Market Trends of Taiwan Integrated Circuits Industry
The Logic Segment is Anticipated to Hold a Major Market Share
- A logic integrated circuit is a type of semiconductor device that combines multiple logic gates into a single chip. These circuits are fundamental components in digital electronics, enabling binary data processing through logical operations. Logic ICs are critical components in modern electronics.
- Logic ICs are essential for performing arithmetic operations, data processing, and control functions at the core of computers and microprocessors. Logic gates form the basis of the central processing unit (CPU), executing instructions through binary operations. With the increasing complexity of computing tasks, advanced ICs like microcontrollers and microprocessors integrate millions of logic gates, enabling high-speed computations and multitasking capabilities.
- Logic ICs are pivotal in digital communication systems, where they facilitate the encoding, decoding, and modulation of signals. They enable error detection and correction algorithms, allowing reliable data transmission over various mediums such as fiber optics, wireless networks, and satellite systems. Digital signal processors (DSPs), which are specialised logic ICs, are extensively used in audio and video compression, speech recognition, and telecommunications.
- Consumer electronics, including televisions, smartphones, and gaming consoles, rely heavily on logic ICs for functionality. Logic gates control various features, such as user interfaces, audio and video processing, and connectivity options. For instance, modern smart TVs utilize logic ICs for smart features like internet streaming, app management, and voice control.
- The increase in Taiwan's export of integrated circuits will likely aid the demand for the studied market. For instance, according to Taiwan customs, in 2023, the value of integrated circuit exports from Taiwan amounted to USD 0.16 trillion. The region was one of the top chip producers in the world.
- Moreover, Taiwan's automotive industry is poised to bolster the market under examination. In recent years, the Taiwanese government unveiled mandates stipulating that all new passenger cars and scooters should be zero-emission by 2040, aiming to significantly reduce the nation's carbon footprint and promote sustainable transportation. Additionally, the government targets a 30% penetration rate for new electric cars by 2030, escalating to 60% by 2035. Simultaneously, it aims for new electric scooters to constitute 70% of the market by 2035.
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The IT and Telecommunications Sector is Anticipated to Drive the Demand for the Studied Market
- In IT, integrated circuits (ICs) are central to the development of microprocessors and microcontrollers. Microprocessors, which serve as the brains of computers, are built on IC technology. They execute instructions and process data, enabling complex computing tasks. The evolution of microprocessors, from early 8-bit designs to today's powerful multi-core processors, has significantly enhanced computing performance, allowing for faster data processing, improved graphics, and enhanced multitasking capabilities.
- The communication industry relies heavily on integrated circuits (ICs) to enable connectivity and data transfer. From basic telecommunication systems to complex data networks, ICs are integral to facilitating communication protocols and standards.
- Integrated circuits play a vital role in telecommunications signal processing, modulation, and demodulation. For instance, ICs are used in mobile phones to manage radio frequency (RF) signals, enabling wireless communication over cellular networks. They allow for features like error correction, voice encoding, and data compression, enhancing the quality and efficiency of communication.
- The rollout of 5G networks necessitates the development of specialized integrated circuits that can handle higher frequencies and increased data rates. ICs designed for 5G applications enable faster mobile broadband, low-latency communication, and the support of many connected devices. According to forecasts by GSMA, over 50% of all mobile internet connections in the country are expected to be based on 5G technology by 2025. Thus, the growth of 5G technology significantly drives the demand for the studied market.
- The expansion of cloud services in Taiwan, driven by domestic companies and global tech giants setting up data centers, increases the demand for integrated circuits. As data centers in Taiwan become more sophisticated and densely packed to maximize efficiency and performance, the demand for high-performance ICs rises. In September 2023, Cloudscene reported 20 data centers in Taiwan.
- The rise in data center investments also aids the growth of the studied market in Taiwan. For instance, in March 2024, Vantage obtained a loan of USD 64 million for its data center project in Taiwan. Taiwanese banks provided the funds, which will be utilized to construct the company's initial facility in Taipei, TPE11. Vantage secured the loan from CTBC Bank and Cathay United Bank. This transaction represents the first time a data center operator in Taiwan secured financing for a hyperscale data center.
