5G may cause DDI supply shortage in 2020

Driven by 5G applications, terminal manufacturers have begun to plan for product demand in 2020, and as a result, the supply of large-size DDI and small-size TDDI has begun to be squeezed...

According to the latest survey by TrendForce Optoelectronics Research (WitsView), driven by 5G applications, terminal manufacturers have begun to plan for product demand in 2020, driving up the capacity utilization rate of wafer foundries. It is estimated that the production capacity of major wafer foundries in the fourth quarter of 8-inch and 12-inch factories is almost at a high level. As a result, the supply of large-size panel driver ICs (DDI) and small-size driver and touch integrated ICs (TDDI) has begun to be squeezed.

TrendForce research associate Fan Boyu pointed out that after two to three years of convergence, large-size DDIs are currently mainly concentrated in 8-inch wafer fabs at 0.1x micron nodes. However, many new demands have begun to emerge recently, including fingerprint recognition, power management ICs, and low-end CMOS sensors. Under the condition of better profit margins, wafer foundries give priority to meeting such new demands, thus beginning to squeeze out the original DDI supply. TrendForce believes that although the current large-size panel market is seriously oversupplied and has entered the off-season, the overall demand is weak, but in the future, as the panel factory's production capacity is adjusted to a certain stage, and the price of TV panels gradually bottoms out, once customer demand begins to heat up rapidly, it is not ruled out that large-size DDIs may be in short supply again in the first half of 2020.

As for TDDI for mobile phones, there was a shortage of supply in the first half of 2018. In order to spread the risk, IC manufacturers began to shift TDDI production from 80nm nodes to 55nm nodes of different wafer fabs. However, the main specifications of HD Dual Gate and FHD MUX6 TDDI that were transferred to 55nm in 2019 were not adopted by customers due to product verification and actual product benefits. Most products still use the existing 80nm TDDI.

On the other hand, after Chinese panel factories started mass production, the demand for OLED DDI began to increase rapidly, and it is estimated that the production will be mainly concentrated in 40nm and 28nm in 2020. Due to the restriction of sharing production equipment at several major nodes, some wafer fabs may lead to tight production capacity of 80nm when expanding production of 28nm and 40nm, which will in turn affect the output of TDDI. It is expected that this may once again accelerate IC manufacturers to shift TDDI production to 55nm node.

The penetration rate of high refresh rate mobile phones increases and the supply risk of TDDI is dispersed

With the high-transmission 5G services starting to operate in different regions and the continued popularity of the e-sports market, mobile phone brand customers have regarded high refresh rate (High Frame Rate, above 90Hz) panels as the focus of mobile phone specification differentiation in 2020. IC manufacturers are also re-building 90Hz/120Hz TDDI at the 55nm node, and are fully committed to driving new demand for TFT-LCD models. In addition to TFT-LCD models, AMOLED models targeting the flagship market are also actively emphasizing 90Hz specifications in new product layouts. TrendForce expects that, overall, the penetration rate of high refresh rate mobile phones has the opportunity to exceed 10% in 2020, and may even become a standard specification in the high-end flagship mobile phone market in the next few years. While the market is accelerating, it will also help IC manufacturers to diversify the TDDI supply risks that may be encountered in 2020.                                               

Forecast of high refresh rate smartphone penetration rate from 2019 to 2020. (Source: TrendForce)