(Report Producer/Author: Shen Wanhongyuan, Yuan Hang, Luo Siyuan, Yang Haiyan, Ren Muhua)
1. Display the market overview of the driver chip
The display panel is an indispensable component of mobile phones, TVs, tablet computers, laptops, security monitoring equipment, car display screens and other equipment.
The development of display panels can be roughly divided into the following stages: 1) In the 1920s CRT (CathodeRayTube, cathode ray tube) technology was officially commercialized as the first generation of display technology, representing products: black and white and color CRT television. 2) In the 1990s, plasma technology and LCD (LiquidCrystalDisplay) technology went hand in hand. After 2000, plasma technology gradually withdrew from the market, LCD (liquid crystal technology) gradually became the world's most mainstream display technology. 3) Around 2010, the OLED commercialization process has made substantial progress, and then AM-OLED has gradually become the mainstream of small and medium-sized flat panel displays, but due to life problems, it cannot replace LCD in the large screen market, nor can it replace LED in the large screen market. 4) In the future, Mini/MicroLED is expected to become the next generation of mainstream technology.
The global display panel market is dominated by LCD, and the new display track is growing rapidly. LCD due to the maturity of its technology, and in the field of large-screen display such as television, notebook computers and other wide applications, the market demand and accounted for a relatively large proportion. In 2020, global LCD panel shipments reached 233 million square meters, accounting for 96% of the global display panel market share. The high number of LCD panels will continue to stabilize at high shipment levels in the future, and it is expected to reach 279 million square meters in 2025. Because of its unique flexible characteristics, OLED can meet the needs of curved and folding screens, and is widely used in small screen products such as mobile phones, but also applied to some emerging electronic products such as smart wearables and VR devices. Global OLED panel shipments will be only 9.7 million square meters in 2020, but are expected to grow at a compound annual growth rate of 16.34% from 2021 to 25.1 million square meters in 2025. According to Omdia data, the downstream application areas of the panel continue to expand and the market demand continues to grow, TV, mobile devices as the largest application category to maintain steady growth; commercial, in-vehicle and other new display tracks grow rapidly.
LCD has gained dominance, and OLED investment has increased. Compared with South Korea and Taiwan, the Chinese mainland display panel developed later. With the rise of domestic panel manufacturers such as BOE, Chinese mainland display panels are catching up with a compound annual growth rate of 20.23%, and the market size has grown from 43.6 million square meters in 2016 to 91.1 million square meters in 2020, and the market size is expected to reach 121.2 million square meters in 2025. LCD panels by 2025 the mainland's global market shipments will account for 45.28%; the OLED field started late, mainly due to the industry's higher technical barriers to early development, but in recent years with the mainland's increasing investment, the overall OLED production capacity has grown rapidly. In 2020, the output of olED panels in the mainland accounted for 12.37% of global output, exceeding 10% for the first time, and is expected to rise to 24.3% in 2025.
DDIC, the panel display driver chip, is one of the main control elements of the display panel. The LCD driver chip provides a stable voltage or current drive signal for the lamp beads in the LCD display, thereby controlling the light intensity and color of the lamp beads, and changing different shades of color combinations on the liquid crystal sheet, thereby ensuring the uniformity and stability of the display screen. The OLED driver chip mainly realizes the switch control of the OLED light emitting element by sending instructions to the thin film transistor behind the OLED unit.
The size of the display driver chip market is growing slightly faster than that of the display panel market. Benefiting from the growth of global display panel shipments, the market size of display driver chips has also grown rapidly. According to Frost & Sullivan, global display driver chip shipments increased from 12.391 billion units in 2016 to 16.540 billion units in 2020, with a compound annual growth rate of 7.49%. It is expected that the upgrading of display technology and the expansion of downstream applications will drive the further growth of the display driver chip market in the future, and the shipment volume will increase to 23.320 billion units by 2025. Corresponding to the downstream display panel market, the global display driver chip is dominated by LCD driver chips, and it is expected that the future will continue to stabilize at the high shipment level, and the OLED driver chip will gradually increase with the high growth share of olED screen. At present, LCD driver chips have achieved a stable supply, and TFT-LCD has turned to TDDI in large quantities, and the market has entered a mature or even excessively competitive stage. With the growing demand for LCD panels for electronic devices such as smartphones and TVs, the display driver chip market is expected to achieve rapid growth worldwide, with major growth drivers including high resolution, increased demand for integrated functions, and lower average selling prices. (Source: Future Think Tank)
Driven by strong demand in emerging applications, the growth rate may reach a cyclical peak in 2021. According to CINNO Research, the global display driver chip market is expected to increase to $13.8 billion in 2021, with a growth rate of 56.8%, the highest peak in recent years, and it is also one of the largest growing sub-industries in the global integrated circuit chip market. At present, due to the shortage of wafer foundry and packaging and testing capacity, the short-term wafer and packaging and testing prices continue to rise; at the same time, the growth of the global display panel market has also led to an increase in the long-term demand for display driver chips. Between 2020 and 2021, although the market demand has increased significantly, the 8-inch capacity increase in global wafer capacity investment is limited, especially in the 90~150nm process node capacity shortage. Therefore, the price increase is the main driving force for the increase in the size of the global display drive chip market (it is expected that in 2021, the price will drive the revenue scale to increase by about 53%, and the shipment will drive the revenue growth of about 2%).
With the continuous transfer of panel manufacturing capacity to China, the mainland has laid the position of global panel manufacturing center, and the corresponding mainland market has become the main market for global drive chips. CINNO expects that the domestic display driver chip market size will increase significantly by 68% year-on-year to 5.7 billion US dollars in 2021, and will continue to grow to 8 billion US dollars by 2025, with an average annual compound growth rate of CAGR of 9%.
TDDI opens up new areas of growth. Display driver chip function integration is the current mainstream technology development direction, in the face of the development trend of smart mobile phones higher screen ratio, the integration of display driver chip and touch chip can effectively reduce the size of the display panel peripheral chip, so the market penetration rate of TDDI chip has increased rapidly, opening up a new battlefield in the field of display driver chips. In the future, other electronic devices represented by automotive electronics will also widely adopt TDDI chips to promote the market to maintain high growth. According to Frost & Sullivan, since the TDDI chip first came out in 2015, shipments have rapidly increased from 0.4 billion to 520 million in 2019. In the future, other electronic devices represented by in-vehicle electronics will also widely use TDDI chips to promote the market to maintain rapid growth, and global shipments are expected to reach 1.15 billion units by 2024, with an average annual compound growth rate of 18.3% from 2020 to 2024.
1) Currently the mainstream drive scheme for smart phone LCD panels. In addition to Apple, other well-known terminal brands use TDDI in a high proportion of LCD panel models. According to Omdia, TDDI shipments for smartphones reached 781 million units in 2020.
2) In the post-epidemic period, distance education has expanded, demand for tablet computers has surged, and the penetration rate of TDDI in tablet pc displays has increased rapidly. With the increase in size and resolution, a screen needs to be equipped with two chips, which is currently becoming a mainstream solution trend, according to Omdia data, TDDI shipments for tablet displays will reach 84 million units in 2020.
3) The TDDI market for automotive displays is maturing. At present, panel manufacturers are actively developing in-cell touch integration solutions for in-vehicle displays, and chip manufacturers will gradually start mass production of TDDI solutions from 2020. The trend of automotive electronics, to promote the demand for automotive electronic components continue to increase, of which the use of automotive touch panels, is expected to usher in a larger outbreak in 2022, driving the automotive TDDI ushered in the first peak of goods, according to DIGITIMES information, including display drive manufacturer Synaptics and Lianyong, Wonder Photoelectric, Duntai have been heavily deployed in this field, and in 2022 to start a large number of shipments. According to Omdia, TDDI shipments of in-vehicle displays reached 5 million units in 2020.
2. Large sizes are incisors, and small and medium-sized areas are accelerated with industrial transfer substitution
The industrial chain of display drive IC is generally composed of IC design - wafer foundry - packaging and testing - panel factory, and the current supply of bottle neck mainly lies in the production capacity of wafer foundry. DDIC's industrial chain is relatively simple, as an important part of the display imaging system, its cost in electronic products accounts for about 10-15%, but because of the large number of chip embeddings, it is a low gross profit product in the chip design industry. In the stage of tight production capacity, display chips are often squeezed by wafer foundries because of their low gross profit and other characteristics.
Due to the diversity of display products, the process range of display driver ICs is also relatively wide, and its main products cover the process segment of 28nm-150nm. Among them, IT products and TVs such as NB and MNT are mainly 110-150nm; the integrated TDDI (Touch+DDIC) process section mainly used in LCD mobile phones and tablets is 55-90nm; the process section for AMOLED driver ICs is relatively advanced at 28-40nm; other driver chips with lower specifications (wear, white, small household appliances and other low-resolution applications) We will not discuss it in this chapter.
In 2021, the supply of display-driven ICs in various categories will show different degrees of tension, in addition to their own demand growth, the wafer consumption of other categories of ICs in the same process will also affect the supply of DDIC. The most out-of-stock power management chips in 2021, the increase in demand for low-end image recognition chips below 10M and fingerprint recognition chips, etc., will squeeze the wafer supply of TV and IT driver chips to varying degrees; the on-board MCU chip process is mainly concentrated in 28-40nm, making it difficult to quickly replenish the DDIC supply of AMOLED, which is also very scarce in this process stage.
DDIC accounts for approximately 3% of overall wafer capacity and approximately 6% of foundry capacity. According to DISCEIN data, the wafer capacity consumed by the display drive IC is about 250-270K/M, such as the wafer capacity of more than about 9500K/M in reference 2021, the actual proportion is less than 3%; if the IDM capacity of about 5000K/M (such as Samsung and Intel, etc.) is excluded, the remaining wafer foundry capacity (such as TSMC, UMC, SMIC, etc.) is about 4500K/M, and DDIC accounts for less than 6% of the capacity ratio.
Mobile phones and TV consume a large amount of wafers. According to Omdia data, large-size display driver chips (including TV, MNT, NB and TPC above 9 inches) account for 70% of the total demand, of which the drive chip used in LCD TV panels accounts for more than 40% of the total demand for large sizes, because of its annual output of about 270 million (272.2M in 2020 AVC Revo data) and more than 50% of UHD, the number of display driver chips is larger, and its wafer consumption accounts for a relatively high proportion. In the small and medium-sized display driver chip market, smartphones have the largest market share. In 2020, including LCD panel driver chips and AMOLED panel driver chips, accounting for 20% of the total demand for driver chips, but because the driver chips of mobile phones often integrate the functions of touch and T-CON, the single grain area is about three times that of the TV driver chips, resulting in the consumption of wafers close to half of the downstream mainstream display. It line product growth is still strong in 2021, and due to the increased penetration of higher resolutions in TV panels, according to Omdia's calculations, the total demand for mainstream display driver chips is expected to grow to 8.4 billion units in 2021.
The number of DDIC required by the terminal is proportional to the panel size and resolution, and the larger the panel size, the higher the resolution, and the greater the number of DDIC required. In the future, as the size of large panel screens continues to increase, the requirements for various screen resolutions and color gamuts will continue to increase, and the number of DDIC required for each end product will further increase.
Taiwan and Han factories account for most of the display drive market share. According to Omdia data, taiwan manufacturers have the largest share of the large-size display driver chip market. LianYong ranked first with a 24% share of 2020, followed by Miracle Optoelectronics and Ruiding, as well as Samsung's LSI and LG's Silicon Works. In the field of smart phones, Taiwan factories dominate in LCD, with nearly 80% share in 2020, and Lian Yong and YiLi rank in the top two.
The Korean factory in the AMOLED field is dominant because of its technological advantage share. Samsung's LSI will account for more than half of the AMOLED display driver market share in 2020, as the exclusive supplier of Samsung display SDCs, LSI and Megana (formerly Hynix Semiconductor) have not yet cooperated with Chinese mainland panel factories. Lian Yong and Ruiding are the main suppliers of AMOLED driver chips for Chinese mainland panel manufacturers in 2020, with market shares of 7% and 6% in 2020, respectively.
With the increase in the share of Chinese mainland panel factories, the transfer of upstream supply chains has led to the rapid development of the domestic display drive chip industry.
In the field of large-size display driver chips, Jichuang North and Yiswei have grown significantly. In the fourth quarter of 2020, Yiswei was the largest supplier of TV display driver chips for BOE; the share of Jichuang North in BOE, HKC Huike and other panel manufacturers continued to increase. In 2020, the market shares of Jichuang North and Yiswei were 3.2% and 2% respectively.
In the field of mobile phone display drive chips, the market share of domestic companies is still low, but it shows a local breakthrough trend. In 2020, Omnivision acquired Synopsys' mobile TDDI business and actively combined its CIS product advantages to expand in the Chinese market; Jichuang North began mass production of TDDI for the brand Xiaomi at the end of 2020; Yunyinggu began mass production of AMOLED driver chips in the third quarter of 2020; Huawei HiSilicon's self-developed OLED driver chips have been trial produced in the second half of 2021, and it is planned to officially complete mass production delivery to suppliers in 2022, and the chip sample will be completed in 2021 In the second half of the year, it has been sent to BOE, Huawei, Honor and other manufacturers for testing; Zhongying Electronics rear-mounted AMOLED display driver chip has been mass-produced in 2021, and at the same time plans to launch a front-loading brand market specification chip in mid-2022.
2.1 TV display driver: the best entrance for domestic manufacturers to cut into the field of display driver
TV panel display drivers are the most consumed display category. The display driver IC controls the switching status display of several million pixels through the source line of the voltage drive panel, and under the conventional IC design, the factor that greatestly affects the amount of drive IC used is the resolution. A single driver IC for a TV panel typically has 960-1366 drive channels, and three driver ICs are required for the next HD resolution OC for conventional designs, six for general FHD, and 12 for UHDs. In addition to the conventional design, panel manufacturers are also developing Dual gate (one drive channel to drive two columns) or triple gate (one drive channel to drive three columns) design, entry-level 32-inch HD has 1 or 2 driver IC design, but currently UHD accounts for more than 50% of the overall TV, such schemes are actually difficult to achieve in the case of higher and higher resolution. According to DISCEIN data, the number of driver ICs required for TV panels corresponds to 270 million TV panel shipments of about 2.5 billion units in the whole year, making it the most consumed display category.
TV driver ICs have taken the lead in becoming the best entry point for mainland manufacturers. We believe that the main reason for the current TV driver IC as a breakthrough is 1) the highest degree of standardization of large-size TV panel products, the technical barriers are relatively low compared to the threshold of small and medium-sized sizes; 2) the annual demand for TV display drive is about 2.5 billion in the mainstream display; 3) after the display panel in several industrial transfers, the large-size LCD TV field has taken the lead in realizing the mainland-led industrial pattern, the top three competitive patterns have been formed, plus CHOT and other panel factories, making TV driver ICs Demand is dominated by mainland manufacturers. But the TV field is also the most fiercely competitive field at present, the overall share is relatively close, of which the Chinese mainland manufacturers Jichuang North and Yi Siwei also occupy a certain share, according to CINNO Research data, local driver chip companies, in the first half of 2021, the two together accounted for more than 90% of the market share of medium and large-sized applications such as TVs, monitors and notebooks. (Source: Future Think Tank)
2.2 MNT display driver: multi-dimensional application scenarios, mainland manufacturers are catching up
MNT displays driver products in a wide range of dimensions. The form of MNT and TV machine is relatively similar, but TV products are relatively simple and decent, MNT comes with more application scenario requirements, such as picture ratio, product refresh rate, plane and surface, resolution and other product dimensions are more abundant, used in office, entertainment, e-sports and other scenes.
The dosage is small due to size limitations. In terms of usage, limited by the generally small size, MNT products are difficult to use more than 10 960 channel drive ICs as simply as TV products, and tend to use a smaller number of 1446 channel drive ICs, combined with the overall scale of MNTs and the tendency to use more channels of drive ICs, MNT IC demand corresponds to 160 million MNT panel shipments per year of about 900 million units, only larger than TPC in several major applications.
Compared with the industrial pattern dominated by mainland manufacturers in TV panels, MNT panels are still a strong situation. Among them, the mainland manufacturer BOE shipment volume is the first in the world, and the other top manufacturers mainly include the Korean manufacturer LG display and the Taiwan region of AUO, Innolux, the mainland manufacturers are currently increasing MNT investment to continue to catch up.
MNT driver ICs are still not the first choice for new manufacturers, but are growing rapidly with the share of industrial transfer. It seems that the MNT driver IC product itself and the TV drive IC specification gap is not large, but due to the overall scale, product diversity, customization and other reasons are not the first choice for new manufacturers to enter the market, the current high concentration is mainly dominated by Taiwan factories. However, at present, domestic panel manufacturers are catching up, and the mainland's Jichuang North, Yi Siwei and Xinxiangwei have also grown rapidly with the transfer of MNT's panel industry to the mainland.
2.3 NB driver IC: In the post-epidemic era, it undertakes new rigid demand and is completely dominated by Taiwan factories
Laptops are underwent more new rigid demand in the post-epidemic era, and the amount of TV used is about half. During the epidemic period, including the home economy, online office, online education and other rigid needs, especially the centralized procurement of educational laptops, the new rigid demand for NB has increased significantly, and it will fall slightly in 2022. According to TrendForce, full-year shipments in 2022 will decline by 3.3% annually to 238 million units, of which Chromebooks account for about 12.4%, shipment momentum slows slightly, and demand derived from home economic effects has declined. The resolution structure of NB products currently accounts for nearly 90% of HD and FHD, so the IC usage is relatively small, and the IC demand of NB corresponds to about 1.2 billion NB panel shipments per year, close to half of the TV usage.
The NB drive IC is basically completely dominated by the Taiwan factory, and the technical threshold is high. From the supplier point of view, in Chinese mainland, in addition to the early Beijing Oriental through the G8.5 generation line of the pioneering production program to quickly occupy the market as the world's first, 2-4 are Taiwan factories and Korean factories, at present in the NB line in the mainland manufacturers have not yet mastered the dominant power. Because NB pays special attention to power consumption, image quality and COG design, etc., it raises the technical threshold of the drive IC, and its supply is completely dominated by Taiwan factories, with the first Lian yong and the second Ruiding accounting for more than 60% of the share, and the participation of mainland manufacturers is lower than that of TV and MNT. In 2021, due to the high oligopoly of the supply side, the drive IC has become a constraint on the supply of NB panels, especially because it is difficult for mainland manufacturers to quickly form a replenishment due to the technical threshold. In addition to the technical threshold, due to the number of channels of the NB driver IC, COG design and power consumption and other factors, a 12-inch wafer can produce about 5K TV driver IC or more THAN 7K MNT driver IC, but can only produce 2-3K NB driver IC, and it is expected that the supply and demand of NB driver IC will improve later than MNT and TV in 2022.
2.4 AMOLED driver IC: Increased penetration drives rapid growth
AMOLED penetration rate continues to increase, and it is currently entering the peak period of construction. AMOLED is still in the rapid growth period, and mainland and Korean manufacturers are also investing in the construction of new factories to increase production capacity, while improving yields, technology optimization and product innovation. According to TrendForce data, the market penetration rate of AMOLED panels for mobile phones in 2021 is 42%, although due to the continuous shortage of AMOLED display panel ICs, mobile phone brands and OEMs will expand the use of AMOLED panels in their new models, which will drive the growth of AMOLED market penetration, and the penetration rate is expected to increase to 46% in 2022. At the same time, the downstream application of OLED has gradually expanded from mobile phones to wearables, tablets, notebooks and other fields, and suppliers have developed from SDC monopolies to a super-strong situation.
AMOLED driver ICs place high demands on the process and are highly profitable from a wide range of competitors in the same process. The process range of AMOLED drive chips is in the most tight production capacity of 28-55nm in the mature process, and there are more competitive products with more profitable advantages in this range, such as in-vehicle MCUs, high-end CIS, consumer electronics SoCs, etc., which make AMOLED production capacity squeezed out, and its demand priority is low and difficult to be met.
Mainland manufacturers do not yet have the ability to supply AMOLED driver ICs on a large scale. Similar to the pattern of AMOLED panel manufacturers, the first three driver ICs of AMOLED are Korean factories, including LSI under Samsung Electronics and Silicon Works under LG Group, the share of the first three has exceeded 80%, the second echelon is mainly Taiwan manufacturers Lian Yong, Ruiding, etc. Mainland chip manufacturers do not have the ability to supply on a large scale, and at present, in the absence of core and lack of production capacity, mainland panel factories are in a relatively passive position.
The pattern of the wafer foundry industry restricts the development process of Chinese mainland OLED driver chips. South Korean wafer foundries and South Korean OLED driver chip designers are deeply bound, forming a vertical integration model, in a leading position in the world; Taiwan wafer foundries also cooperate with local OLED driver chip designers in depth, giving priority to local chip design manufacturers; Chinese mainland fabs mainly oem liquid crystal display driver chips, OLED driver chip foundry experience is less, most of the mainland OLED driver chip designers have to hand over orders to Taiwan fabs.
3． Supply and demand have gradually eased, and structural supply and demand have continued
Since the fourth quarter of 2020, due to the increasing shortage of foundry wafer mature processes and the priority of superimposed capacity allocation, the supply constraints of driving ICs have gradually emerged. According to the calculation of Qunzhi Consulting, the supply and demand ratio of DDIC fell from 15.6% in the first quarter of 2020 to -16.5% in the fourth quarter of 2020, showing a gradual narrowing trend, the relationship between supply and demand gradually eased, it is expected that supply and demand in the first half of 2022 will gradually enter a relatively balanced state, but with the supply chain capacity is still tight in the second half of 2022 there is still a risk of shortage.
While supply and demand continue to be tight, the price of the driving IC is also showing a quarter-by-quarter upward trend. In the first half of 2021, the continuous supply and demand imbalance, superimposed supply chain run effect, LCD and OLED DDIC, its price rose sharply for several consecutive quarters; but as terminal inventory grew, the demand fluctuation coefficient amplified, and the willingness of the demand side to accept the price increase of DDIC will gradually weaken. According to the forecast of Qunzhi Consulting, looking forward to 2022, with the continuous release of new production capacity including Jinghe and the steady return of terminal demand after the epidemic dividend, the price of the driving IC will most likely show a high and flat price trend.
3.1 Demand side: In the LCD field Chinese mainland manufacturers will have absolute right to speak
Display drive IC requirements depend on the overall panel capacity. The upper limit of the production capacity of the panel factory directly determines the demand ceiling of the driving IC, even if the terminal demand is relatively weak, the panel factory still has considerable motivation to maintain full momentum without breaking through the cash cost, on the one hand, it can obtain positive cash flow, on the other hand, even if the loss can also promote industrial restructuring. From the perspective of the panel industry in the second half of 2021, even if the price of LCD panels has pulled back from the high point, manufacturers still maintain a high rate of about 90%.
In the future Chinese mainland panel manufacturers have strong upstream bargaining and influence on supply. The capacity restructuring and suspension of Korean panel manufacturers, as well as the caution of Taiwan manufacturers in capacity investment, have indirectly increased the share of Chinese mainland panel manufacturers in the global capacity. According to Omdia's forecast, after several acquisitions and capacity expansions, the top three domestic manufacturers are expected to reach 52% of the global capacity share in 2023, becoming the main position of industry development and having a strong influence on the upstream.
With the domestic panel factories successively put into production, the demand for OLED display drivers is also increasing. According to UBI Research data, in the AMOLED market, Samsung has a market share of 68.2% in 2020, ranking first in the world; the second is LG, with a market share of about 21%, mainly contributed by large-size OLED panels (TVs); BOE is the third, with a share of about 5.7%. But from a demand point of view, China is the largest buyer's market, with about 50% of purchases. With the domestic panel factory 6 generation OLED line successively put into production, the demand for display driver chips is also continuing to increase.
3.2 Supply-side: upstream and downstream cooperation to gradually improve the industrial ecology
Overall, as the scale of the domestic display panel industry leaps to the top of the world, the upstream industrial links such as manufacturing and packaging and testing will gradually move towards localization.
3.2.1 Wafer foundry: Binding mode is the current development direction
Medium and large size panel display drivers are mainly mature processes. From the process point of view, because the display technology of large and medium-sized panel terminal products has been relatively mature, the integration requirements are lower than the mobile phone screen requirements, and more mature process DDIC of 90nm and above can be produced. And due to the large and medium size panels required for a large number of chips, the DDIC used in the 90nm and above processes still accounts for the main part of the global DDIC market, with a market share of about 80% in 2020; under the trend of chips as a whole to more advanced process nodes, the DDIC market share of 90nm and above processes will gradually decline, but will still occupy most of the market share, according to Frost & Sullivan forecast, in 2024 90nm and above DDIC The market share will still exceed 70%.
The wafer foundry capacity of display chips is mainly concentrated in non-continental foundries. According to Frost & Sullivan statistics, in 2020, do not consider Samsung Electronics and other IDM companies with design capabilities and wafer production capacity at the same time, only consider wafer foundry enterprises, global wafer foundry enterprises in the field of display driver chips annual output of about 2 million pieces (equivalent to 12-inch wafer), UMC, world advanced, force accumulation, Eastern Hi-Tech and other wafer foundry enterprises in the display driver chip wafer foundry field have a layout. In the field of large size, the production capacity of SMIC and JCC is relatively small, in terms of small size, after the binding of JCC and Jichuang North, the TDDI technology of 90nm can be quickly promoted, and the proportion of TDDI technology in the small size field is more than 30%; but in the OLED display drive field, it accounts for less than 1%, mainly because the OLED driver chip basically takes 40nm/28nm and a small number of 55nm processes, and the domestic current process is still weak in this process, and there are not many manufacturers with foundry capabilities The domestic display chip FOUNDRY supply is structurally unbalanced.
The LCD display drive field has gradually shifted its production capacity to other areas as the share of South Korea's midstream panel manufacturers has shrunk, and Taiwan factories still occupy most of the share. The display driver IC process of LCD is mainly 110-150nm and a small number of 90nm. According to its prospectus, Q4 increases its monthly production capacity by about 20K compared to Q1, of which about 90% is used to drive ICs; SMIC is breaking through advanced processes while also shifting part of its production capacity to mature drive IC fields; UMC's strategy is to continue to maintain its position as a leading foundry in the drive IC field, adding part of its 28nm production capacity to AMOLED's DDIC. With the Korean fabs, especially the Samsung-based Korean fabs, with the weakening of local panel factories, the production capacity of the driving IC will gradually shift to other fields.
The rise of both The Korean factory and the Taiwan factory have formed a binding relationship with the upstream and downstream. The process in which DDIC is located is classified as a high-voltage mold, and although there is a 40nm option, the long-term downturn in the ASP market before 2020 makes the DDIC for medium and large size TFT LCDs unable to bear the high cost line of 12-inch wafers. The response is to move to second-, third- or even fourth-tier foundries to maintain supply to important customers in a business model that combines downstream panel factories to contract capacity. Because the business model of the display drive chip industry is different from that of the ordinary chip industry, and the demand for foundry capacity due to its large shipment volume, mastering the supply chain may be a breakthrough direction. At present, driver chip manufacturers mainly have two models, one model is South Korea's whole industry chain integration model, one group integrates chip design, chip manufacturing, packaging manufacturing, panel manufacturers and machine manufacturers; the other model is the upstream and downstream binding mode in Taiwan, and the driver chip designer can bind with wafer foundries to form an IDM model to ensure process development and production capacity.
The fabs that can provide AMOLED foundries are more limited, and the production capacity is basically monopolized by Hantai. Currently, according to Omdia, only five foundries can provide mature capacity for AMOLED driver chips for HV 40nm and 28nm processes, including Samsung, UMC, TSMC, GF, and SMIC Chinese mainland. Among them, Samsung, TSMC and UMC three fabs provide 90% of the wafer capacity supply.
Samsung: The main factory is the Austin S2, which supplies high-end iPhone and Galaxy models, and only provides 28nm capacity to Samsung LSI.
UMC: It is currently expanding its 28nm production capacity to maintain its position as a leading foundry in the drive IC field, and is expected to increase to 15-16K/M in 2022. Samsung LSI is a major customer, with the remaining 5K/M capacity going to LX Semicon (formerly Silicon Works), LianYong and other small and medium-sized manufacturers; Lianyong accounts for the majority of its HV 40nm capacity; small companies have difficulty obtaining capacity from UMC.
TSMC: 28nm capacity is still difficult to open, will mainly provide LX Semicon with 40nm capacity in 2022, about 10K/M, Apple for its end customers; other companies can obtain surplus capacity or less than 5K/M, such as Yili, Synopsys and Yunyinggu will continue to rely mainly on TSMC in 2022, each month or less than 1K.
GF: Mainly supplying 28nm capacity to Megana; LX Semicon and Synopsys will also begin a partnership in 2022; and Jichuang North plans to introduce its 40nm process, which is expected to be mass-produced in the second half of 2022.
SMIC: Capacity continues to grow, expecting to reach 7-8K/M by the end of 2022. Ruiding is increasing the volume of films, and currently occupies about half of the 40nm production capacity. Jichuang North, Yiswei, Huawei HiSilicon and Haowei are undergoing sample output or verification, and can only be mass-produced after the second quarter of 2022 at the earliest, and the new production capacity opened by SMIC is a key resource.
Watt & Integration: Plans to develop 40nm capacity for AMOLED driver chips, which are expected to be operational by 2023.
3.2.2 Packaging and testing: with the transfer of industry to the first echelon
The global display driver chip packaging and testing industry concentration is high, and the head effect is obvious. In addition to some manufacturers specializing in providing internal display drive packaging and testing services concentrated in South Korea, the leading enterprises in the industry are concentrated in Taiwan and mainland China. The display driver chip manufacturers in Taiwan and mainland China are produced by outsourcing, wafer manufacturing by wafer foundries, and then gold bump processing for wafers by the packaging plant, followed by the test factory (outsourced test factory or the company's own production capacity) for wafer yield testing, and finally by professional packaging plants for cutting, COG/COF processing and other packaging work. According to Frost & Sullivan data statistics, in the global display driver chip packaging and testing industry in 2020, companies that independently provide external services and have a high market share include Jibang Technology, Nanmao Technology, Huicheng Shares, Zhongzhong Technology and Tongfu Microelectronics.
The supply chain is shifting synchronously, and the industrial pattern may change. Similar to the display panel industry pattern, the global display driver chip packaging manufacturers are mainly concentrated in South Korea, Taiwan and Chinese mainland. With the transfer of the display driver chip industry, the supply chain of packaging and testing is also shifting from South Korea, Taiwan, to Chinese mainland.
South Korea: Represented by Steco and LB-Lusem, it is a display driver chip packaging and testing service provider in Samsung and LG and the ecosystem, respectively, and does not provide services to external display driver chip design companies. Samsung and LG, as the leading enterprises in the display panel industry, adopt the whole industry chain integration model, and integrate chip design, chip manufacturing, packaging manufacturing, panel manufacturers and machine manufacturers within the group, with strong technical and scale advantages.
Taiwan: Represented by State of Taiwan and Nam Mao. Due to the relatively perfect development of the LCD industry in Taiwan, there have been more than ten packaging and testing factories including silicon products (acquired by Riyueguang), Youli (acquired by Anzhu), Feixin (merged with Qibang), Fubao and so on, which have entered the field of display driver chip packaging and testing, resulting in fierce competition in the market, and after a long period of industry integration, small and medium-sized packaging and testing factories have been acquired by large manufacturers, and at present, only two display drive chip packaging and testing manufacturers remaining, forming a duopoly market pattern. As mentioned above, the upstream and downstream binding modes of the display panel industry in Taiwan are mature, and the display drive chip designers, wafer foundries, packaging and testing manufacturers, and the display panel industry can form capital and business bindings, such as Lian Yong and UMC binding, UMC and Jibang binding, Foxconn's Tianyu, Sharp, And Qunchuang binding, BenQ AUO and Ruiding binding, forming a whole industry chain model to ensure process development, production capacity and downstream customers.
Chinese mainland: Due to the late start of the overall sealing and testing plant, there is a certain distance between the Korean factory and the Taiwan factory in terms of technology and scale, mainly representing Xiamen Tongfu, Zhongzhong Technology, Huicheng Shares, Napex and so on. At present, with the rapid growth of the display drive design industry and the improvement of domestic capital investment, the display drive chip packaging and testing business has gradually begun to shift to Chinese mainland.
The tight production capacity has led to an increase in the scale of the display packaging and testing market. Since 2015, due to the breakthrough of leading domestic panel manufacturers such as BOE, the panel has achieved bulk commercialization, and the overall panel and its components are in a period of price decline, so the scale of the display driver chip packaging and testing market at this stage has not increased significantly. In 2020, despite the short-term impact of the epidemic, the home economic effects such as home isolation and long-distance office stimulated the outbreak of terminal demand related to the display industry. At the same time, due to the tight production capacity of wafer foundries, the overall display chip price continues to rise to drive the growth of the display packaging and testing market, according to Frost & Sullivan data, the global display driver chip packaging and testing market size reached 3.6 billion US dollars in 2020, an increase of 20% over 2019, and is expected to continue to grow to 4.5 billion US dollars in 2021, an increase of 25% year-on-year.
Mainland China shows that packaging and testing manufacturers are catching up quickly, and it is expected that the share will be close to that of Taiwan factories by 2025. Benefiting from leading wafer foundries and a mature chip design industry, the market size of display driver chips in Taiwan was 5.73 billion yuan in 2016. Subsequently, through mergers and acquisitions, the core competitiveness of the industry was further enhanced, and the market size reached 8.89 billion yuan in 2020, with an average annual compound growth rate of about 11.61%. In contrast Chinese mainland related manufacturers started relatively late, and the display driver chip packaging and testing market size of the Chinese mainland in 2016 was only 1.91 billion yuan. With the rapid growth of the integrated circuit design industry and the improvement of domestic capital investment, the display driver chip packaging and testing business has gradually begun to shift to Chinese mainland.
At the same time, benefiting from the global price increase in display driver chips, the market size of the Chinese mainland display driver chip packaging and testing market reached 4.68 billion yuan in 2020, accounting for an increase. In the future, with the development of domestic chip designers and the shortage of wafer production capacity in the short term, it is difficult to change the situation, and the demand for China's display driver chip packaging and testing industry will grow rapidly. It is estimated that the overall display drive packaging and testing market size of Chinese mainland will grow from 6.73 billion yuan in 2021 to 12.76 billion yuan in 2025, with an average annual compound growth rate of about 17.34%, and the proportion of the display drive packaging and testing market in Chinese mainland + Taiwan in 2025 will increase to 77.01% of the global market.
With the rise of the domestic display panel industry, the display driver chip will accelerate the localization, and will also drive the packaging and testing supply chain to shift step by step. Chinese mainland started relatively late, and due to the lack of mature chip design manufacturers, the market demand is insufficient, so the scale of packaging and testing enterprises in Chinese mainland is relatively small compared with the scale of packaging and testing enterprises in Taiwan. With the continuous support of chip design companies and the continuous maturity of enterprise technology in Chinese mainland recent years, the sharp rise in the demand for display driver chip packaging and testing will promote the continuous expansion of existing display driver chip packaging and testing manufacturers, and attract more leading packaging and testing manufacturers to enter the industry.
4． Shows the analysis of key companies related to the driving industry chain
4.1 SMIC: Production capacity is king, and mature process revenue is increasing rapidly
Mature technology and advanced process at the same time. The company's market share in the global foundry market in the third quarter of 2021 was about 5%, ranking fifth in the world and first in the Chinese mainland. After 2010, the company's products are mainly logic chips, and the revenue CAGR in 2011-2020 is 14.07%, and the core driving force comes from the expansion of production capacity. In 2020, wafer foundry product revenue accounted for 87%, from the process distribution, 0.15/0.18um mature process and 55/65nm node is the company's largest source of revenue, accounting for 33% and 31% of wafer foundry revenue, respectively.
Steadily expand production to meet the growing market demand, and gradually alleviate the tight production capacity of the industry. The company now owns three 8-inch fabs and four 12-inch fabs (including majority plants), with a planned capital expenditure of approximately RMB28.1 billion for 2021, most of which will be used for the expansion of mature processes, and a small part for advanced processes, civil engineering of new joint venture projects in Beijing and others. Among them, the 12-inch 100,000-piece project in Beijing and the 12-inch 100,000-piece project in Shanghai Lingang are expected to be put into operation in 2023, and the 12-inch 40,000-piece project in Shenzhen is expected to achieve mass production in the second half of 2022. It is expected that in 2022, the company's monthly production capacity will reach 600,000 pieces, and the capacity utilization rate will remain stable at more than 95%. (Source: Future Think Tank)
AMOLED DDIC capacity continues to expand. According to Omdia, the company's AMOLED driver chip production capacity continues to grow, and is expected to reach 7-8 thousand pieces per month by the end of 2022. At present, the major customer Ruiding accounts for about half of the HV 40nm AMOLED production capacity. Jichuang North, Yiswei, Huawei HiSilicon and Haowei are undergoing sample output or verification, and can only be mass-produced after the second quarter of 2022 at the earliest, and the new production capacity opened by SMIC is a key resource.
4.2 Weir shares: Acquisition of Synopsys LCD TDDI, into the display drive
Acquired Synopsys TDDI and officially entered the display drive. In April 2020, the company acquired Synopsys' Asia-based TDDI business and acquired the remaining 30% stake in 2021 to officially enter the display driver chip market. According to the Company's 2020 annual report, the TDDI business achieved sales revenue of 749 million yuan, and in the second half of 2021, 100% consolidation will begin. According to CINNO Research, its market share of smartphone TFT-LCD driver chips in 2020 is 6% (excluding synaptics TDDI's pre-closing share), ranking fifth.
The TDDI business may return to growth. In 2015, Synopsys first launched the TDDI mass production solution for mobile phones and tablets, which occupied the largest market share in the TDDI industry in the following two years, and its share fell to 15% in 2019, ranking second, mainly due to the increase in competitors, TDDI price war stage, the US chip manufacturers mainly rely on the initial technology leadership, the price is not dominant, resulting in orders from Apple only one-third of the original. When Weir takes over, it is expected to create a cost-effective product. 2) As one of the three giants of EDA, Synopsys restricts the use of EDA software by sanctioned mobile phone manufacturers and restricts the provision of TDDI, resulting in other domestic brands being more cautious when choosing U.S. companies, so it loses some orders from the domestic Android camp, and Lianyong benefits from it. After Weier acquires its TDDI business, it is also expected to re-coordinate with domestic manufacturers to seize TDDI orders from Taiwanese companies such as Lianyong and Duntai, and the market share may increase significantly.
4.3 Geke Micro: Focus on small and medium-sized markets, and gradually change from Fabless to Fab-Lite model
Gradually shift from Fabless to Fab-Lite mode. Founded in 2003, the company was mainly engaged in the design of PC CMOS image sensors at the beginning of its establishment, and gradually expanded to the CMOS design business of mobile phones in 2007, and realized the mass production of display driver chips in 2012, enriching the product structure and improving the company's profitability. In the course of nearly 20 years of operation, the company has continuously followed the market trend to enrich the product structure, enhance technical strength, improve the ability to integrate resources in the industrial chain, and achieve a steady improvement in market position. In the future, the company plans to gradually change from the Fabless model to the Fab-Lite model by building some 12-inch BSI wafer post-channel production lines, 12-inch wafer manufacturing pilot lines, some OCF manufacturing and back-grinding cutting.
Small and medium size display drive faucet, shipments in China second. According to Frost & Sullivan data, Gerco Micro ranked second among suppliers in the Chinese market with 420 million LCD (liquid crystal) driver chip shipments in 2019, accounting for 9.6% of the Chinese market shipments. The company's driver chips are mainly laid out in small and medium-sized markets such as wearables, feature phones and low-end smart phones, ranking first among local enterprises in the wear and feature phone markets, and its display driver chip revenue in 2020 is 590 million yuan, accounting for 9.16%. At present, the company's LCD drive chip between QQVGA (120*160) and HD (1280*720) has been mass-produced, and the driver chip with HD and FHD (1920*1080) resolution has entered small batch trial production. In addition, the company is actively promoting the research and development of TDDI, AMOLED driver chips and other products to achieve rapid catch-up.
4.4 Zhongying Electronics: Attacking the AMOLED front-loading brand market
After more than ten years of storage and cultivation, AMOLED driver chips have been mass-produced. The company's R & D team in 2011 to carry out AMOLED display driver chip design, and in 2013 successively launched HD, FHD hard screen AMOLED display driver chip, in December 2014 began mass production gradually replaced the PMOLED business, is the first domestic enterprise to achieve AMOLED mass production. In 2016, the company set up a subsidiary ChipPing Technology specializing in the research and development and design of display driver chips, and in the first quarter of 2018, Chiping Technology completed the internal verification of the first FHD AMOLED display driver, and stepped into the 40nm process with international competitors.
The aftermarket repair market continues to increase volume, and attacks the AMOLED front-loading brand market. According to the company's third quarterly report, its display drive chip sales increased several times year-on-year. From the perspective of revenue structure, the company achieved display-driven sales of 104 million in the first half of 2021, which has exceeded the full year of 2020, and the proportion of revenue has increased from 6% in 2020 to 15%. At the same time, the company plans to launch the mobile phone screen AMOLED display driver chip required by the front-loading brand market specifications before the end of the year.
4.5 Tongfu Microelectric: Hefei Tongfu deep layout display driver package
It is one of the three major sealing testing leaders in China and the fifth in the world. Through the way of endogenous extension, the company has laid out production capacity in many places, forming a situation in which the technologies of the six major production bases are complementary and the positioning is clear, and it is the fifth largest in the world and the second largest packaging and testing manufacturer in China. According to ChipInsights data forecast, the company achieved revenue of 14.537 billion yuan in 2021, an increase of 34.99% year-on-year (excluding the actual growth rate of the top ten OSAT factories excluding Zhilu Capital acquisition factors, the second largest), and the market share was 5.08%, an increase of 0.49pcts compared with 2020. At present, the main customers are AMD, MediaTek, STMicroelectronics, Infineon, Realtek, Aiwei Electronics, Huiding Technology, Zhuoshengwei, Weier Shares, etc., more than 50% of the world's top 20 semiconductor companies and the vast majority of well-known domestic integrated circuit design companies have become corporate customers.
The depth layout shows the driver package. Hefei Tongfu to ultra-high density frame packaging products as the focus, while undertaking peripheral memory and LCD driver business, with LCD / OLED DRIVER packaging technology, especially 12-inch TDDI, but also with 8K LCD Driver COF production technology capabilities, Hefei Tongfu display driver circuit packaging and testing line customers have been mass production. Hefei Tongfu customers include Jingfeng Mingyuan, Angbao, Shenzhen Mingwei, etc., while further importing memory-related business and expanding the DRAM packaging line.
4.6 Jichuang North (unlisted): Full category coverage, backed by large factories to open up the industrial chain
Focusing on the field of display driver design, there are few display chip design companies with global competitiveness in China. The company was founded in 2008, focusing on the chip design in the field of display, the company's products cover TDDI (display driver and touch integrated chips), medium and large size display driver chips (LDDI), OLED display chips, power management chips, LED display driver chips, timing control chips (Tcon), fingerprint recognition chips, touch chips, silicon-based OLED chips and other full categories of display chips, customer groups covering the world's mainstream panel factories, domestic first-line mobile phone terminal brand customers and well-known LEDs Display factory.
Backed by a large factory, bound upstream and downstream. The company has initially opened up the industrial chain through shareholder resources, and SMIC of wafer foundry and BOE of midstream panels are both shareholders and downstream manufacturers. It makes up for the shortcomings of the traditional design and outsourced OEM production model due to the inconsistent demands and goals of all aspects, resulting in the actual performance and production capacity cannot meet the requirements.
4.7 Wafer Integration (to be listed): Chinese mainland the third largest fab, focusing on display driver foundry
Chinese mainland the third largest wafer foundry, focusing on display drives. According to Frost & Sullivan, TG Has become the third largest pure wafer foundry company in Chinese mainland revenue and the third largest in 12-inch WA foundry capacity (excluding foreign-controlled companies). The company mainly focuses on panel drive chip products, the process mainly covers 90nm-150nm, as of the first half of 2021, its N1 plant has reached a full production scale. By the end of 2021, the total capacity of N1 and N2 plants will reach 100,000 pieces/month, which is expected to enter the top ten in the global wafer foundry field. In 2020, the company's wafer foundry output (equivalent to 12-inch wafers) in the field of display drives reached 259,800 pieces, with a market share of about 13%, ranking third among display driver foundries, second only to UMC and the world's advanced.
Revenue showed rapid growth, and orders on hand were full. From 2018 to 2020, the company's 150nm, 110nm and 90nm products have achieved mass production, and the operating income is 2.2/5.3/1.51 billion yuan, showing a rapid growth trend. In addition, the company's 55nm process research and development has made progress in stages, and the 55nm touch and display driver integration chip will enter mass production in the first quarter of 2022; the 55nm logic chip platform has been developed, and the customer trial production tape will be introduced in the first quarter of 2022. At present, the company's customers have covered well-known companies in the industry such as Lianyong Technology and Jichuang North, and are actively developing new customer resources. According to the announcement, the company's chip sales in the first half of 2021 reached 216,400 pieces, accounting for 82% of the total sales in 2020. The average unit price of chip sales is 7403 yuan / piece, an increase of 29.31% over the average price in 2020. As of the end of June 2021, the company had ordered 473,500 products in hand, with an order amount of 4.075 billion yuan.
4.8 Huicheng shares (to be listed): The leader in display driver packaging
The leader in display driver packaging. The company, formerly known as Hefei Xinhuicheng Microelectronics Co., Ltd., has been working in the field of display driver chip packaging and testing for many years, and its main business is the core of the former gold bump manufacturing (Gold Bumping), and the comprehensive wafer testing (CP) and the rear glass cladding packaging (COG) and thin film cladding packaging (COF) links to form a comprehensive service capability of the whole process of packaging and testing of display drive chips. In 2020, the company's display driver chip package shipments were 828 million units, ranking third in the global display driver chip packaging and testing field, and ranking first in China.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank].