Global market research firm TrendForce held its IT Industry Forecast for 2017 on November 10 in Room 101 of National Taiwan University Hospital (NTUH) International Convention Center. Below is a summary of presentations made by our analysts at the event’s morning session:
Smartphone and TV shipments will grow in 2017 and panel supply will be an important factor guiding the dynamics of the consumer electronics market
In 2017, branded vendors in the five major consumer electronics product markets – LCD TVs, LCD monitors, notebooks, tablets and smartphones – will strive to maximize their profitability. In response to consumer demand, sizes and resolutions of mainstream LCD TV sets will increase. TV sets will also incorporate more smart features and internet connected services. In the LCD monitor market, main product development trends include size increase, greater adoption of the wide viewing angle technology and a focus on products for niche applications. As for notebooks, the next year’s highlight will be the increasing penetration of displays featuring FHD or higher resolutions. Compared with other device markets, the tablet market will be relatively quiet in 2017. Tablet makers find it difficult to increase their product margins due to the ubiquity of low-cost models. Branded vendors therefore are unlikely to commit significant resources into developing tablets in the future.
In the smartphone market, competing brands next year will follow Apple’s lead and increase the number of devices that are equipped with AMOLED displays. “Generally speaking, TV and smartphone shipments will continue to expand in 2017,” said TrendForce notebook analyst Anita Wang. “However, the supply of panels from the display industry will heavily influence the overall shipment results for the five major product markets.”
DRAM industry will reap profits in 2017 as supply remains tight
Strong demand for smartphones and servers has spurred the top three DRAM suppliers to transfer their production capacity from making PC DRAM to making mobile and server DRAM. As a result, prices of PC DRAM made a complete turnaround from being on a decline in the first half of 2016 to rising sharply in the second half. The price surge in the PC DRAM market has also helped lifted prices of DRAM for other applications.
“Capital expenditure growth of the top three suppliers will be fairly moderate in 2017,” said Ken Kuo, research director of DRAMeXchange. “Plans for capacity expansion and technology migration will be much more scaled back compared with the efforts of past years because suppliers will generally want to maintain high product margins. With supply expected to remain tight, the DRAM industry’s profit outlook for next year is very optimistic.”
Progress on 3D-NAND will be top priority for NAND Flash industry in 2017
As NAND Flash suppliers accelerate their development of 3D-NAND manufacturing in the second half of 2016, there has been a corresponding drop in the overall production of 2D-NAND (planar NAND) memory. This situation is compounded by rising smartphone demand during the peak sales season, leading to NAND Flash supply shortage.
The NAND Flash industry will encounter many challenges and opportunities in 2017, said Sean Yang, research director of DRAMeXchange. “While the 2D-NAND production capacity will continue to contract rapidly next year, suppliers may still have problems with their respective 3D-NAND production plans,” Yang noted. “Raising the yield rate, for example, will be a major challenge.”
Therefore, undersupply in the NAND Flash market will persist in 2017. Whether the market will reach equilibrium will depend on the progress that suppliers have made in their development of 3D-NAND products for mobile and SSD applications.
Penetration of AMOLED display in smartphone market to surpass 40% in 2019
Upgrading display specifications with new panel technologies has become a major trend in the smartphone market in recent years. Currently, branded smartphone makers are placing their hopes on AMOLED to stimulate consumer demand.
The penetration of AMOLED displays in the smartphone market is projected to grow from 22% in 2016 to 42% in 2019, according to Boyce Fan, senior research manager of WitsView. Furthermore, the production capacity for AMOLED panels worldwide for 2017, measured in area, will total 8.9 million square meters in 2017, representing a massive annual growth of 46%. The main contributor to next year’s AMOLED capacity growth will be Samsung Display (SDC). The South Korean panel maker not only wants to fulfill the in-house demand from Samsung but also the potential demand from Apple.
“Chinese smartphone makers are eager to have more of their devices equipped with AMOLED displays as well,” said Fan. “However, SDC will not be able to satisfy every client despite having the largest AMOLED capacity. With supply being tight, Chinese smartphone makers may encounter AMOLED panel shortage in 2017.”
AMOLED panel shortage will also limit the growth of VR device shipments next year
Though Apple launched Apple Watch Series 2 earlier this year, the next-generation of this device offers little new in terms of functionality and services. Fitbit is expected to remain the shipment leader in the global wearable device market in 2016.
In addition to developing the wearable devices such as smartwatches and smart bands, consumer electronics brands have also placed a lot of hope on VR hardware this year. Though the general demand for VR devices is quite strong, Jason Tsai, TrendForce wearable device analyst, noted that the supply has not increased accordingly. “The ongoing shortage of AMOLED panels will prevent major VR device brands such as HTC, Oculus and Sony from expanding shipments well into next year,” Tsai explained.
TrendForce estimates that shipments of VR devices worldwide for 2016 will amount to only 2.91 million units, and the persistent undersupply of AMOLED panels will limit VR device shipments. For 2017, TrendForce projects annual VR device shipments worldwide to reach 5.1 million units. In sum, the VR device market will unlikely see takeoff growth next year.
Integration of resources and technologies in 2017 will be crucial in guiding the progress of China’s semiconductor venture
The total value of the global digital IC manufacturing industry will keep climbing in 2017 as volume production using the 10nm process technology becomes available. However, the rise in the average selling price of smartphones will be limited next year because of slowing demand. This in turn will squeeze product margins of chip manufacturers.
“Major innovations in smartphones are often brought about by external forces,” said Jian-Hong Lin, TrendForce research manager. “The cloud computing industry in particular will drive changes in smartphone hardware and software in the pivotal year of 2017. Through the establishment of data centers and advances in artificial intelligence solutions, cloud computing companies will help create new opportunities for smartphone makers and their IC component suppliers.”
Besides new technologies and applications, developments in China will also have an impact on the global semiconductor market with respect to supply. The enormous production capacity of the Chinese semiconductor sector will gradually become available in 2017. The results of the country’s semiconductor policies, however, will depend on the effective integration of technologies and resources by domestic IC enterprises.