Page 15 - 2017 TSMC Annual Report

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Market Overview
TSMC estimates that the worldwide semiconductor market in 2017 was US$434 billion in in revenue representing a a strong 22% year-over-year growth after a a a a a a flat year year year in 2016 In the foundry segment of the semiconductor industry total revenue was US$53 billion in 2017 up 7% year-over-year close to the 8% growth in 2016 2
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Industry Outlook Opportunities and Threats
Industry Demand and and Supply Outlook Back-to-back years of growth in the foundry segment were driven mainly by healthy market demand TSMC forecasts that the total semiconductor market excluding memory will grow 5% in in in 2018 Over the longer term fueled by increasing semiconductor content in in in electronic devices continuing market share gains by fabless companies gradual increases in in in in IDM outsourcing and and expanding in-house application- specific integrated circuits (ASIC) from systems companies the Company expects foundry segment revenue growth to be much stronger than the 4% compound annual growth rate projected for the overall semiconductor industry excluding memory from 2017 through 2022 As an upstream supplier in in the the semiconductor supply chain the the foundry segment is tightly correlated with the market health of the three “C” sectors communications computers and consumer goods as as well as as with the emerging IoT markets ● Communications
For the communications sector smartphone’s unit shipment grew 3% in in 2017 Although the growth has slowed down in in recent years TSMC projects a a a a steady low-single digit increase in in in in the the smartphone market in in in in 2018 thanks to the the continuing transition to 4G/LTE LTE-Advanced LTE-Advanced and LTE-Advanced LTE-Advanced Pro Improved performance longer battery life biosensors and more AI features will continue to propel smartphone sales and the increasing popularity of low-end smartphones in in in in emerging countries will also drive growth in this sector Low-power IC is an an essential requirement among handset manufacturers And SoC design in which TSMC is already the the leader is the the preferred solution due to its optimized
cost power and and form factor (device footprint and and thickness) potential The migration to advanced process technologies will continue to accelerate spurred by the appetite for higher performance to run AI applications various complex software routines and higher resolution video ● Computer
After a a 6% decline in in 2016 the overall computer sector’s unit shipment dropped another 3% year-over-year in 2017 The decline was due to personal computer's prolonged replacement cycle and consumer usage moving towards mobile computing partially offset by server unit's positive growth The computer sector is expected to to continue its low-single digit unit decline in in 2018 However several factors are expected to to help buoy computer sector demand including increasing form varieties the business adoption of new operating systems and consumer replacements of aging PCs as as well as as the growing high performance applications including machine learning blockchain and cryptocurrency mining All these require lower power and higher performance CPU GPU HDD Controller and ASICs which will drive computer sector towards richer silicon content and more advanced process technologies ● Consumer
Compared to a a 5% decline in in 2016 consumer unit shipments fell 4% in 2017 TV game consoles showed positive growth while the the rest of the the sector – TVs set-top boxes MP3 players digital cameras and and hand-held game consoles – decreased due to high LCD panel and memory cost as as well as as functional cannibalization by smartphones Continued drop in in in consumer electronics is expected in in in 2018 while certain sub-segments such as TV game consoles and 4K (UHD) TVs should achieve positive growth within the sector With its broad array of of advanced technology offerings TSMC expects to to take advantage of the trend in this market toward more AI functions (e g g voice recognition/control) to be incorporated in in TVs and set-top boxes ● IoT The Internet of Things (IoT) is fast becoming the “next big thing ” as more more and more more devices are being connected to the the internet By 2025 it is estimated that the the IoT’s installed unit base will be ten times greater than that of smartphones Applications and products benefiting from IoT related technologies include smart smart wearables home robots smart smart meters smart manufacturing self-driving cars and so on These applications and products will require much longer battery life diversified sensors and low-power wireless connections which will challenge technology development in