PCB News - Intelligent networking is the future direction of Taiwan's IC design industry

Intelligent networking is the future direction of Taiwan's IC design industry

ICB Industrial Research Institute IEK analyst Cai Jinkun pointed out that in 2011, Taiwan’s IC design revenue from smart handheld devices only accounted for 15%, while smartphones and tablets accounted for 10.3% and 4.7%, respectively, with a total revenue of NT$58 billion; The domestic chip industry has strengthened its layout in the field of smart handheld devices. It is estimated that the revenue contribution of smart handheld devices is expected to increase from 2012, which will help enhance the competitiveness of domestic IC design.
IEK predicts that from 2010 to 2015, smartphones will grow mobile phones by 3.8 times, while tablets will grow by 19 times. It is estimated that smartphones will officially surpass feature phones from 2015, and tablets are expected to surpass laptops as early as 2016 This also means that after 2015, smart handheld devices will become the most important driving force for the growth of the global semiconductor market.

From the perspective of the amount of demand for semiconductors in smart handheld devices, Cai Jinkun pointed out that in each smart phone, semiconductor costs account for about 20% of the selling price; semiconductors in tablet computers account for about 40% of its selling price. From this year's point of view, the current average cost of semiconductors in each smart phone is around US$53, while the cost of a tablet is US$99. In terms of overall semiconductor demand, the demand for semiconductors in smartphones this year will reach 31.1 billion US dollars; tablet will also reach 10.273 billion US dollars.

In the next few years, with the increase in shipments of smart handheld devices, although the cost of semiconductors for each terminal is decreasing year by year, the overall demand for semiconductors is still increasing. IEK estimates the demand for semiconductors from smartphones from 2013 to 2014 The total amount will grow to 37.2 billion U.S. dollars and 43.1 billion U.S. dollars, respectively, with a CAGR of 25%; the tablet will also grow to 14 billion and 17.8 billion U.S. dollars, with a CAGR of 66%.

From the perspective of the main components and cost structure of smart phones, Cai Jinkun said that at present, in addition to NAND Flash and DRAM, Taiwan has the ability to supply almost all other required parts. Therefore, the next focus is how to develop towards high-profit products, and is no longer limited to the traditional middle and low-end computing categories.

"The difference in manufacturing cost between high-end and low-end mobile phones is actually not that big, but the difference in R&D investment and the technological value that can be created is very big," said Cai Jinkun. Therefore, this is also the key point that Taiwanese operators, which are still mainly low-end mobile phones from the mainland, must rethink.

The shift of the global electronics industry from computing to action has brought variables to many industries, including, of course, Taiwan’s IC design industry.

Looking at the top ten manufacturers in Taiwan’s IC design industry in 2011, it can be seen that only Morningstar, Phison, and Yili are showing positive growth, while MediaTek, Novatek, Himax, Realtek, Richtek, Creative and Ruiding have shown positive growth. Both show negative growth.

From the perspective of gross profit margin, in the past ten years, the gross profit margin of Taiwan's IC design has almost been maintained at around 33%~35%, which is quite stable. But after reaching a peak of 39.5% in 2009, it has now fallen to about 32.5%~33%. "The main reason is the extrusion of the former US and the mainland," said Cai Jinkun.

He also warned that the erosion of Taiwan's gross profit will also affect the investment in new products and new technology research and development in the future, and indirectly widen the gap with American industry players. In the end, when the U.S. and Chinese companies move closer to the middle market, "Taiwan's space will become smaller and smaller."

Especially in the face of the mainland's rush to catch up, Taiwan's IC design industry is facing increasing pressure. In 2009, China's HiSilicon ranked 17th in the global IC design ranking, and rose to 16th in 2011; Spreadtrum quickly rose from 67th in 2009 to 17th in 2011.

IEK Manager Yang Ruilin also pointed out that a few weeks ago, he heard the news of Spreadtrum launching a new application processor. The processor’s die size is rumored to be 2 x 2mm, while the current MediaTek’s application processor die The size is 4 x 4mm. "It is worth noting whether Spreadtrum's baseband chip contains RF, because this will pose a threat to MediaTek."

"Most of Taiwan's industry players have actively entered the field of smartphones and tablet chips. Therefore, there is still optimism in the second half of the crisis," Cai Jinkun said. He said that the global demand for smart handheld devices, coupled with the deferred demand for PCBs, is expected to inject growth momentum into domestic IC design. It is estimated that revenue in the third quarter will be NT$108.2 billion, and there is a risk of decline in the fourth quarter, and the output value is expected. 103.3 billion Taiwan dollars. In total, the 2012 annual growth rate was 3.8%, and the output value was 400.2 billion Taiwan dollars.