Counterpoint Research is attending the 2023 IEEE-EPS-IESA Workshop on Semiconductor Packaging
Our Senior Analyst, Ashwath Rao will be attending the workshop at The LaLiT Ashok, Bengaluru. You can schedule a meeting with him to discuss the latest trends in the technology, media and telecommunication sector and understand how our leading research and services can help your business.
When: 30th November & 1st December 2023
Where: The LaLiT Ashok, Bengaluru, Karnataka, India
About the Workshop:
A collaborative initiative by IESA and IEEE-EPS (USA), this workshop aims to unite stakeholders across government, industry, academia, policymaking, entrepreneurship, and students to foster innovation in semiconductor packaging, focusing on microsystems packaging and manufacturing. Addressing manufacturing and educational needs, the workshop catalyzes collaborative research discussions.
Click here (or send us an email at contact@counterpointresearch.com) to schedule a meeting with them.
Renesas acquires Sequans Communications for $249 million, expanding into the cellular IoT market.
The acquisition provides Renesas access to Sequans’ expertise, customer base, and partnerships in the 5G/4G cellular IoT sector.
With cellular IoT module shipments expected to exceed 1.2 billion units by 2030, this strategic move aligns with Renesas’ expansion plans and reflects a broader trend of consolidation in the IoT market.
Japanese semiconductor manufacturer Renesas Electronics has acquired France-based Sequans Communications, a pioneer in 5G/4G cellular IoT chips and modules. The acquisition will enable Renesas to expand its portfolio and expertise in the rapidly growing cellular IoT market. Although Renesas is a prominent name in the world of microcontroller units, the company has not historically specialized in connectivity.
According to the deal, Renesas will purchase all outstanding common shares of Sequans, including American Depositary Shares (ADS), for $3.03 per ADS in cash. This values Sequans at around $249 million, considering net debt. The transaction is expected to close by Q1 of calendar year 2024, subject to regulatory approvals.
Here are some analysis of the deal between Renesas and Sequans:
Renesas acquires Sequans to bolster its cellular IoT capabilities and tap into the expanding market. With this acquisition Renesas gains access to Sequans’ US and European customer base, enhancing global reach and market growth.
The partnership between Renesas and Sequans, which began in 2020, has already resulted in successful collaborations to develop modules that combine embedded processors and analog front-end products with wireless chipsets for IoT applications. Sequans has the broadest product portfolio of its non-Chinese competitors except Qualcomm which is why Renesas acquired Sequans.
The Renesas-Sequans collaboration is primed to meet the rising demand for smart solutions. The merger offers diverse choices for customers seeking to reduce dependence on the Chinese ecosystem and gain valuable expertise from a single source.
Renesas plans to integrate Sequans’ connectivity products, aiming to strengthen its presence in the Wide Area Network (WAN) market. They will collaborate on 5G and high-performance 4G modules based on Sequans’ Taurus 5G modem and Renesas’ analog front-end tech.
Renesas’ Acquisitions Over Time
Source: Counterpoint Research
Conclusion
According to Counterpoint’s report on IoT trends, the IoT market is highly fragmented, with over 4,000 players in IoT value chain competing for a share. This fragmentation has led to low margins and has made it difficult for companies to grow and expand. Consequently, there has been a wave of consolidation in the market, with companies merging or being acquired by larger players, a trend that is expected to continue as the market matures. In 2022, there were significant acquisitions within the IoT module industry, such as Telit’s acquisition of Thales and Mobilogix’s cellular IoT divisions, Semtech’s acquisition of Sierra Wireless, and Aeris Communications’ acquisition of Ericsson’s IoT accelerator and connected vehicle cloud business. As the cellular IoT module market continues to mature, we expect more consolidations aimed at providing improved solutions and maintaining competitiveness. Non-Chinese brands are now following the trend of becoming integrated players in the IoT value chain like Chinese module vendors, and it seems like Renesas is also following suit. For Renesas to compete with Chinese module giants like Quectel and Fibocom, it is crucial for them to develop a strong and effective business strategy specific to each international market they want to operate in.
For detailed research, refer to the following report available for subscribing clients and individuals:
Counterpoint is attending IDMC on September 13th – September 14th, 2023
Our analysts will be attending the India Display Manufacturing Conference (IDMC), 2023. You can schedule a meeting with them to discuss the latest trends in the technology, media and telecommunications sector and understand how our leading research and services can help your business.
Here is the list of team members attending the event:
At IDMC, thought leaders from across the world will converge to share their insights and perspectives on the sector’s outlook and opportunities. This event will bring together prominent investors, business leaders in the global display industry, and leading Indian corporations.
Additionally, the event will feature an exhibition, unveiling the latest display products and trends, making it a gathering for anyone seeking to stay at the forefront of the industry.
Click here (or send us an email at contact@counterpointresearch.com) to schedule a meeting with them
Weaker-than-expected macroeconomic situation continued to weigh on TSMC’s Q2 2023 business performance. Muted smartphone and PC/NB demand negatively impacted the overall utilization rate during the quarter. Though largely expected by the market, the company further cut its full–year revenue guidance on the weaker end demand expected for H2 2023. However, TSMC projects a strong AI demand in Q32023 and, going forward, sees itself as the key enabler for AI GPUs and ASICs that require a large diesize. We give ourtakes on the key points discussed during the earnings call:
Is AI semiconductor demand real?
Chairman(Mark Liu):Neither can we predict the near future, meaning next year, how the sudden demand will continue or will flatten out. However, our model is based on the data center structure. We assume a certain percentage of the data center processors are AI processors and based on that, we calculate the AI processor demand. And this model is yet to be fitted to the practical data later on. But in general, I think the trend of a big portion of data center processors will be AI processors is a sure thing. And will it cannibalize the data center processors? In the short term, when the capex of the cloud service providers is fixed, yes, it will. It is. But as for the long term, when their data service – when the cloud services have the generative AI service revenue, I think they will increase the capex. That should be consistent with the long-term AI processor demand. And I mean the capex will increase because of the generative AI services.
Adam Chang’sanalyst take: Supply chain checks reveal that cloud service providers such as Microsoft, Google, and Amazon aggressively invest in AI servers. NVIDIA is continuing to add orders for the A100 and H100 to the supply chain, echoing the strong momentum for AI demand. TSMC holds a significant market share in AI semiconductor wafer production, mitigating the risk of misjudging CoWoS capacity expansion concerning AI demand.
Akshara Bassi’s analyst take: Over the medium term, as hyperscalers continue to develop their own proprietary AI models and look to monetize through AI-as-a-Service and simiilar models, the infrastructure demand should remain robust.
Can AI semiconductor demand offset short-term macro weakness?
CEO (Che-Chia Wei):Three months ago, we were probably more optimistic, but now it’s not. Also, for example, China economy’s recovery is actually also weaker than we thought. And so, the end market demand actually did not grow as we expected. So put all together, even if we have a very good AI processor demand, it’s still not enough to offset all those kinds of macro impacts. So, now we expect the whole year will be -10% YoY.
Adam Chang’s analyst take: Although there is a lot of promise around AI, it would only account for around 6% of total revenues in 2023. Therefore, AI is not a panacea for broader short-term demand weakness.
Is TSMC CoWoScapacity enough to fulfill current AI demand?
CEO (Che-Chia Wei): For AI, right now, we see very strong demand, yes. For the front-end part, we don’t have any problem to support, but for the back end, the advanced packaging side, especially for the CoWoS, we do have some very tight capacity to — very hard to fulfill 100% of what customers needed. So, we are working with customers for the short term to help them to fulfill the demand, but we are increasing our capacity as quickly as possible. And we expect these tightening will be released next year, probably toward the end of next year. Roughly probably 2x of the capacity will be added.
Adam Chang’s analyst take: Due to TSMC’s CoWoS capacity constraints, the company is finding it challenging to fulfill the strong AI demand from customers,, including NVIDIA, Broadcom, and Xilinx, at the moment. NVIDIA is actively seeking second- source suppliers as TSMC looks to outsource some of its production.
N3E/N3/N2 status
CEO (Che-Chia Wei): N3 is already involved in production with good yield. We are seeing robust demand for N3 and we expect a strong ramp in the second half of this year, supported by both HPC and smartphone applications. N3 is expected to continue to contribute mid-single-digit percentage of our total wafer revenue in 2023. Our N2 technology development is progressing well and is on track for volume production in 2025. Our N2 will adopt a narrow sheet transistor structure to provide our customers with the best performance, cost, and technology maturity.
Adam Chang’s analyst take: Apple is the sole customer expected to adopt TSMC’s 3nm technology in its A17 Bionic and M3 chips during 2023. The Qualcomm Snapdragon 8 Gen 4 processor is also anticipated to join the TSMC 3nm family (N3E) in 2024. Moreover, Intel is likely to adopt TSMC’s 3nm technology for its Arrow Lake CPU, scheduled to launch in H2 2024.
Results summary
Q2 2023 results beat slightly: TSMC reported $15.67 billion in sales, slightly above the midpoint of guidance. EPS beat consensus due to higher non-operating income. Both GPM and OPM slightly beat guidance thanks to favorable FX and cost control efforts.
Q3 2023 guidance in line: The management guided $16.7-$5 billion (+9% QoQ at midpoint), gross margin in the range of 51.5%-53.5%, and operating margin in the range of 38%-40%. The gross margin dilution resulting from the N3 ramp-up would be 2-3 percentage points in Q3 2023 and 3-4 percentage points in Q4 2023. This impact would persist throughout the entire year of 2024, affecting the overall gross margin by 3-4 percentage points. Notably, this dilution is higher than the 2-3 percentage points gross margin dilution experienced during the N5’s second year of mass production in 2021.
2023 revenue guidance revised down but expected: TSMC revised down the full-year revenue guidance to -10% YoY. The management sees weaker-than-expected macroeconomics in H2 2023 affecting the demand for all applications except for AI.
Strong AI demand, 50% revenue CAGR forecast: AI revenue currently makes up 6% of TSMC’s total revenue. The company anticipates a remarkable compound annual growth rate (CAGR) of nearly 50% from 2022 to 2027 in the AI sector. As a result of this significant growth, the AI revenue percentage share in TSMC’s total revenue is projected to reach the low teens by 2027.
CoWoS capacity expected to double by 2024 end: TSMC is experiencing strong demand in the AI sector, with sufficient capacity for the front-end part but facing challenges in advanced packaging, particularly CoWoS.It is working with customers to meet demand in the short term while rapidly increasing capacity which it expects to double by the end of 2024, easing the current tightness.
Financial journalist Govindraj Ethiraj talks to Neil Shah, Our Research Vice President and talked about India’s Latest Big Bang Electronics projects and where will they land.
Podcast Chapter Markers
[00:56] Tata Steel sacks 38 employees, Sets A New Benchmark For Disclosures
[04:07] India’s Latest Big Bang Electronics Projects, Where Will They Land? with Neil Shah
[15:03] Hmm…IVF clinics are under the tax man’s scanner
[18:39] Mark Zuckerberg and Meta launch Threads, A Twitter Alternative, 10 million downloads and counting
[19:32] The CEOs Diet: The How & Why Of Breakfasts In Our Busy Lives
Joining the US-led effort to restrict chipmaking equipment exports to China, Japan has put in place restrictions that are more draconian than that of the US and where the Japanese state has effectively taken control of the country’s semiconductor capital equipment market.
Japan is imposing export restrictions on 23 types of equipment used to make semiconductors. But instead of limiting the restrictions just to China, it has flipped the entire industry on its head.
Instead of being able to ship to anyone unless told not to, now the Japanese companies can’t ship to anyone unless they are allowed to.
This effectively gives the Japanese trade ministry life and death power over semiconductor equipment, which may prove to be detrimental to the local industry’s health in the long run.
Unlike the US Department of Commerce, where the presumption is denial of a license, it seems the Japanese Ministry of Trade will operate under the presumption of granting licenses.
Any other mode of operation would be highly detrimental to its own industry.
This represents a bigger step than what many analysts were expecting from Japan. It will really hinder China’s ability to manufacture chips at non-leading edge nodes below 20nm.
This was the weakness of the new measures announced by the US last October, as at 20nm-10nm, it is possible to build a fab using non-US equipment.
However, when you add Japan into the mix, this then becomes virtually impossible and there will be no point in buying machines from ASML, meaning that the combination of the US and Japan represents an effective embargo.
This means that China will now have to rely on domestically produced capital equipment which is going to be a real problem.
Although Huawei claims to be able to manufacture at 14nm, it did not say whether it could do so at volume with good yields which is what is required for Huawei to be able to use these chips economically in its products.
The net result is that Japan’s actions make the US actions far more effective and deal a blow to any workarounds that the Chinese may have found to build fabs without US equipment.
This reinforces the view that China is in real trouble when it comes to semiconductors, which will hamper and slow its rise as a technological superpower.
That being said, there will be a likely bounce in the Chinese economy in H2 2023, although the lack of action on stimulating the economy remains a cause for concern.
If it comes, the rising tide will lift all boats and especially the beleaguered technology sector.
Micron: A display of weakness
China’s review of Micron on “national security” grounds is a tit-for-tat retaliation that shows just how weak its hand is in the game of semiconductor brinksmanship.
The Cyberspace Administration of China (CAC) has said it would review Micron’s imports into China to ensure that using its products would not compromise the security of its information infrastructure.
It seems that this move has nothing to do with national security but is instead an attempt to damage US interests in China without compromising its own technological ambitions.
If China was really concerned about “national security”, it would be reviewing many other companies. But a blockade on the import of products from many of these companies would hurt China just as much as the US, if not more.
In the case of Micron, China can still buy the same products from South Korea or Japan with no ill effects on its development of technology.
This is precisely why Micron has been targeted. It is unlikely that other companies that export chips to China will be targeted as it would do more harm than good.
The move is also unlikely to give China much in the way of negotiating leverage and so this will prove to be an isolated incident that is pretty irrelevant to the overall technological and ideological struggle.
(This guest post was written by Richard Windsor, our Research Director at Large. This first appeared on Radio Free Mobile. All views expressed are Richard’s own.)
EV sales in the US grew by 52% YoY during Q3 2022.
Top 10 EV models constituted almost 70% of EV sales.
US EV sales are expected to exceed 10 million units annuallyby 2030.
New Delhi,London, San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – January 4, 2023
The US electric vehicle* (EV) sales** grew by almost 52% YoY during Q3 2022 despite macroeconomic headwinds, according to Counterpoint Global Passenger Vehicle Model Sales Tracker. Battery EVs (BEVs) constituted over 80% of the total US EV sales. BEV sales grew by more than 78% YoY during Q3. Tesla’s Q3 sales eclipsed the next 15 brands combined.
Commenting on market dynamics, Associate Director Hanish Bhatia said, “Overall US passenger vehicle sales will likely suffer due to macroeconomic pressures until at least mid-2023. Higher interest rates are hitting both loan and leasing routes to ownership. However, the affordability of EVs will be revitalized once EV policies and credit subsidies take effect.”
Source: Counterpoint Global Passenger Vehicle Model Sales Tracker, Q3 2022
Market summary
Teslasales in the US grew by more than 56% YoY during the quarter. Although Tesla has had some headwinds in meeting orders and delivering vehicles, it has remained the undisputed market leader for at least the previous 19 quarters. The Model Y and Model 3 are its most sold models.
Ford sold over 18,000 EV units during Q3, registering almost 132% YoY growth. With the introduction of the electric version of the best-selling F-150, the company has been able to mark its position in the US EV market.
Chevrolet catapulted its EV sales growth rate by 225% YoY to over 14,000 units. The Bolt and Bolt EUV are the only two Chevrolet EV models being offered currently. The Bolt EUV sales volume almost quadrupled from the previous year. The brand is on track to introduce three new EV models – Silverado EV, Equinox EV and Blazer EV.
The top 10 best-selling EV models constituted almost 70% of the country’s EV sales in Q3. Tesla’s Model Y has been the best-selling EV model since the third quarter of 2020.
Commenting on the market outlook, Research Director Jeff Fieldhack said, “Tax credits are expected to boost EV demand. Moreover, a price reduction is expected as more battery manufacturing firms are being set up across the North American continent. Batteries constitute 40% to 45% of the cost of EVs. The availability of multiple battery suppliers and a decrease in logistics costs for batteries will positively impact the US EV market. EV sales in the US are expected to exceed 10 million units annually by 2030 at a CAGR of 37%, according to Counterpoint’s Global Passenger Vehicle Forecast.”
*For EVs, we consider only BEVs and PHEVs. This study does not include hybrid EVs and fuel-cell vehicles.
**Sales refer to wholesale figures, i.e. deliveries from factories by the respective brands/companies.
Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
BYD led China’s EV market, followed by Wuling, Tesla, Chery and GAC Group.
Top 10 EV models in China accounted for more than 44% of the country’s total Q2 2022 EV sales.
One in four cars sold in China will have an electric powertrain by the end of 2022.
New Delhi,Beijing, London, San Diego, Buenos Aires, Hong Kong, Seoul – September 15, 2022
China’s Q2 2022 passenger electric vehicle (EV) sales* almost doubled from that a year ago, despite the quarter being a weak one, according to Counterpoint’s Global Electric Passenger Vehicle Model Sales Tracker. Pure battery electric vehicles (BEVs) accounted for almost 78% of total EV sales, while the remaining were plug-in hybrid electric vehicles (PHEVs). BYD remained the market leader, followed by Wuling and Tesla. Emerging brands, such as Xpeng Motor, Neta (Hozon Auto), Leapmotor, Li Auto, NIO and AITO (Seres), proved to be strong competition for the top players.
Commenting on the market dynamics, Senior Analyst Soumen Mandal said, “China is a mature EV market but it still has immense potential to expand further. Fresh COVID-19 cases from March 2022 onwards and the supply chain crisis due to the Russia-Ukraine war have adversely affected the Chinese automotive industry. Had it not been for these factors, the China EV market would have achieved sharper growth. The price hike by most Chinese automakers during March, followed by strict COVID-19 lockdowns during April and May around Shanghai, restricted growth in the domestic automotive industry. Although better results are expected in H2 2022, the economic downturn, energy crisis, supply chain bottlenecks and rising geopolitical tensions may hinder market growth, especially for EVs.”
Market summary:
BYD Auto: BYD, which has been the market leader in China since mid-2021, sold more than 353,000 EV units in Q2 2022. The automaker’s BEV segment grew 229% YoY while its PHEV division expanded 312% YoY. The company’s decision to discontinue the production and sales of pure ICE vehicles since March 2022 allowed it to focus on electrified vehicles and become the global EV leader.
Wuling: The SAIC-GM-Wuling joint venture has been very successful in China. Wuling’s Hongguang Mini EV has been the flag bearer for the brand since the end of 2020 and has been China’s best-selling EV model for more than the past 18 months. Wuling’s EV sales grew almost 16% YoY during Q2 2022.
Tesla: The pandemic-related lockdowns in Q2 2022 severely hurt Tesla’s business. Production ramp-ups were almost completely halted in April and May during which its sales in China fell 49% YoY to reach the lowest number for the automaker since 2020. The situation improved only after production resumed to full capacity in June 2022. The company ended Q2 2022 on a positive note with 10% YoY growth in sales.
Commenting on the EV infrastructure development, Associate Director Brady Wang said, “Direct subsidies to consumers have played a big role in increasing EV adoption across China. Now, as the government plans to phase out direct subsidies to consumers, the country’s dual credit policy for EV production is likely to play an important role. Moreover, many laws that were implemented to save China’s automotive industry from the onslaught of foreign OEMs are being lifted as domestic brands have matured and are now even penetrating other markets, such as Europe and Southeast Asia. Moreover, China’s component industry, especially the battery supply chain, has been strong and is expected to maintain its global dominance. Apart from the increased EV sales and a strong battery supply chain, China also has a good charging network and domestic players are currently focusing on developing proper battery recycling facilities. China is at the forefront in every aspect of the EV ecosystem and has become the leading global figure in the EV space.”
The top 10 EV models in China accounted for more than 44% of the country’s total EV sales in Q2. Wuling’s Hongguang Mini EV remained the undisputed best-selling model for the quarter followed by BYD’s Song and Tesla’s Model Y. However, in June 2022, the Model Y overtook the Hongguang Mini EV to become the top-selling model. China’s EV market is dominated by domestic brands, along with Tesla. Six of the top 10 models were from BYD, among which the BYD Yuan Plus and BYD Dolphin were released after Q2 2021.
Source: Counterpoint Global Passenger Electric Vehicle Model Sales Tracker, Q2 2022
Commenting on the market outlook, Research Vice President Neil Shah said, “EV sales in China constituted 15% of the total passenger vehicle sales in 2021. According to Counterpoint’s Global Passenger Car Forecast, EV sales are expected to cross the 6-million-unit mark by the end of this year. The market will likely remain subdued due to the ongoing chip crisis, COVID-19 outbreaks, energy crisis, geopolitical tensions and rising consumer inflation. However, we believe one in four cars sold will have an electric powertrain by the end of 2022.”
*Sales here refer to wholesale figures, i.e. deliveries out of factories by respective brands/companies.
*Under electric vehicles (EVs), we are considering only battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). Hybrid electric vehicles and fuel cell vehicles (FCVs) are not included in this study.
Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
Net revenue grew 28.3% YoY as the company recorded decent growth in all product groups and subgroups. Gross margin of 47.4% came in above the norm due to favorable pricing and improved product mix.
STMicro recorded net revenues of $3.84 billion for Q2 2022, primarily driven by the strong demand from factory automation, robotics and industrial infrastructure and automotive sectors.
STMicro is teaming up with 20+ car makers in power train electrification using its silicon carbide (SiC) MOSFET. Automotive market continued to see strong demand in Q2, with the ongoing electrification and digitalization transformation across the supply chain and automotive industry.
Automotive: Strong demand was seen in Q2 across the automotive supply chain due to the ongoing electrification and digitalization of the industry. Between the automotive and industrial markets, STMicro has around 102 projects spread over 77 customers. Multiple wins have been recorded in silicon carbide (SiC), power module and other electrical vehicle-related applications for Tier 1 automotive manufacturers. The Volkswagen Trinity project is a collaborative effort between Volkswagen Group and STMicro that aims to address multiple applications with new zonal architectures by adding an MCU and system-on-chip.
Industrial: This sector has seen a tremendous increase in semiconductor content due to the increase in digitalization, power management and efficiency in devices and systems. Design wins have been seen in intelligent power switches, MOSFETs and wireless charging solutions.
Consumer electronics and PC: This segment has shown some signs of softening. STMicro is focusing on selected high-volume smartphone applications and multiple design wins for wireless charging solutions in smartphones and smartwatches. Some of the consumer application design wins include a pressure sensor for hard disks, time-of-flight senses for laptops, and MasterGaN family for high-power-density charging adapters.
Segment revenues
Automotive and Discrete Group (ADG) revenues increased 35.1% on growth in both automotive and power discrete. ADG has seen increased capability in manufacturing.
Analog, MEMS and Sensors group (AMS) revenues grew 11.3% on higher analog, MEMS and imaging product sales.
Microcontrollers and Digital ICs Group(MDG) revenues increased 39.5% on growth in both microcontrollers and RF communications.
Company forecast
Revenues: Q3 2022 net revenues will be around $4.24 billion at mid-point, growing 32.6% YoY and 10.5% QoQ. Also, for the full year of 2022, revenues are expected to be in the range of $15.9 billion-$16.2 billion, driven by the strong demand in ADG. ADG and MDG will register growth, but AMS will be affected by tight capacity.
Demand and supply: Strong customer demand and planned investments will increase capacity in 2022. Manufacturing capacity for some products is fully saturated by the strong demand from factory automation, robotics and industrial infrastructure and automotive sectors. Backlog visibility is now above 18 months and well above the company’s current and planned manufacturing capacity through 2023.
Capex and investment: Capex in Q2 2022 was $809 million compared to $438 million in Q2 2021. For 2022, capex investment is expected to be in the range of $3.4 billion-$3.6 billion. Financial support from France for the 300-mm wafer fab in Crolles will result in a high-volume manufacturing plant ranging from 90nm to 28nm and covering embedded non-volatile memory, RF mixed signal and other technologies.
Key takeaways
In the long term, the 300-mm semiconductor manufacturing facility will be a major enabler for ST’s $20-billion-plus revenue ambition. The new fab in Italy will ramp up the production of SiC and GaN products in H1 2023.
High-volume applications such as smartphones, communication equipment, computers and 5G infrastructure products have resulted in an increase in semiconductor content per device. In the long term, power-related semiconductor and analog content will further increase as more and more people are embracing EVs and 5G-related equipment.
STMicro continues to drive design wins for car electrification, and with the increase in the use of silicon carbide, the revenue target is expected to reach $1 billion by 2023.
STMicro’s major growth driver in 2023 will be the automotive segment through the company’s alliance with Volkswagen Group.
Mobile and wearables, IT and industrial segments currently contribute around 80% of the semiconductor revenues in India.
‘Make in India’ and Production Linked Incentive schemes will boost local sourcing of semi-components in the coming years.
Further policy reforms and building of a semiconductor ecosystem will reduce reliance on imports going forward.
New Delhi, Seoul, San Diego, Buenos Aires, London, Hong Kong, Beijing – August 16, 2022
India’s semiconductor component market will see its cumulative revenues climb to $300 billion during 2021-2026, according to the ‘India Semiconductor Market Report, 2019-2026’, a joint research by the India Electronics & Semiconductor Association (IESA) and Counterpoint Research. IESA is the premier industry body representing the ESDM and intelligent electronics industry in India. It acts as a trusted knowledge partner to the central and state governments, helping devise policies and incentives for the industry to attract investments into India. The comprehensive research on India’s semiconductor market focuses on the bottom-up modelling unit as well as revenue demand for semiconductor components covering the entire Bill of Materials (BoM) of multiple end-device and equipment categories across seven major sectors in India – Mobile and Wearables, Information Technology, Automotive, Industrial, Telecom, Aerospace and Defence, and Consumer Electronics – from domestic consumption as well as export perspective. The report provides detailed recommendations, potential policies and a framework for building a robust domestic semiconductor ecosystem to boost local production and sourcing.
Source: India Semiconductor Market Report
IESA CEO and PresidentKrishna Moorthy said, “Before the end of this decade, there will be nothing that will not be touched by electronics and the ubiquitous ‘chip’. Be it fighting carbon emissions, renewable energy, food safety, or healthcare, the semiconductorchip will be all-pervasive. Imagine this – all children all over India get educated in virtual classrooms by the country’s best teachers. The chip makes it possible. Again, imagine everyone in the country gets quality healthcare and diagnostics done remotely. Medicines are delivered by drones at your doorstep, even in the farthest villages of India. The chip will make it possible, and we will see this in front of our eyes very soon. Let us make India the semiconductor nation.”
India is poised to be the second largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications. This demand is being pushed by the increasing pace of digital transformation among the country’s consumers, enterprises and public sector through the adoption of new technologies, from advanced connectivity to content consumption to the cloud. These cover smartphones, PCs, wearables, cloud data centers, Industry 4.0 applications, IoT, smart mobility, and advanced telecom and public utility infrastructure.
Mobile and wearables, IT and industrial sectors alone contributed to almost 80% of the semiconductor revenues in India in 2021. Commenting on the mobile and wearables industry, Research Director at Counterpoint ResearchTarun Pathak said, “The mobile and wearables sector was the biggest contributor to India’s semiconductor industry in 2021. Mobile devices have become a primary tool for internet connectivity given that broadband and laptop/PC penetration remains low. In the last five years, the ‘consumer digital transformation’ has accelerated with the availability of cheap mobile internet, and mobile devices have connected a big part of the Indian population. Also, the gradual shift from feature phones to smartphones has been generating increased proportions of advanced logic processors, memory, integrated controllers, sensors and other components. This will continue to drive the value of the semiconductor content in smartphones, which is still an under-penetrated segment in India, aided by the rise of wearables such as smartwatch and TWS.”
Commenting on the potential opportunity in the mid-to-long term, CounterpointResearch Vice President Neil Shah said, “The next big boom for semiconductor components will come from across sectors. However, the telecom sector with the advent of 5G and fiber network rollout will be a key catalyst in boosting the semiconductor components consumption. This consumption will not only come from the advanced semiconductor-heavy 5G and FTTH network infrastructure equipment, which will contribute to more than 14% of the total semiconductor consumption in 2026, but also from the highly capable AI-driven 5G endpoints, from smartphones, tablets, PCs, connected cars, industrial robotics to private networks. Also, ongoing efforts to embrace cleaner and greener vehicles (electric vehicles) will provide an impetus for the automobile industry to adopt advanced technologies, which in turn will boost the demand for semiconductor components in India. Consumer electronics, industrial, and mobile and wearables will be the other key industries for the growth of the semiconductor market in India. Further, this semiconductor demand will not only be driven by domestic consumption but also by the growing share of exports.”
In 2021, India’s end equipment market stood at $119 billion in terms of revenue. It is expected to grow at a CAGR of 19% from 2021 to 2026. The Electronic System Design and Manufacturing (ESDM) sector in India will play a major role in the country’s overall growth, from sourcing components to design manufacturing. The semiconductor industry in India is on a path to immense growth over the next few years to help India’s economy reach the next stage for both domestic consumption and exports. While the country is becoming one of the largest consumers of electronic and semiconductor components, most components are imported, offering limited economic opportunities for the country. Currently, only 9% of this semiconductor requirement is met locally.
The demand for semiconductors is growing astronomically worldwide. However, multiple factors, including the pandemic and global geopolitical events, have heavily impacted the manufacturing of the components. This research is aimed at analyzing the market situation, manufacturing supply chain, and prospects for India as a premier manufacturing destination not only for finished goods but also for semiconductor components. While the local production is currently low, India has immense potential to become a leading semiconductor component supplier in the coming years, provided the talent pool and resources are utilized correctly. The government’s initiatives, from ‘Make in India’ to Production Linked Incentive (PLI), will help accelerate this journey but will need some additional reforms to increase local manufacturing and sourcing of semiconductor components. If this is done, the semiconductor market can be a major contributor to economic growth, and India’s push to become a $5-trillion economy.
IESA Vice PresidentSunil G Acharya said, “Semiconductors will be inside everything intelligent. India is becoming a tech-centered growth story with advancing technologies and innovation being integral to democratizing access. The semiconductor study will play a major role in India’s growth. A large young population combined with an increased focus on digitalization, advancing skill levels, growing manufacturing and foreign investment traction will take India’s semiconductor industry to the next level in the coming years.”
Commenting on the current stage of local manufacturing, Research Analyst at Counterpoint Research Shivani Parashar said, “To achieve India’s semiconductor vision, a robust and indigenous technology ecosystem will be required to build on the existing policy foundation through PLI-like schemes. Renewed focus is needed for incentivizing the country’s design ecosystem in a manner that helps create a stronger foundation for design-led manufacturing and allied sectors, be it for local consumption or exports. This strategy will transform the landscape in the coming years to drive local sourcing trends. The share of local sourcing is expected to grow to over 17% by 2026. This translates into a six-fold rise in potential locally-sourced semiconductor revenues.”
IESA Vice President (Public Policy, Government and Corporate Relations) Anurag Awasthi said, “From safety razors to space shuttles, everything will be powered by the chip. Let us ensure our chips are not down in the world of tomorrow! Keeping this as an aim, MeitY is working further towards making India one of the next technology powerhouses, especially in a pandemic-struck world where there has been a realization of the need for more flexible and diverse supply chain ecosystems. The government is keen to leverage India’s existing strengths in mobile manufacturing, software and start-up hubs for other critical industries in the ESDM sector.”
Research Analyst at Counterpoint Research Priya Joseph added, “Government policies including PLI, New Electronics Policy, 2019, Electronics Manufacturing Clusters, and Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS) are all being equipped to boost domestic design, manufacturing and assembly. To help drive more initiatives under the themes of Make in India and Digital India, the government, in its last budget, pushed the total allocation to $936.2 million. This step not only aims to incentivize India-based manufacturing but also catalyze investments in the sector to support job creation, ease of doing business, import reduction and export promotion.”
To access the full report, please contact IESA at the coordinates below.
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
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