Semiconductor & Display Trends - Defense Logistics … & Display Trends November 2016 Technology Vice President & Chief Analyst +1 (310) 524-4083 © 2016 IHS Markit. All Rights Reserved.

© 2016 IHS Markit. All Rights Reserved.© 2016 IHS Markit. All Rights Reserved.

Semiconductor & Display Trends

November 2016

Technology

Vice President & Chief Analyst

+1 (310) 524-4083

mailto:[email protected]

© 2016 IHS Markit. All Rights Reserved.

Electronics & semiconductorforecast outlook

The Start of a New Cycle

2


Electronics market – Growth goes negative for 2nd time in 14 years

3

• Five year CAGR = 2.2%

• Industrial Electronics leads growth followed by Automotive, Consumer & Wired Comm

• Industrial Electronics passed Data Processing as largest market in 2012; Wireless followedin 2013

10.3%

7.9% 8.3%

6.0%

2.6%

-8.4%

13.3%

7.4%

3.6% 4.0% 4.1%

1.9%

-0.3%

2.7%3.3%

2.2%3.0%

-10%

-5%

0%

5%

10%

15%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Year-

on-Y

ear

Gro

wth

Global Electronic Systems Revenue2015 WW Revenue = $2.08 T

Source – IHS Application Market Forecast Q3 2016


Electronics growth weighed down by Wireless & Data Processing

4

-4%

-2%

0%

2%

4%

6%

-10% -8% -6% -4% -2% 0% 2% 4% 6% 8%

WW

Ma

rke

t C

AG

R F

ore

ca

st

’15 t

o ‘2

0

2016 Growth

Wireless

Automotive

Industrial

Consumer Wired

Data

Processing



Quarterly semiconductor forecast

5

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Q1

'08

Q2

'08

Q3

'08

Q4

'08

Q1

'09

Q2

'09

Q3

'09

Q4

'09

Q1

'10

Q2

'10

Q3

'10

Q4

'10

Q1

'11

Q2

'11

Q3

'11

Q4

'11

Q1

'12

Q2

'12

Q3

'12

Q4

'12

Q1

'13

Q2

'13

Q3

'13

Q4

'13

Q1

'14

Q2

'14

Q3

'14

Q4

'14

Q1

'15

Q2

'15

Q3

'15

Q4

'15

Q1

'16

Q2

'16

Q3

'16

Q4

'16

Q1

'17

Q2

'17

Q3

'17

Q4

'17

Q2 & Q3 2016 surge to solid growth; Boost full year to only -1.1% decline


Quarter-to-Quarter Growth

Supply ChainSeizes

‘Snap Back’More Than Anticipated

Alignment with Weak Electronics

Seasonality

Q2 Becomes New Peak

Weak 2015 Start

WeaknessContinues


Annual semiconductor outlook

6

23.6%

4.1%

10.3%

3.9%

-5.1%

-10.9%

34.1%

1.3%

-2.5%

6.4%8.3%

-2.0%-1.1%

4.8% 5.1% 4.3% 4.0%

-20%

-10%

0%

10%

20%

30%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Year-

on-Y

ear

Gro

wth

• Semiconductor market growth outlook – Next four years challenging

• June 2016 begins tenth semiconductor industry cycle– mid-single digit growth

• Long-term outlook sees five-year CAGR of only 3.4%

Global Semiconductor Revenue

2015 Revenue = $347.1B



Historical 12 month moving average

7

Source – WSTS

PC Multimedia PC WWW Mobile Phone /

Mobile PC

GUI PCConsumer

Electronics

Economy


June 2016 – Start of the tenth semiconductor cycleMost cycles last roughly four years

8

Source – WSTS


3/12 and 12/12 moving averages

9


-35%

-25%

-15%

-5%

5%

15%

25%

35%

45%

55%

Ma

r-03

Aug

-03

Ja

n-0

4

Ju

n-0

4

Nov-0

4

Apr-

05

Sep

-05

Fe

b-0

6

Ju

l-0

6

Dec-0

6

Ma

y-0

7

Oct-

07

Ma

r-08

Aug

-08

Ja

n-0

9

Ju

n-0

9

Nov-0

9

Apr-

10

Sep

-10

Fe

b-1

1

Ju

l-1

1

Dec-1

1

Ma

y-1

2

Oct-

12

Ma

r-13

Aug

-13

Ja

n-1

4

Ju

n-1

4

Nov-1

4

Apr-

15

Sep

-15

Fe

b-1

6

Ju

l-1

6

Dec-1

6

Ma

y-1

7

Oct-

17

IHS 12/12 Average IHS 3/12 Average

IHS 12/12 Average Fcst IHS 3/12 Average Fcst


-2%

0%

2%

4%

6%

8%

10%

-8% -6% -4% -2% 0% 2% 4% 6% 8% 10%

WW

Ma

rke

t C

AG

R F

ore

ca

st

’15 t

o ‘2

0

2016 Growth

Wireless

Automotive

Industrial

Consumer

Wired

Data

Processing

New semiconductor growth drivers for next 5 years

10



Historic alignment between economy and electronics Semiconductor growth profile continues to predict accurately

11

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

-30%

-20%

-10%

0%

10%

20%

30%

40%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Real

GD

P G

ro

wth

Ele

ctr

on

ic E

qu

ipm

en

t an

d S

em

ico

nd

ucto

r R

ev

en

ue G

row

th

Electronic Equipment OEM Factory Revenue Semiconductor Revenue WW Real GDP

Source – IHS Global Insight and IHS Technology


Semiconductor manufacturing trends

12


Capital expenditure provide verification for long-term growth opportunities as well as a technology roadmap

• Expenditures supporting Logic (Foundry) and Memory continue tofuel long-term industry revenue growth

CapEx by Technology 2010 - 2019

13


CapEx by Company 2015 & 2016

2016 capital expenditure forecast by company

• Expenditures for capital are focused on next generation technologyand expansions in China

> Samsung, TSMC, Intel, Globalfoundries, UMC and SMIC are all focused onadding capacity in China

14


Technology migrations drive 2nd half revenue

• Foundry revenue is driven by demand for advancedtechnology supporting Handsets, Graphics and computing

> 28 nanometer – Apple, MediaTek, Qualcomm, Xilinx, Nvidia, AMD,Huawei, HiSilicon, Spreadtrum

> 20 nanometer – Apple, Qualcomm, Xilinx

> 16/14 nanometer – Apple, Qualcomm, MediaTek, Xilinx, Nvidia, AMD, IBM, HiSilicon, Spreadtrum

> 10 nanometer - Apple, Qualcomm, MediaTek, HiSilicon

> 7 nanometer - Apple, Qualcomm, MediaTek, Xilinx, HiSilicon, Lenovo, IBM, AMD

28 nanometer

20 nanometer

16 / 14 nanometer

10 nanometer

7 nanometer

2011 2014 2015 2016 2017 2018

15


USA & Canada26.6%

European Union22.1%Emerging

Europe5.0%

Rest of Asia-

Pacific17.7%

China14.7%

Latin America

7.7%

Middle East3.2%

Africa3.0%

Source: IHS © 2016 IHS2015 Total = $73.3 T

China Has Become a Global Economic Powerhouse

16

China has the largest economy outside of the US and is a leader in its region

Share of World GDP, Nominal (2015)

0

2

4

6

8

10

12

14

16

18

20

Ch

ina

Sh

are

of

Wo

rld

wid

e

GDP, Nominal

Source: IHS © 2016 IHS

Top Ten Countries by GDP, Nominal


Workforce, infrastructure &technology have driven high-quality / low-cost productioncenters and China dominance ofelectronics production

Foxconn is the modern driver of the“company town / city” in China

Other countries such as the UShave lost critical skills/abilitiesto compete in the world ofmanufacturing in many keysectors

China Dominates Production of Electronics:Local markets growing to complement exports

17

Consumer and Mobile Electronics Production Revolve around China

Production Trends

0%

10%

20%

30%

40%

50%

60%

70%

To

tal M

ark

et

Wir

ele

ss

Co

mm

un

icati

on

s

Co

nsu

me

rE

lectr

on

ics

Da

ta P

roces

sin

g

Au

tom

oti

ve

Ele

ctr

on

ics

Wir

ed

Co

mm

un

icati

on

s

Ind

ustr

ial

Ele

ctr

on

ics

Ch

ina

Sh

are

of

Wo

rld

wid

e P

rod

uc

tio

n -

2015

Percent


China’s Share of WW Production


China – Development of a domestic supply chain

• Development of a semiconductor industry began with Project909 in 2000

> Semiconductor companies that were state owned were privatized

> HHNEC, SGNEC, ASMC were the initial companies founded as JV’swith multinational companies

• Technology development was limited due to US and Taiwanlaws

• SMIC became the first company to successfully developadvanced technology using 300mm wafers

> SMIC formed a JV with Elpida Memory in order to manufactureDRAM

• China’s goal: “Made in China Policy 2025”

> 40% self-sufficient by 2020 and 70% self–sufficient by 2025

18


China – Global challenges facing China

• China is the worlds largest purchaser of semiconductorsaccounting for more than 55% of global consumption

> China is also the worlds largest exporter of electronics systems

• China is aggressively adding capacity in order tomanufacture components to reduce the volume ofsemiconductors imported

• Semiconductor technology manufactured in China’s domesticfabs remains 3 generations the market leaders

> Advanced technology accounts for more than half of China’ssemiconductor imports

19


Manufacturing expansions in China

• Expansion in Chinese wafer fabs is focused on 300 mm

> Technology deployment targets ranges from n-1 to legacy “Morethan Moore”

Wafer Fab Expansions by Year in China

20


Chinese wafer capacity expansions will outpace short-term demand

• Global semiconductor industry continues in a slow growth period through 2020and possibly 2022

> Domestic demand must increase substantially in order to fill fab capacitybeyond 2017

Forecasted Capacity Expansions within China and Global Semiconductor Industry Revenue

21


Displays

22


Demand Driven By TV Area & New Applications

23

Display Long Term Forecast ( Area Base, Million Square Meters ) 2014 – 2022

© 2016 IHSSource: IHS

172

239

0.00

50.00

100.00

150.00

200.00

250.00

2014 2015 2016 2017 2018 2019 2020 2021 2022

Others

Office Appliance

Head Mount Display

Smart Watch

Public Display

Plasma TV

OLED TV

Mobile Phone

Mobile PC

LCD TV

Home Appliance

E-Book

Desktop Monitor

Automobile Monitor

CAGR 5%

CAGR 11%

CAGR 4%

CAGR 35%

CAGR 14%

CAGR 145%

CAGR -1%

CAGR 6%

CAGR 72%


Growth engine: Demand for larger size TV

LCD TV Panel Average Size (inch)


24

• Big size jump within these years : 39.2”@2015, 41.4”@2016, 42”@2017

• 2016 : 4x” segment surpass 3x” segment. 2018: 6x” segment surpass 5%.

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

32”

42”

44”

1” per year.

Average Size move from 32” to

42”

32” stable

40”-45” Mainstream

55” Growth


Possible restructure/shutdown of fabs in 2016-2017 • Struggling financial issues, low utilization, and low efficiency push panel makers to shut down fabs.

25

Possible fab shutdowns, 2016-2017

Panel

Maker Fab Gen/Glass Size Original Capacity Tech. Utilization now Products Ramp-up year Depreciated Year

Original EOL

Year

Samsung

Display

L6 Gen 5 120K/M a-Si 70-80% Mobile 2003 2009 2018

L7-1 Gen 7 155K/M a-Si 95% 40” TV 2005 2011 2018

AUO

L3C Gen 3.25 60K/M a-Si 35% Mobile 1999 2006 2017

L4A Gen 3.5 25K/M+ 35K/M Touch a-Si 50-60% Mobile, Touch 2001 2008 2017

L3D Gen 3.25 50K/M + 15K/M LTPS a-Si 0% Mobile, Touch 2001 2008 2015/End

L5A Gen 5 50K/M a-Si 60-70% Mobile, NB 2003 2009

L5D Gen 5 75K/M a-Si 50-60% Mobile, NB 2003 2011

Innolux

T0 Gen 4 20K/M a-Si+EPD 50% Mobile 2004 2009 2017

T1 Gen 5 60K/M a-Si 60% Mobile 2004 2010 2018

Fab1 Gen 3.25 70K/M a-Si 60-65% Mobile 1999 2005 2018

Fab2 Gen 3.5 85K/M a-Si 45-50% Mobile 2001 2007 2018

Fab3 Gen 5 145K/M a-Si 85% Mobile, NB 2003 2010

LG Display

P2 Gen 3.25 85K/M a-Si 52% Mobile, NB 1997 2004

P3 Gen 3.5 92K/M a-Si 50% Mobile, NB 2000 2004 2018

P4 Gen 5 150K/M a-Si 65% Mobile, NB 2002 2008 2019

P5 Gen 5 100K/M a-Si 62% Mobile, NB 2002 2007 2018

BOEB1 Gen 5 75K/M a-Si 0% Shift to MEMS 2004 2012 2016

B2 Gen 4 45K/M a-Si Stop Mobile 2008 2016 2016

CPTT2 Gen 3.5 73K/M a-Si <20% Mobile 2001 2007 2018

T1 Gen 3 35K/M a-Si <50% Mobile 1999 2006

Sharp Taki No.2C Gen 3.5 45K/M a-Si <45% Auto, Mobile 2000 2005

Taki CGS B Gen 4 95K/M a-Si, In-Cell <50% Mobile 2003 2010 2018

JDI

Mobara V3

LTPS Gen 4 40K/M LTPS <50% Mobile 2002 2012 2016

STL Higashiura

#1& #2Gen 3.25 36K/M LTPS+OLED <50% Mobile 1999 2007 2017



Capacity Area Growth vs. Demand

• 1H’16 : Oversupply. 2H’16 : Tightness. The panel price increase in 2H’16 has somehow reflected

the tightness in ’17 and ’18.

• 2017 and 2018 will be tight due to fab restructure and LCD TV area growth. To cope with the

tightness, panel makers might have to pull in new fab construction schedules.

• In reality, the LCD TV demand will be influenced by the panel price increase in 2017-2018.

2013 2014 2015 2016 2017 2018 2019

LA LCD, AMOLED, AMEPD Demand Y/Y% 6% 14% 5% 5% 5% 6% 5%

TFT Capacity for AM Applications Y/Y% 5% 5% 7% 6% 2% 4% 7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Ye

ar/

Ye

ar

Gro

wth

Rate

s (

%)

Display demand area growth vs. capacity area growth


Oversupply

Inventory carried over

from previous year

New TV size/area demand

Shortage

Tightness

Oversupply

Old fab restructure/shutdown


NB and Monitor Panel Price Stabilize due to low supply

27

Notebook Panel vs. Demand (Million Units) Monitor Panel vs. Demand (Million Units)

0

20

40

60

80

100

120

140

160

180

200

2015 2016 2016Demand

2017 2017Demand

CEC-Panda Sharp Samsung

Panasonic LG Display InfoVision

HannStar CPT Innolux Corp.

BOE AUO

0

20

40

60

80

100

120

140

160

2015 2016 2016Demand

2017 2017Demand

CEC-Panda Sharp Samsung

Panasonic LG Display InfoVision

HannStar CPT Innolux Corp.

BOE AUO

165M 170M

162M 172M

180M 139M

134M 137M

131M 134M


Growth engine: Higher resolution

28

Smartphone, Tablet & Notebook PPI Trend (million units)


0

500

1000

1500

2000

2500>600 500-600450-500 400-450350-400 300-350250-300 200-250150-200 100-150

0

50

100

150

200

250

300

300-350 250-300

200-250 150-200

100-150 50-100

0

50

100

150

200

250

350-400 300-350

250-300 200-250

150-200 100-150

50-100

400ppi ↑

500ppi ↑

250ppi ↑150ppi ↑

28


Virtual Reality - Integrated Display Headset List

29

Model NameFacebook HTC Sony FOVE Starbreeze

Oculus Rift Vive Pre PlayStation VR FOVE VR StarVR

Photos

Start Price $599 $799 $399 $500 TBC

Launch Time Mar’16 Apr’16 Oct’16 Q1’16 TBC (Acer)

Display pieces 2 pcs OLED 2 pcs OLED 2 pcs OLED 1pcs LCD 2 pcs LCD

Display

2 pcs 1080x1200

OLED

90mm (3.54’), 456

ppi

2 pcs 1080x1200 OLED

92mm (3.62’), 447 ppi

2 pcs 960x1080 ,3.x” =

1pics of 5.7” , each

960x1080, 387ppi

1pcs of 5.7”

2560 x 1440 LCD

2pcs of 5.5”

(2160x1440) Total

5120 x 1440 LCD

472 ppi

Refresh Rate 90Hz 90Hz 120Hz 60Hz 90Hz

Image credit: Oculus Image credit: Sony Image credit: FOVEImage credit: HTC Image credit: Starbreeze

29


Display is the most high-price component in VR device

30

Facebook Oculus Rift Tear-Down cost

Display cost = US$69 , 35% of the

total BOM (Bill of Materials) Cost.


AMOLEDs From Emerging to Mainstream

31

Examples of Recent Prototypes and Commercialized AMOLEDs

© 2016 IHSSource: Makers, IHS

LGE 77”

Hisense 65”

Skyworth 65”

SDC 55” Transparent OLED1920x1080, 45% transmittance

SDC 55” Mirror OLED1920x1080, 75% reflectance

LGD 18” RollableSDC Galaxy S6 LG G Watch Apple Watch

12.3” Samsung 2-in-1

OLED for automotive applications

Dual-view curved tiling OLED Dell 30” OLED Monitor


Technology Trend for Smartphone OLED

32

Vs.Galaxy

SGalaxy

S2GalaxyS2 LTE

GalaxyS2 HD LTE

GalaxyS3

GalaxyS4

GalaxyS5

GalaxyS5 Prime

GalaxyS6

GalaxyS6 Edge

GalaxyS6 Edge+

GalaxyS7

GalaxyS7 Edge

Launching Mar. 2010 Apr. 2011 Sep. 2011 Nov. 2011 May. 2012 Mar.2013 Mar.2014 Jun.2014 Mar.2015 Apr.2015 Aug. 2015 Mar. 2016 Mar. 2016

Diagonal Size 4.0” 4.3” 4.5” 4.65” 4.8” 4.99” 5.1” 5.1” 5.1” 5.1” 5.7” 5.1” 5.5”

TSP On-Cell On-Cell On-Cell On-Cell On-Cell On-Cell On-Cell On-Cell On-Cell P1S A-P1S On-Cell A-P1S

Resolution800 x 480/ WVGA

800 x 480/ WVGA

800 x 480/ WVGA

1280 x 720/ WXGA

1280 x 720/ WXGA

1920x1080/ Full HD

1920 x 1080/ Full HD

2560 x 1440/ Quad HD

2560 x 1440/ Quad HD

2560 x 1440/ Quad HD

2560x1440/ Quad HD

2560 x 1440/ Quad HD

2560 x 1440/ Quad HD

PPI 232 217 207 316 306 441 432 577 577 577 515 577 534

Real PPI 154 217 207 210 204 294 288 385 385 385 342 377 342

Substrate Rigid Rigid Rigid Rigid Rigid Rigid Rigid Rigid Rigid Flexible Flexible Rigid Flexible

Pixel Type Pentile RGB Stripe RGB Stripe Pentile Pentile S-Pentile S-Pentile S-Pentile S-Pentile S-Pentile S-pentile S-Pentile S-Pentile

MicroscopeView

( 4 pixels )

# of Sub pixels 8 12 12 8 8 8 8 8 8 8 8 8 8

History of Galaxy S Series’ AMOLED specification


( Source : IHS Report, ‘OLED Strategy, Technology & Market – 2015’)

3

4

5

6

7

Dia

go

nal S

ize (

In

ch

)

iPhone Galaxy

200

300

400

500

600

Pix

el p

er I

nch

(P

PI)

iPhone Galaxy

Su

bstr

ate

Typ

e

iPhone Galaxy

Rigid

Flexible


OEMs increasing AMOLED panel adoption

• Samsung’s product lineup change and demand for Chines brands impact the AMOLED

market growth.

33

Samsung smartphone strategy in 2015-2016


Focus on flexible

AMOLED to lead market

and gain high profits

Expand rigid AMOLED to

grab the volume market

Change displays from TFT

LCD to AMOLED

High end

Mid end

Low end

TFT LCD with add-on touch

to meet low cost demandLow end

Overseas brands’ AMOLED smartphones

2014 2015 2016

Model 21 models over 50 models

(55M panels)

over 50 models

(100M panels)

Brand Motorola,

Nokia, Lenovo,

OPPO, VIVO,

Gionee

OPPO, VIVO,

Gionee, Micromax,

Meizu, WIKO,

Huawei, Microsoft,

OPPO, VIVO,

Gionee, Micromax,

Meizu, WIKO,

Huawei, Xiaomi,

Microsoft, BB, HP,

Hisense, Konka

Product High-end Mid to high-end Mid to high-end

Display 4.x-5.x" 4.x-6.0" 4.x-6.0"

Resolution HD, FHD HD, FHD, WQHD HD, FHD, WQHD

Substrate Rigid AMOLED Rigid AMOLED

Started to supply

flexible AMOLED

from Q4 2015

Rigid AMOLED

Increase flexible

AMOLED



Flexible OLED in SID 2016

34

Samsung Display Rollable 5.7” FHD


BOE Bendable 4.35” WVGA


BOE Foldable 4.35” WVGA


JDI Curved 5.2” FHD


LG Display Curved 12.3” FHD


Tianma Bendable 5.5” FHD



Considering Foldable ApplicationTypes of flexible display by bending radius and folds


35


36

Flexible OLED

Flexible OLED : Nice to Have or must have?

Nice but many substitutes good enough

No substitutes. Make people buy no matter how much it costs

© 2016 IHS Markit. All Rights Reserved.© 2016 IHS Markit. All Rights Reserved.

Semiconductor & Display Trends

November 2016

Technology

Vice President & Chief Analyst

+1 (310) 524-4083

mailto:[email protected]

Semiconductor & Display Trends - Defense Logistics … & Display Trends November 2016 Technology Vice President & Chief Analyst +1 (310) 524-4083 © 2016 IHS Markit. All Rights Reserved.

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