As the semiconductor industry recovers from its downturn, is automotive electronics the main driving force?

The semiconductor industry is gradually recovering from the bottom. Lu Mingguang, chairman of Sino-American Crystal, and Lin Xiaoping of M31 Star Technology are optimistic about artificial intelligence (AI) and 5G applications. In addition, automotive electronics will become an important driving force for the growth of semiconductor applications.

ITRI ​​hosted the 2019 International Large Scale Integrated Circuit Technology Symposium. From left: Lu Mingguang, Chairman of Sino-Metal Semiconductor, Hong Lining, General Manager of Wiwynn Technology, Jiao Youjun, Chairman of Winbond Electronics, and Lin Xiaoping, Chairman of M31. Photo by Han Qingxiu

Lu Mingguang pointed out that the subsequent market demand showed signs of warming in the second quarter, and he believed that the semiconductor industry is expected to return to the growth trend, and the third quarter will be better than the second quarter; Lin Xiaoping said that silicon intellectual property (IP) is located in the upstream of the industry, and the economic outlook in 2019 is relatively cautious, but the automotive IP certification in major regions is gradually in place, and the overall outlook is still optimistic.

Lu Mingguang said that the solar energy industry is still in its growth stage, but the supply chain costs in mainland China are competitive. Taiwanese manufacturers lose due to higher production costs rather than technology. From the perspective of Sino-US Crystal's own operations, the proportion of solar energy revenue has been declining year by year, from 19% in 2017 and 11% in 2018. By the first quarter of 2019, the proportion had dropped to 9%.

Sino-American Crystal will continue to expand semiconductor applications in the future to reduce the impact of fluctuations in the solar industry. Sino-American Crystal currently has more than NT$30 billion in cash on hand. Following last year's investment in specialty gas plant Taitech, it plans to continue investing in the semiconductor industry until 2020. It is currently in the planning and preparation stage. It is expected that after the transformation is completed, the overall operation will be significantly improved.

Sino-American Semiconductor's consolidated revenue in the first quarter reached 17.505 billion yuan, a quarterly decrease of 1.5%. The overall operating performance in the second quarter is expected to continue to grow. It is expected that the first half of 2019 will be the off-season for the semiconductor industry, but we have seen an increase in subsequent demand. We believe that the third quarter will be better than the second quarter, and the full-year operation will have the opportunity to increase quarter by quarter.

Despite weak mobile phone sales, there are still many new applications that will emerge in the semiconductor industry in the future, including 5G, AI, and the Internet of Things. Automotive electronics will be an important driving force, including autonomous driving, electric vehicles, etc. Pengcheng, a subsidiary of Sino-US Crystal, will occupy a position with insulated gate bipolar transistor (IGBT) modules.

Pengcheng plans to build a new plant that will specialize in MOSFET and IGBT, and it is expected to be completed by the end of 2020. According to estimates, in 2018, traditional fuel vehicles accounted for 90%, hybrid vehicles accounted for 6%, and electric vehicles accounted for 2.5~3%. It is expected that the proportion of electric vehicles will reach 12~15% in 2025, and hybrid vehicles will grow to 15%. In the future, in 2035, the proportion of electric vehicles will exceed 30%, and the demand for large IGBT modules will also grow exponentially.

Lin Xiaoping pointed out that thanks to the rise of new industries such as 5G and AI, IC chip design is becoming more and more complex, and the industry's demand for silicon smart material suppliers is increasing. Taiwan's wafer foundry industry is strong, and close cooperation between smart material suppliers and foundries is the key. The importance of customization and software and hardware integration will also increase.

In 2019, we observed that some customers were more cautious. In the field of automotive applications, certification has been gradually completed in different regional markets such as Europe, the United States, and mainland China. There is strong demand from start-ups in mainland China, and the development of AI and 5G in the US market has made progress. However, overall, 5G development is still in its early stages and is expected to grow gradually from the second half of 2019 to 2020.