18 Sep 2017

Upstream material suppliers in new iPhone supply chain to see strong growth

With Apple expected to launch its new iPhone soon, Taiwan players in the US vendor’s smartphone supply chain are warming up to embrace a new round of business boom, with the upstream suppliers of semiconductor and optical materials, particularly, likely to score higher business growth than industry averages, according to industry sources.

The sources said that such materials as copper clad laminates and photoresist dry films needed to produce substrate-like PCBs (SLPs) for iPhones, and photoresist required for advanced semiconductor process, as well as optical engineering plastics will see higher sales records than other sectors in the supply chain of new iPhones.

Upstream partners of Apple’s new iPhones adopt a semi-additive process to manufacture SLPs, triggering demand for photoresist dry films and copper clad laminates. Meanwhile, as Apple has contracted Taiwan Semiconductor Manufacturing Company (TSMC) to manufacture high-performance application processors (AP) for its new iPhones, such photoresist suppliers as Wah Lee Industrial and Topco Technologies are expected to see their sales soar as photoresist is a material indispensable to advanced semiconductor process.

Since the beginning of 2017, Taiwan suppliers of memory chips, particularly NOR flash memory products, have experienced remarkable shipment recovery, with such leading players as Winbond and Macronix witnessing fully-booked NOR Flash capacities in the wake of some international players exiting the NOR Flash memory market, industry insiders said. While Apple’s new iPhone is expected to adopt OLED panels and other smartphone brands surely to follow suit, Taiwan suppliers of NOR Flash memory chips are estimated to enjoy even brighter business prospects as such chips are needed to support the OLED screens.

Increasing demand for optical engineering plastics

On another front, as new iPhones will be fitted with high-pixel twin-lens cameras, this will not only benefit major optical lens suppliers such as Taiwan’s Largan Precision, Genius Electronics Optical (GSEO) and Asia Optical, and China’s Sunny Optical, but will also boost sales of optical engineering plastics needed for the production of optical lenses.

Furthermore, suppliers of silicon wafers in Taiwan and Japan are also poised to enjoy a major turnaround this year, due to increasingly tight supply. Suppliers have moved to hike quotes for silicon wafers and are planning to expand their production capacity. Nevertheless, as leading wafer foundry firms are rushing to book production capacity, the tight supply condition is expected to last for a while.

Market observers said that the overall business performance of the entire semiconductor industry has been rather strong in 2017, but the lingering market expectation for the launch of new iPhones has served to defer the peak season of the year for the wafer foundry and IC packaging and testing sectors. For instance, TSMC has turned conservative about its performance for the third quarter, traditionally a boom season, while those engaged in IC design, packaging or testing services, such as ASE, Silicon Precision Industries and Kin Yuan Electronics have not reported significant revenue increases for the quarter. The observers said that if the overall terminal market demand remains unchanged in the fourth quarter of the year, then the semiconductor industry is expected to see its real sales boom last through the first half of 2018.

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