Taiwan's Top 50 Performers: IC Design Leads the Pack Thanks to China's 5G Potential
 
May 24, 2020
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The most eye-catching category in this year’s Top 50 Performers survey is none other than “IC Design”. Beset on both sides by the trade war and the COVID-19 pandemic, how was this bunch of IC Design companies able to beat the odds and continue to shine throughout the year?

A cursory glance at the Top 50 Performers in 2020 will show that companies in the category of “IC (integrated circuit) Design” are having a field day. Six of them made it into the list, having broken the mold amid the dual crises of the trade war and the COVID-19 outbreak. How has the IC Design group been able to outperform everyone else?

5G and Network Communication Boost Chip Demand
First of all, the coming of 5G has ramped up demand for network communication equipment up and down the supply chain. Coming in at number four on our list is IC design house Realtek (瑞昱), which became hugely successful thanks to the construction of network communication infrastructure in China.

“They’ve always enjoyed a fair share of the Chinese market. Since last year, the driving force behind their revenue growth is the various network communication projects coming in from China,” says CY Yao (姚嘉洋), Senior Analyst at the Topology Research Institute.

This year, 5G is expected to take off in China. But the advent of 5G is reliant on the speed of Wi-Fi equipment. As Wi-Fi technology continues to improve, demand for Realtek’s Wi-Fi chips is also experiencing a meteoric rise.

In addition to this, Realtek launched new Wi-Fi 6 chips to lay their claim to the market. In order to keep up with upgrades to wireless communication features on mobile devices, Wi-Fi 6 technology has been broadly adopted by diverse applications such as routers, smart homes, and personal computers.

In 2019, thanks to the success of their Wi-Fi, Bluetooth, and audio-related product lines, Realtek’s consolidated annual revenue grew by 31.5% in the first ten months, shattering previous records. The first three quarters’ earnings per share (EPS) surpassed ten dollars, netting more than 100% of Realtek’s initial invested capital. 5G has incredible potential in China in 2020. Investors are uniformly optimistic about Realtek’s future growth.

The boost that 5G is giving the Chinese market is also beneficial for ShunSin Tech (訊芯科技), a semiconductor packaging and testing company widely regarded as the golden goose of its parent company, Foxconn.

ShunSin comes in at number eleven on our list of top performers. General Manager Wen-Yi Hsu (徐文一) predicted last year that 2020 would be the year when 5G truly took off. “It is predicted that technological advances will continue far into 2024, which in turn will cause an increase in demand for ShunSin’s high-speed optical transceiver modules and System in Package Modules (SiP).”

As early as 2016, Foxconn purchased American company Avago’s optical modules business. This generated packaging and testing orders for 100G optical transceiver SiP for ShunSin. It also showed that Foxconn was counting on ShunSin to help pave its way to the lucrative semiconductor market.

Consumer Products Boost Demand for Display Driver IC
What’s more, demand for display driver IC is also ramping up due to a strong showing from the consumer electronics market.

In 2019, the shipment of notebook computers around the world increased by 2.7%, ending a seven-year streak of negative growth. Coming in at number twenty-five, Elan Microelectronics Corp. (義隆電子) holds nearly 50% of the market share of touchpad chip sets for consumer-grade laptops.

“Elan does well when the laptop market is doing well,” Yao points out. Elan integrates chips with modules to achieve a gross margin of over 45%.

Coming in at number twenty-five alongside Elan is Egis Technology (神盾), a company specializing in making the chips used in optical fingerprint sensors.

Smartphone brands around the globe have incorporated fingerprint scanning technology into their products. From industry-leading Chinese brands such as Xiaomi, Oppo, and Huawei, to various high-end smartphones put out by South Korea’s Samsung, Egis chips are showing up in more and more devices and doing wonders for the company’s bottom line.

World-renowned fabless chip design company Novatek (聯詠) ranks number thirty-two on our list. In recent years, Novatek has been devoting its energy to the development of Touch and Display Driver Integration (TDDI) IC. In 2019, Novatek recorded impressive results. The reason is, in an effort to reduce the expense of chips in a mobile phone’s cost structure, major smartphone companies around the world are moving away from discrete chips and trending toward an integrated chip design.

The shipment of smartphones dipped slightly in 2019. But in contrast, demand for this kind of integrated chip showed astounding growth. Novatek’s worldwide market share is second only to Samsung’s semiconductor division, which was why it reaped such rewards.

It is apparent from the Top 50 Performers list that IC design companies higher up on the supply chain performed well because they benefited from countries upgrading their network communication equipment. It is only logical that network communication companies further down the supply chain had a good year as well.

Network Communication Staying Strong
One example is Accton (智邦), which posted the highest revenue for 2019 in the “Network Communication” category. It came in at number two on the Top 50 Performers list.

Accton benefited from major internet companies setting up cloud data centers all over the globe. They opted to make their cloud solutions compliant with the Open Compute Project (OCP). Accton’s network switches enjoyed a market share of over 30%.

With the advent of 5G, virtualization and OCP-compliance are two of the trends sweeping the telecom industry. This year, Accton plans to combine unbranded telecom equipment with base station gateways and switches to enter the telecom market and improve its revenue stream.

Coming in at number nineteen is Arcadyan (智易), the network and communication golden goose of Taiwanese computer giant Compal Electronics. In order to meet demand for upgrading network and communication equipment, set-top boxes manufactured by Arcadyan have all been upgraded to 4K. They are also integrated with AIoT functions. A deluge of orders from eager customers has boosted the company’s performance considerably. Arcadyan’s profit in the first three quarters of 2019 surpassed its annual profit in 2018.

The COVID-19 crisis has filled the industry’s outlook with uncertainty. From our list of the Top 50 Performers, we can see that 5G has gotten the tech industry excited about the future. It will play an important role in the industry’s growth for years to come.

CommonWealth Magazine compiled this year’s list of the Top 50 Performers based on six independent indicators, such as each company’s revenue growth, profit margin growth, etc. See the complete list below:

 

 

Rank

 

Company

 
1 力山工業 Rexon
2 智邦科技 Accton
3 易華電子 JMC Electronics
4 瑞昱半導體 Realtek
5 海悅國際開發 Hiyes International
5 緯創軟體 Wistron ITS
7 和鑫光電 HannsTouch
7 台灣表面黏著科技 Taiwan Surface Mounting Technology Corp.
9 六角國際事業 La Kaffa International
9 大江生醫 TCI Co.
11 優仕咖啡 UCC Ueshima Coffee Co.
11 泰碩電子 TaiSol Electronics Co.
11 大塚資訊科技 Otsuka Information Technology Corp.
11 訊芯科技控股 ShunSin Tech
15 宣德科技 Speed Tech Corp.
15 高雄晶傑達光電科技 Kaohsiung Opto-Electronics
17 公信電子 Clientron Corp.
17 特昇國際 Techcential International Ltd.
19 旭富製藥科技 SCI Pharmtech
19 健策精密工業 Jentech
19 致新科技 Global Mixed-mode Technology Inc.
19 喬山健康科技 Johnson Health Tech.
19 麗豐 CHLITINA Holding Limited
19 智易科技 Arcadyan
25 義隆電子 Elan Microelectronics Corp.
25 和展投資 Hozan Investment Co.
25 神盾 Egis Technology
25 美時化學製藥 Lotus
29 鈺太科技 ZillTek Technology
29 合迪 FINA Finance & Trading Co.
29 崇越石英製造廠 Topco Quartz Products Co.
32 聯詠科技 Novatek
32 優群科技 Argosy Research Inc.
32 嘉澤端子工業 Lotes Co., Ltd.
35 高僑自動化科技 Tera Auto Tech Corporation
35 廣越企業 Quang Viet Enterprise Co.
37 欣泰石油氣 Hsin Tai Gas
37 中租控股 Chailease Holding
37 三竹資訊 Mitake Inc.
37 美利達工業 Merida Industry Co.
41 亞洲水泥 Asia Cement Corporation
42 零壹科技 Zero One Tech
42 安勤科技 Avalue Technology Inc.
42 光洋應用材料科技 Solar Applied Materials Technology Corp.
42 中租迪和 Chailease Finance Co.
46 晉泰科技 Genesis Technology
46 豐泰企業 Feng Tay Group
46 東森得易購 Eastern Home Shopping & Leisure Co.
49 豐達科技 National Aerospace Fasteners Corporation
49 晶達光電 Litemax
49 鑫聯大投資控股 Trigold Holdings
49 大地幼教 Dadikid
49 吉嘉電子 Gigatek Inc.

By Elaine Huang