Tech’s time to shine in 2021
KUCHING: Analysts remained overweight on the technology sector going into 2021 on the anticipation that demand for semiconductor components will remain robust with the dawning of the 5G era.
Building on its previous sector outlook whereby researchers at Kenanga Investment Bank Bhd (Kenanga Research) highlighted early signs of 8-inch wafer foundries experiencing orders beyond capacity, the research house gathered that the capacity squeeze is tightening as consumer demand bounced back from the coronavirus crisis.
This is led by growing demand for components such as smallpanel display IC (SSDI), contact image sensor (CIS), radio frequency front-end (RFFE), WiFi 6, TWS chips, power management IC (PMIC), MEMS sensor, MOSFET and IGBT which are used in gadgets such as 5G smartphones and base stations, laptops, gaming consoles, wireless earphones and automotive.
“Besides the Apple iPhone 12 series which is still being sold out for some of its Pro models, Nintendo Switch and the recently launched Sony Play Station 5 have also been facing global shortage to the extent that consumers are paying a premium in the secondary market,” it said in a tech report yesterday.
“The top five laptop brands – HP, Lenovo, Acer, Dell and Asus – saw combined shipment reaching its highest monthly sales in October followed by its second highest in
November as the work-fromhome (WFH) practice continues.
“Meanwhile, the topthree laptop original design manufacturers Compal, Quanta and LCFC are poised to enjoy a strong first half of 2021 on the back of continued ramp-up in orders.”
The pandemic in 2020 has caused firms to take a cautious approach towards capital expenditure (capex) budgeting which led to under-investment among the front-end wafer fabrication houses, particularly the 8-inch wafer manufacturing plants, Kenanga Research said.
As a result, wafer fabrication houses like TSMC, SMIC, UMC and Samsung have reported utilisation rates close to 100 per cent, with Kenanga Research expecting demand to remain elevated going into 2021.
“Therefore, significant expansion plans are slated to take place in 2021 to meet the surging demand for front-end capacity.
“China, in particular, is well positioned for another growth phase in semiconductor output for 2021, driven by its continuous effort to be technologically selfsufficient,” it added.
Meanwhile, China car sales extends growth streak as favourable government policy coupled with robust demand continued to bolster China’s automotive sales recovery from the Covid-19 pandemic.
To note, China’s car sales have logged seven months of consecutive growth from May till November 2020, thanks to the easing of purchase quota and increase in subsidies provided by the Chinese government.
Car sales growth continued to be driven by the premium segment where consumer purchases are largely centred on sport utility vehicles (SUV) and crossovers.
“Based on our observations of both regions, we noticed a big shift in customer preference. There is a huge increase in purchase of electric vehicles (EV) this year. China’s EVs sales growth have skyrocketed from a strong double-digit since July 2020 to a triple-digit growth for the month of October and November.
“While China’s government’s environmental policy has played a part to push for more EVs, the recent jump in numbers can also be tied to the Hongguang Mini, built by the General MotorsSAIC-Wuling joint venture.
“While the Hongguang Mini has a top speed of only 62mph (or 100km/h), it has zoomed passed Tesla Model 3 as the top selling EV model in China. From Sepember to October, the Hongguang Mini sold 55,781 units compared with the Tesla Model 3 sale of 35,283 units.”