How China’s DDIC Industry Finds a Market Breakthrough

DDIC for the large-sized screen is the breaking point due to the low threshold in technology and large capacity. With the trend of display industry transfer and increasing investment, DDIC supply chain in mainland China is entering into the fast developing stage.

I. Large size is the entry point, and small and medium fields are accelerating along with industrial transfer and substitution

Driver IC industry chain is generally composed of IC design -wafer foundry – packaging and testing – panel factories. The current bottleneck of supply mainly lies in the capacity of the wafer foundry.

The DDIC industry chain is relatively simple. As an important part of the display imaging system, the cost of DDIC in electronic products is about 10-15%. However, due to a large number of chips embedded, it’s 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 due to low profit and other characteristics. Because of the diversity of display products, the process range of DDICs are also relatively wide, and the main products cover the process of 28nm-150nm.

Among them, IT products such as NB (Notebook), MNT（Monitor） and TV are mainly 110-150nm.

The integrated TDDI (Touch+DDIC) process mainly used for LCD smartphones and tablets are 55-90nm.

The relatively advanced process for AMOLED driver IC is 28-40nm.

Other driver chips with lower specifications, such as wearables, white electric appliances, and small household appliances which apply with lower resolution will not be discussed in this chapter.

(1) In 2021, the supply of various DDICs will be tight to varying degrees. In addition to their own demand growth, the wafer consumption of other types of ICs in the same process will also affect the supply of DDICs

In 2021, the most shortage of power management chips, low-end image chips below 10M, and fingerprint recognition chips increased in demand, which will squeeze the wafer supply of TV and IT to varying degrees.

In-vehicle MCU chip processes are mainly concentrated in 28-40nm, making it difficult to quickly replenish the DDIC supply of AMOLED, which is also in short supply in this process.

(2) DDIC accounts for about 3% of the overall wafer capacity, and 6% of the foundry

According to DISCEIN, the wafer capacity consumed by the DDIC is about 250-270K/M;

● If we refer to the wafer capacity of more than about 9500K/M in 2021, the actual proportion is less than 3%.

● If excluding the IDM capacity of about 5000K/M (such as Samsung and Intel), the leave-over foundry capacity (such as TSMC, UMC, SMIC) is about 4500K/M, and DDIC accounts for less than 6%.

(3) Smartphones and TVs consumed a large number of wafers

According to Omdia, large-size DDICs, including TV, MNT, NB, and TPCs(Tablet PC) above 9 inches account for 70% of the total demand. Among them, LCD TV panels account for more than 40%. Because of its annual panel shipments of about 270 million (AVC Revo is 272.2M in 2020) and more than 50% of UHD, there is a large demand for DDIC and high consumption of wafers.

In the small and medium-sized DDIC market, smartphones have the largest market share.

In 2020, the DDICs of LCD and AMOLED panels accounted for 20% of the total demand. However, because the driver chips of smartphones often integrate the functions of touch and T-CON, the area of a single grain is about triple that of TV driver chips, resulting in the consumption of wafers close to half of the downstream main current display.

In 2021, the growth of IT products is still strong. At the same time, due to the increased penetration rate of higher resolution in TV panels, according to Omdia, the total demand for mainstream DDIC is expected to grow to 8.4 billion in 2021.

The number of DDICs required by the terminal is proportional to the panel size and resolution. The larger-size and the higher resolution, the number of DDICs are required.

In the future, as the increase of large panel screen size, and the resolutions and color gamut requirements continue to improve, the number of DDICs required for each terminal product will further increase.

(4) Taiwan and South Korean manufacturers occupy most of the display driver market share

According to Omdia, Taiwan manufacturers have the largest share in the market of large-size DDICs. Novatek ranked first with a share of 24% in 2020, followed by Himax, Raydium, Samsung LSI, and LG Silicon Works.

In the field of smartphones, Taiwan manufacturers took the lead in LCD, with nearly 80% share in 2020, and Novatek, ILITEK-MTK rank in the top two.

(5) In the AMOLED field, Korean manufacturers have a dominant share due to their technological advantages

Samsung LSI occupied more than half of the market share of AMOLED display drivers in 2020. As exclusive suppliers of Samsung SDC, LSI and Magnachip (formerly SK Hynix Semiconductor) have not yet cooperated with panel makers in mainland China.

In 2020, Novatek and Radium are the main AMOLED driver chip suppliers for panel factories in mainland China, with a market share of 7% and 6% respectively.

As the share of domestic panel manufacturers increases, the transfer of the upstream supply chain drives the rapid development of the domestic DDICs industry.

In the field of large-size DDICs, Chipone and ESWIN have grown significantly. ESWIN is the largest TV DDICs supplier to BOE in 2020. Chipone’s share in panel manufacturers such as BOE and HKC continued to increase. In 2020, the market share of Chipone and ESWIN were 3.2% and 2% respectively.

(6) In the smartphone DDICs field, domestic companies still have a low market share, but show a local breakout situation

In 2020, OmniVision acquired Synaptics mobile TDDI business, and actively combined its CIS product advantages to expand in the Chinese market.

At the end of 2020, Chipone started mass production of TDDI for Xiaomi.

In the third quarter of 2020, Viewtrix started mass production of AMOLED driver chips.

In the second half of 2021, the trial production of the OLED driver chip developed by Huawei Hisilicon has been completed, and planned to officially complete mass production and delivery to suppliers in 2022. In the second half of 2021, the chip sample has been sent to BOE, Huawei, Honor and other manufacturers for testing.

In 2021, SinoWealth after-assembly AMOLED DDICs have been mass-produced and shipped; it plans to launch a pre-assembly brand market specification chip in mid-2022.

(7) TV display driver: the best entrance for domestic manufacturers to cut into the display driver field

TV panels are the most consumed display category.

The DDIC controls the on-off state display of millions of pixels through the source line of the voltage-driven panel. In regular IC design, the factor that has the greatest impact on the amount of driver IC is resolution.

A single driver IC of a TV panel generally has 960-1366 channels. The regular design of an OC with HD resolution requires 3 driver ICs, generally 6 for FHD, and 12 for UHD.

In addition to conventional designs, panel manufacturers are also developing dual gate (one driver channel drives two columns) or triple gate designs (one driver channel drives three columns). The entry-level 32-inch HD has one or two driver IC designs. However, at present, UHD accounts for more than 50% of the overall TV. This kind of solution is difficult to achieve when the resolution is getting higher and higher.

According to DISCEIN, the number of driver ICs required for TV panels corresponds to 270 million annual shipments, with a volume of about 2.5 billion, which is the display category with the largest consumption.

II. TV driver ICs are the first to become the best entrance point for mainland manufacturers

The following reasons explain that we believe the current TV driver IC is the main breakthrough.

(1) Large-size TV panels have the highest degree of standardization, and the technical barriers are lower than the threshold for small and medium-sized;

(2) The annual demand for TV display drivers is about 2.5 billion, which accounts for a large proportion of mainstream displays;

(3) After several industrial transfers of display panels, China took the lead in realizing the mainland’s dominant industrial pattern in the field of large-size LCD TVs. The top three competition patterns have been formed. Together with other panel manufacturers such as CHOT, the demand for TV driver ICs is dominated by mainland manufacturers.

At present, TV is also the most competitive field, and the overall share is relatively close. Among them, mainland China manufacturers Chipone and EAWIN also occupy a certain share. According to CINNO Research, among local driver chip manufacturers, the sum of both for more than 90% of the market share in medium and large-sized applications such as TVs, MINs, and NBs in the first half of 2022.

III. MNT display driver: multi-dimensional application scenarios, mainland manufacturers are catching up

MNT products are rich in dimensions. The form of MNT and TV is similar, but the TV is relatively simple and standard in the scene.

MNT comes with more application scenario requirements, such as screen ratio, refresh rate, flat and curved surface, resolution and other rich multi-dimensional features. MNTs are used in various scenarios such as office, entertainment, and e-sports.

(1)MNT is less used due to size constraints

In terms of dosage, due to the generally smaller size, it is difficult for MNTs to use more than 10 DDICs with 960 channels as easily as TV, and tend to use fewer DDICs with 1446.

Combined with the overall size of MNT and the tendency to use more channels of driver ICs, the number of driver ICs required for MNT panels corresponds to 160 million annual shipments, with a volume of about 900 million, which is only larger than TPC in several major applications.

Compared with the industrial structure dominated by mainland manufacturers of TV panels, MNTs are still in a strong situation.

Among them, the BOE ranks first in the world in terms of shipments. Other top-ranked manufacturers mainly include South Korean LG Display, Taiwan AUO and Innolux. At present, mainland manufacturers are increasing MNT investment to continue to catch up.

MNT driver ICs are still not the first choice for new manufacturers, but the share is growing rapidly with industry transfer.

It seems that the MNT driver IC product is not much different from the TV specification, but it is not the first choice for new manufacturers to enter the market due to overall scale, product diversity, customization and other reasons. The current high concentration is mainly dominated by Taiwan manufacturers.

However, at present, domestic panel manufacturers are catching up. The mainland Chipone, EXWIN and NewVision have grown rapidly as the MNT panel industry shifts to the mainland share.

IV. NB driver IC: the post-epidemic era to undertake new rigid demand, completely dominated by Taiwan manufacturers

In the post-epidemic era, notebooks have undertaken more new rigid demands, and the consumption was about half of TV.

During the epidemic, various rigid demands including the in-house economy, online office and education, etc., especially the centralized purchase of laptops greatly increased the new rigid demand of NB, and will decline slightly in 2022.

According to TrendForce, the annual shipment volume in 2022 will decrease by 3.3% year-on-year to 238 million units, of which chromebooks account for about 12.4%. The momentum of shipments has slowed down slightly, and the demand derived from the effect of the online economy has declined.

The resolution structure of NB products is currently dominated by HD and FHD, accounting for nearly 90%, so the amount of IC is less relatively used. Annual shipments of 230 million NB panels are about 1.2 billion ICs, which is close to half of the TV consumption.

The number of NB ICs demand corresponds to an annual shipment of 230 million panels, with a volume of about 1.2 billion, which is close to half of the TV consumption.

(1) NB driver ICs are basically dominated by Taiwan manufacturers, and the technical threshold is relatively high

From the perspective of suppliers, apart from BOE early adoption of the pioneering production solution of the G8.5 generation line, which quickly occupied the market and ranked first in the world. There are 2 to 4 manufacturers in Taiwan and South Korea, currently in the NB line of mainland manufacturers that have not yet mastered the lead.

Because NB pays special attention to power consumption, image quality and COG design, which has raised the technical threshold of driver IC, its supply is completely dominated by Taiwan manufacturers. The first Novatek and the second Raydium account for more than 60% of the shares, and the participation of mainland manufacturers is lower compared to TV and MNT.

In 2021, due to the high oligopoly of the suppliers, the driver IC became a constraint on the supply of NB panels, especially because of the technical threshold, it is difficult for mainland manufacturers to quickly supplement.

In addition to the technical threshold, due to the number of channels, COG design and power consumption of NB driver ICs, a 12-inch wafer can produce about 5K TV ICs or more than 7K MNT ICs, but only 2-3K NB ICs. It is expected that the supply and demand of NB driver ICs will improve later than MNT and TV in 2022 with the core shortage disturbance.

V. AMOLED driver IC: the increment of penetration rate drives the rapid growth

The penetration rate of AMOLED continues to increase, and it is now entering the peak construction period. Mainland and South Korean manufacturers are still investing in the construction of new factories to increase production capacity, and at the same time carry out yield improvement, technology optimization and product innovation.

According to TrendForce, the market penetration rate of AMOLED panels for smartphones have been 42% in 2021. Despite the continuous shortage of AMOLED display panel ICs, the trend of smartphones, and OEM manufacturers to expand the use of AMOLED panels in their new models, which will drive the growth of AMOLED market penetration, and is expected to increase to 46% in 2022.

At the same time, the downstream applications of OLED have gradually expanded from smartphones to wearables, tablets, notebooks, and other fields. The suppliers have developed from a monopoly of SDC to a situation of multi-great power.

(1) AMOLED driver IC has high process requirements, and multiple competing products within the same process have strong profitability

The process range of AMOLED driver chips is 28-55nm, which is the most tight production in mature processes. In this range, there are more competitive products with more profitable advantages, such as automotive MCU, high-end CIS, consumer electronics SoC, etc., which makes AMOLED production capacity crowded out, and its demand priority is low and difficult to meet.

(2) Mainland manufacturers cannot yet have the ability to supply AMOLED driver ICs on a large scale

Similar to the structure of AMOLED panel manufacturers, the top three driver ICs of AMOLED are all Korean, including Samsung LSI and LG Silicon Works. The share of the top three has exceeded 80%, and the second is mainly Taiwan manufacturers such as Novatek and Raydium.

Mainland chip manufacturers cannot have the ability to supply large-scale products. At present, in the absence of chips and production capacity, mainland panel manufacturers are in a relatively passive position.

(3) The wafer foundry industry restricts the development of OLED driver ICs in mainland China

The Korean wafer foundries are deeply bound with the OLED driver chip design manufacturers, forming a vertical integration model and is in a leading position in the world.

Taiwan wafer foundries also have in-depth cooperation with local OLED driver chip design manufacturers, giving priority to OEM for local manufacturers.

Mainland China wafer foundries mainly OEM LCD driver chips, while OLED driver chip OEMs have less experience, so most mainland manufacturers have to hand over orders to Taiwan.