Semiconductor Industry: Demand Increasing for PCs, Smartphones, and Game Console
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. — Ed.
Backed by rising demand for non-face-to-face services, strong PC sales are expected to continue going forward. With the advent of Wi-Fi 6, sales related to networking chipsets are climbing. Due to the US’s regulation of Huawei, inventory stockpiling demand for smartphone parts is also in play. And, the fact that Sony’s PS5 (to be launched in 2H20) is to be equipped with an SSD should contribute to strengthening NAND demand.
Covid-19 pushing up demand for PCs and networking semiconductors
Going forward, PC demand should continue improving. The Taiwanese media has reported that, due to Covid-19, robust demand for networking chips, notebook chip solutions, healthcare sensors, and MCUs is expected to last into October. In the case of insufficient supply relative to demand, networking semiconductor prices could rise. Along with greater demand for non-face-to-face services due to Covid-19, the introduction of Wi-Fi 6 is contributing to strong chip sales growth.
Amid increasing demand for telecommuting and online education due to Covid-19, demand for notebook PCs is continuing to expand. Of note, Taiwanese PC-related supplier Elan Microelectronics is forecasting record-high sales in June. Excelliance MOS, Niko Semiconductor, and Sinopower Semiconductor are also predicting record-setting monthly sales from end-2Q20 into start-3Q20.
Buoyed by new product launches, smartphone and game console demand to strengthen
Demand for smartphone parts, which proved sluggish in 1H20, is anticipated to improve in 2H20. Facing heavy regulations by the US government, Huawei is increasing orders to accumulate components inventory (including DRAM, NAND, etc) prior to the implementation of new regulations in September. Under US regulations, Huawei is expected to ramp up its annual orders for MediaTek APs by more than 300% in order to replace its self-designed APs.
Sales of the iPhone 12 series (to start mass production in July) should also arrive strong. We estimate 2020 iPhone 12 sales volume at 68mn units (+12% y-y vs 2019 iPhone 11 sales). Meanwhile, Sony’s PS5 (to launch in 2H20) should contribute to fortifying components demand. NAND demand, in particular, looks set to benefit, as the PS5 is to be equipped with an SSD instead of an HDD for the first time in the console series. Assuming 825 GB of SSD storage per unit and 20mn units sold per year, the PS5 is expected to push up global NAND demand by 5% pa.