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Where is the "Growth Point" of the Electronics Industry under Post-Covid 19?



Sailesh Chittipeddi, executive vice president and head of the Internet of Things and Infrastructure Business Division of Renesas Electronics Group (Renesas), from the business perspective of Renesas, detailed the growth points of the industry since the outbreak of the epidemic.

Since the beginning of the Covid-19 Epidemic, there have been voices emphasizing the devastating blow to the economy. Of course, semiconductors and even the entire electronic technology industry have been more or less affected. However, to a degree, from a long-term observation, the overall impact of the new crown epidemic on the electronic technology industry is far less than that of some traditional industries such as tourism and catering.

Due to the wide coverage of electronic technology nowadays, even if certain sub-industries have indeed suffered a shock, there are still short-term benefits in some areas: typical examples are the sensor industry and chip products targeting medical applications. Perhaps it is more appropriate to describe the current situation of the impact of the epidemic on the electronic technology industry with a mixed feeling: even if the existing resources are not yet able to systematically analyze how much "happy" and "worry" account for each.

Sailesh Chittipeddi, executive vice president and head of the Internet of Things and Infrastructure Business Division of Renesas Electronics Group (Renesas), from the business perspective of Renesas, detailed the growth points of the industry since the outbreak of the new crown epidemic.

It is worth mentioning that since Renesas acquired Intersil and IDT, the business scope covered after the transformation has been quite extensive, from the memory interface of the data center, 5G infrastructure, and even space exploration related products. In Renesas’ IIBU (Industrial/Infrastructure/Internet of Things business), “From memory interfaces to optical communication products, from low-latency HBM to network terminals, we provide a variety of solutions. From wireless power for consumer devices, to high-performance computing, we cover everything."

Chittipeddi said: "I think this is the way we can maintain sustained growth in the right market for a long time. Therefore, the development of Renesas IIBU's business in the past six months can actually reflect the impact of the epidemic on the industry to a large extent. Impact, where is the current growth point of the electronics industry, and whether those technology trends that are already in development have been affected by the epidemic."

Sailesh Chittipeddi

Dr. Sailesh Chittipeddi

 

Renesas' Business Growth Points Overview

It is important to emphasize that this article is not intended to be global, but to provide insight into some of the current application growth points in the electronics industry, given the breadth of Renesas' involvement in the industry. It does not address areas that have been hard hit by the epidemic, such as automotive - which is actually another important business for Renesas.

Renesas' business growth trends before and after the epidemic in each terminal application market

Renesas' business growth trends before and after the epidemic in each terminal application market.

The chart above is one that Renesas made public during its strategy update presentation in August, showing some of the company's current major growth areas and how the growth rate of these specific applications compares before and after the outbreak of the epidemic. Among them, data centers, laptops and tablet devices, healthcare and the environment, monitoring/voice interfaces (VUIs), and Rad Hard (radiation-resistant) technology related to space exploration are become the growth point of Renesas and the entire electronic technology industry.

Among them, notebook computers and tablet devices, as well as the overall rise in the PC industry, are relatively easy to understand. The epidemic has pushed up PC shipments. According to data from research institute IDC, global PC shipments in the second quarter of 2020 increased by 11.2% compared with the same period last year. Some of these segments also showed strong growth, such as e-sports. PC shipments grew 16.2%.

Other application areas are also emerging in the "post-epidemic" era. Working from home and more people staying at home for longer periods of time have led to a surge in demand for internet bandwidth. Using the North American market as an example, Chittipeddi pointed out that "The amount of data downloaded and viewed every 60 seconds on Netflix has grown by 10-15%; Google search has double-digit growth." These two types of growth are typical "bandwidth consumption” grows. In the first half of this year, Renesas’ revenue related to data center applications grew by 20% over the same period last year.

Sensors and various electronic parts and products related to medical health and the environment are most directly related to the epidemic. Among them, due to the spread of the virus, people's concerns about the safety of the surrounding living environment have greatly promoted the growth of demand in this field. Chittipeddi revealed that Renesas has just launched a flow sensor for ventilation systems, and some related power components and sensor signal conditioning chips. Moreover, blood oxygen saturation and the new coronavirus are also quite related, and we also see the demand for biological sensing in the global market.

In terms of security monitoring and VUI applications, the growth in demand for VUIs is driven by the fact that people are more likely to interact with electronic devices in public places without contact due to the outbreak; "There is a considerable growth in demand for contactless applications," said Chittipeddi."In the future we will offer further solutions, in a scalable way. From a relatively simple VUI solution to a compact look and feel solution that can handle natural language recognition, we will provide more reference designs. Renesas product layout mainly consists of MPU/MCU products, typically such as the MCUs needed for voice activation and recognition."

It seems that the overall growth forecast is for smartphones, a market that has become less strong in the "post-epidemic" period - and that is now the consensus. At the end of last year, market research firm IDC predicted that smartphone shipments would return to growth due to the onslaught of 5G; however, in reality, due to the emergence of the new epidemic in the first half of the year, IDC pessimistically predicted that global smartphone shipments would decline by 12 percent this year - a decline of more than 20 percent - because the first half of the year saw a drop of 18.2%.

Chittipeddi’s explanation for this is that fewer people are willing to go to retail stores to buy smartphones because of the epidemic, because the purchase of smartphones is based on experience and touch, and you need to see how the camera is used. Therefore, a lot of market research data shows that the demand for smart phones has fallen relatively sharply. However, in the second half of the year, especially in the fourth quarter, 5G mobile phones and some larger screen products will play an important role in driving the market.

In addition, the Rad Hard technology related to space exploration is theoretically not related to the new crown epidemic, but it has also become a business growth point for Renesas expected.

 

Application Demand brings Value to the Upstream and Downstream of Industry

Of course, the development of the above-mentioned application fields not only benefited Renesas, but from the perspective of the overall electronics industry, the progress of any one of the application fields has brought about the overall development of materials and end products. However, as you explore further upstream, the situation may become more complicated.

For example, material suppliers. Many large-scale material suppliers do not only serve the electronics industry. Even for the electronics industry, they may be involved in a wide range of businesses, such as various semiconductors and display panels. Therefore, material suppliers will increase investment in certain businesses during the epidemic and significantly reduce the production of certain businesses to achieve revenue growth during the epidemic or to overcome difficulties. The trend of any link in the upstream and downstream of the industrial chain may affect the decision-making of other links.

The following uses Renesas’ business growth area as an example to understand how the epidemic can objectively promote the development of the industry, and whether some technological trends that are still under development are affected.

 

Data Center, Bandwidth Demand Growth

The main opportunity that this part brings to Renesas lies in DDR5 RAM memory. Related products deployed in the company's data center include memory interfaces, timing components, and so on. The trend of DRAM memory transition from DDR4 to DDR5 has created quite a potential market for Renesas. The LRDIMM (load-reduced DIMM) in the second row of the figure below has 9 data buffers, a temperature sensor (TS) and SPD on the DDR4 module. On the DDR5 module, it contains 10 data buffers, two temperature sensors, plus PMIC and SPD Hub (the blue part on the board).

Data Center, Bandwidth Demand Growth

The conditions of SCM (Storage Class Memory) and SODIMM (small outline DIMM) are similar, even above SODIMM. It can be considered as a new area for Renesas to expand. This part is mainly the active area of the original IDT. At the same time, Chittipeddi also talked about Renesas’ memory interface solutions, which are irrelevant to the CPU architecture—that is, these solutions are applicable to various CPUs such as Intel, AMD, and IBM. This is a part with a higher technical threshold. Renesas is required to cooperate with partners at all levels of the ecosystem, not only CPU and memory manufacturers, but also server-level partners such as Dell and HP.

 

5G Infrastructure

The development of 5G has little to do with the epidemic, but Renesas is currently expanding its participation in 5G infrastructure deployment. 5G is the transition from the previous proprietary network to the current Open-RAN (Open Radio Access Network). Its characteristic is the decoupling of software and hardware, so new market participants begin to enter the network infrastructure construction.

In the early years, Renesas also had RF, power, and timing products in traditional networks. However, with the arrival of Open-RAN, Renesas’ participation in it has naturally increased, including memory interfaces and high-speed I/O. Obviously, this is also an important manifestation of Renesas' new capabilities acquired in the past two years. "We are also preparing to announce more components. Some products have already been released, and soon we will release new products. Products will get closer and closer to the antenna side-but not to the data converter side. So Our strength is actually in the AAS active antenna system, especially beamforming Rx and Tx."

"In fact, in terms of optical systems, we are also playing an important role. Now we often talk about the fronthaul, midhaul, and backhaul of 5G networks. The bandwidth demand has increased, and optical communications play a very important role in the fronthaul." Chittipeddi Said, "And we are now mainly working in the sub-6GHz part, you will also see that we will play an important role in millimeter wave technology."

According to data provided by Renesas, the company's 5G business-related revenue in the first half of this year grew by 80% compared to the same period last year. However, it seems that the proportion of 5G business in Renesas' revenue is not high for the time being. Chittipeddi believes that the proportion of revenue in this part of the future should be higher and higher. Obviously, the epidemic has not slowed down the development of 5G.

 

Space Exploration

Rad Hard (radiation harden, anti-radiation) technology is related to space exploration. Renesas has participated in the construction of many space vehicles and probes since 2018, and cooperated with NASA, ESA (European Space Agency), ISRO (Indian Space Research Organization), JAXA (Japan Aerospace Exploration Agency). Renesas mainly provides power components and MCUs in these aircraft and probes.

Chittipeddi said: "This year, due to the changes in planetary positions, the distance between the Earth and Mars will be the closest within 15 years. Therefore, many space exploration-related applications, such as the Mars rover, have a market and require Rad Hard technology. Some specific market solutions." In terms of satellite communications, Chittipeddi believes that the use of satellite communications for telemedicine should be a more pragmatic and promising direction.

Some of the above cases may have the characteristics of Renesas’ own business development, but we can still see how market participants obtain market opportunities in the growth of demand. The upstream and downstream players in the industry chain may have different ways to comply with development trends, but the overall direction is the same. In the face of adversity, continuing to seek opportunities for the development of enterprises and industries, and even make a difference, is a major feature of the electronics industry itself, and it is also the most attractive aspect of this industry.

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