Rising demand for 5G smartphones is expected to fuel growth for local manufacturers of heat-dissipation products, as 5G devices tend to generate more heat than 4G handsets, demanding better thermal solutions, KGI Securities Investment Advisory Co (凱基投顧) said in a research note on Friday.
Vapor chambers are to become mainstream among thermal solutions for 5G smartphones, as opposed to heat pipes and graphite sheets, KGI analysts led by Angela Hsiang (向子慧) said, adding that upgrades of vapor chambers are likely to continue through next year.
“Huawei Technologies Co (華為) introduced its flagship Mate 30 smartphones on Sept. 19, which use vapor chambers to spread heat and that could portend growth opportunities in the second half of 2019 for heat-dissipation parts makers,” the analysts said.
“In addition, Xiaomi Corp’s (小米) new Mi 9 Pro 5G smartphones also use vapor chambers as thermal solutions, while new phones for next year — including Oppo Mobile Telecommunications Corp’s (歐珀) Reno, Samsung Electronics Co’s Galaxy S11 and Note 11 products, and Huawei’s incoming P40 and Mate 40 phones — are to install vapor chambers as well, which could stimulate demand for thinner heat spreaders,” they said.
Global smartphone shipments are expected to decline 4 percent year-on-year to 1.49 billion units this year, but increase 2 percent next year and 3 percent in 2021, due to demand for 5G devices, they said.
“Shipments of 5G smartphones are predicted to reach 7.5 million this year, climb to 230 million units next year and grow to 502 million units in 2021, pushing up the penetration rate of 5G smartphones from 1 percent this year to 15 percent next year and 32 percent in 2021,” the analysts said.
To cope with demand, Taiwanese vapor chamber manufacturers have been expanding production, which could boost their total output by 175 million to 180 million units next year, compared with 50 million to 55 million units this year, they said.
There is no need for the industry to worry about potential oversupply by the fourth quarter of next year, given that 5G smartphone shipments would reach 230 million units next year, while demand for vapor chambers is expected to be about 170 million units, they said.
As vapor chamber business growth is expected to remain solid through next year, local makers, such as Auras Technology Co Ltd (雙鴻), Taisol Electronics Co (泰碩) and Chaun-Choung Technology Corp (超眾), should benefit the most from rising orders, the analysts said.
Chaun-Choung shares have risen 70.65 percent on the Taiwan Stock Exchange this year, with the broader market advancing 12 percent, while Auras shares have surged 107.35 percent on the over-the-counter Taipei Exchange, where the benchmark TPEX has moved up 14.18 percent. Over the same period, Taisol jumped 202.87 percent.
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