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Taiwan IC design houses enjoy pull-in of short lead-time orders from China

The US trade sanctions against Huawei and its chipmaking affiliate HiSilicon continue to benefit Taiwan's IC design sector in the fourth quarter of 2020, set to be a particularly strong fourth quarter for Taiwan-based fabless chipmakers, according to industry sources.

For first-tier players, such as MediaTek and Novatek Microelectronics, they are capable of fulfilling a strong pull-in of short lead-time orders from China thanks to sufficient foundry support they have, said the sources. On the other hand, smaller Taiwan-based peers may struggle to obtain enough capacity support from foundries, which have already run their fabs at full capacity utilization, the sources indicated.

Taiwan-based fabless chipmakers specializing in chip solutions for set-top boxes (STB), surveillance systems and other devices for security controls, and image processing devices have seen their supplies constrained by insufficient foundry support, the sources continued. These companies, including ALi, Appro Photoelectron, Rafael Microelectronics and Sonix Technology, are still striving for more capacity support from foundries, the sources said.

Meanwhile, many of the suppliers of image processing chips and sensors, security ICs and STB chips have raised their prices to reflect tight supply, the sources noted. The ramp-up in short lead-time orders from China is encouraging them to adjust prices, the sources said.

With short lead-time orders from China unlikely to slow down until after the Lunar New Year break, many Taiwan-based IC design houses supply constraints may persist through the first quarter of 2021, according to the sources.