mature processing nodes for the use of consumer electronic products being canceled or on hold. But Sony said its PS5 remained sold out and supplies are expected to ease up in 2024. And demand growth for servers is forecasted at 6.5-6.7% on year between 2022-2024, and at 7.2% and 7.5% for 2025 and 2026, respectively, according to DIGITIMES analyst Frank Kung.

 

Revenue growth of semiconductor manufacturers has slowed, but capacity utility rate remained at high levels by Q2 2022, as chip demands in electrical vehicles and industrial power management and IoT remain strong, said Eric Chen, DIGITIMES semiconductor analyst, in his latest report. He is still predicting a 20% growth for pure foundry revenues in the entire year of 2022.

 

Aggressive expansion of semiconductor manufacturing capacities in the next few years also triggered fear of an over-supply. However, semiconductor equipment shipment delays as reported by Nikkei Asia recently may result in a slower-than-expected capacity expansion.

 

Note: The figures are compiled from the IC 50 Ranking, conducted by DIGITIMES Asia in June 2022

Silver linings 희망의 조짐

The short-term industry outlook may look gloomy, but there are silver linings seen on the horizon.

단기적으로는 반도체 산업 전망은 어둡지만 수평선위에 희망의 조짐이 있다.

 

Electrical car sales increased by 101.3% in 2021, and will continue to enjoy annual growth in the high 40% level between 2022-2025, according to a report issued by DIGITIMES analyst Jessie Lin.

전기차 매출은 2021년에 전년대비 101.3% 증가했고, 2022년에 2025년 사이에 연율 40%대 후반의 성장을

할것으로 디지타임즈는 예상했다.

 

While predicting a 5-10% in global smartphone shipment decline for 2022, DIGITIMES analyst Luke Lin forecasts an 8.7% rebound in 2023 and more than 6% growth on year, in the next 3 years.

2022년 글로벌 스마트폰 출하량은 전년대비 5-10%정도 감소할 것이지만, 2023년에는 8.7% 성장할 것이고

향후 3년간 연율 6%이상의 성장을 이룰 것이다.

 

 

	DIGITIMES forecast for YOY growth (%)
	Smartphone shipment	Electrical Car sales
2021	6	101.3
2022	-7.5	48.7
2023	8.7	47.3
2024	6.4	45.9
2025	6.3	41.1

Source: DIGITIMES research, June 2022

 

Cyclical downturns are inevitable. However, there are always sages reminding us that we need to see things in perspectives. Mark Liu, chairman of TSMC, in a rare article contributed to Fortune recently, pointed out that the rise of 5G, artificial intelligence (AI), AR/VR applications, and the Internet of Things (IoT) is paving the way for "a golden era for the semiconductor industry."

 

"The upcoming decades will be a golden era for the semiconductor industry. Over the past 50 years, the development of semiconductor technology has been akin to walking inside a tunnel," wrote Liu, "Now we are approaching the exit of the tunnel.

 

There are many more possibilities outside the tunnel,... We now have unlimited room for unleashed innovation."

New innovations in materials, architecture, and applications propel the continuous advancement in semiconductor technologies. After coming out of the tunnel, there will be a wide-open future with the semiconductor in the center. There is no time for pessimism, and it takes agility to make the vision a reality.