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ICT Industry Outlook 2024 #2 - Global Policy Shifts Bring Uncertainty to Electric Vehicle Market While the ICT Industry to Focus on Silicon Photonics Technology and Shaping of 5G RedCap Ecosystem: MIC
December 21, 2023

The Market Intelligence & Consulting Institute (MIC) recently released the "ICT Industry Outlook 2024," providing an overview of the impact on the ICT software industry with AI as the main focus. It further analyzes predictions from the perspectives of net-zero trends, semiconductor and communication development, and the global overall environment. MIC's Director General Chris Hung stated that the net-zero trend poses challenges but also presents significant business opportunities, benefiting electric vehicles. However, the electric vehicle market in 2024 may face variables due to the sway of international policies. Additionally, in 2024, there will be a higher urgency for companies to purchase green energy. The semiconductor industry should pay attention to the competition among the three giants in advanced processes and the development of silicon photonics technology. Regarding the communication industry, the 5G RedCap ecosystem is expected to accelerate, and opportunities for satellite communication continue to expand.

Looking at long-term global environmental changes, a new form of globalization is taking shape. "Nearshore outsourcing" has become the mainstream production model, and major countries are intensifying protection efforts for key technologies, with technological nationalism becoming predominant.

Net-Zero Trend #1: Global Electric Vehicle Market Variables Due to International Policy Shifts in 2024

MIC stated that the European Parliament, U.S. presidential/congressional elections, the energy price crisis, and the challenges of traditional automotive powers catching up with China's progress in new energy may influence the attitudes of governments and original equipment manufacturers (OEMs) toward full support for new energy vehicles. The growth of the global electric vehicle market in 2024 will have variables. The subsidies for car purchases by governments worldwide are expected to continue, but they will gradually shift to support production and supply chains or invest in infrastructure. Facing the Chinese market and its electric vehicle manufacturers, the Japanese and European-American governments will assist in pushing for higher trade barriers. Some foreign automakers may reduce investment or withdraw from the Chinese market. As Taiwan is positioned as an electric vehicle component/system integration supplier, attention must be paid to the uncertainties arising from the sway of international policies and their subsequent impact on the development of OEMs and the market.

Net-Zero Trend #2: "Buying Green Electricity" Becomes a Must for Corporates to Achieve Net-Zero

Facing the global consensus of "carbon pricing," the use of green electricity has become one of the preferred means for companies to reduce carbon emissions. The demand for companies to purchase green electricity is expected to be more urgent in 2024. Taiwan's carbon fee collection is scheduled to take effect in 2024, and in 2025, carbon fees will be levied based on the investigation results, triggering companies to adjust their operational strategies to reduce carbon costs. MIC stated that the policy environment in 2024 will be more favorable to the vibrant green electricity trading market. The green electricity Corporate Power Purchase Agreement (CPPA) credit guarantee mechanism, scheduled to be launched at the end of this year (2023), is expected to reduce banks' qualification concerns about the creditworthiness of large electricity consumers, assisting large electricity consumers in purchasing green electricity. In addition, as the supply and demand situation of green electricity becomes clearer, companies can participate in the market through methods such as bidding for small amounts of green electricity from Taiwan Power Company, planning to sign CPPAs, etc. 2024 will be an excellent time for companies to engage in green electricity procurement exercises.

Semiconductor Trend #1: Three Global Semiconductor Giants Intensify Competition in Advanced Processes

MIC indicates that the mass production of advanced process technology has progressed to the 3-nanometer technology node. With TSMC and Samsung taking the lead, Intel anticipates to launch its 3 process products in 2024, intensifying the competition among these three semiconductor giants in the 3-nanometer process. Attention is also drawn to the 2-nanometer process, with expectations for trial production and verification in 2024. The progress in this area is worth monitoring. Overall, the semiconductor industry focus in 2024 will center on the global advancement of advanced process technology, with three main areas of observation: the progress of 3-nanometer mass production processes, major customers and products in the 3-nanometer process, and the trial production progress of the 2-nanometer process.

Semiconductor Trend #2: High-Speed Transmission Demand Drives Rapid Development of Silicon Photonics Technology

The bandwidth demand for data exchange and transmission between servers, racks, and data centers has significantly increased due to big data, AI, and other data center computing needs. Looking ahead to 2024, MIC expects that technologies and products such as silicon photonics optical transceivers will develop even more rapidly. In addition, the introduction of silicon photonics technology into circuit boards, carriers, and chip-level connections will continue to advance. The development focus of silicon photonics technology in 2024 includes the progress of mass production of 800 Gbps optical transceivers, the development progress of 1.6 Tbps optical transceivers, and the development progress of 5.12 Tbps co-packaged optical technology.

Network Communication Trend #1: 5G Lightweight Network (RedCap) Ecosystem Will Soon Take Shape

The 5G lightweight network (RedCap) ecosystem in 2024 will accelerate its formation. 5G RedCap can provide transmission speeds far higher than the current NB-IoT technology, with lower latency, higher data throughput, and longer and more efficient battery life. This helps reduce the complexity and cost of device development, supporting the development of IoT application scenarios required by various industries in the 5G era. With the advent of 5G RedCap data chips, whether for consumer, enterprise, or industrial IoT devices, costs are expected to enter the market at more than 40% lower than traditional 5G NR technology terminals. Looking to the future, 5G RedCap chips will drive module and terminal mass production, stimulate the continuous reduction of key links in the industry, and telecom operators and IoT service providers are actively seeking suitable application scenarios, accelerating commercialization and scaling.

Network Communication Trend #2: Major Companies Invest Successively, Expanding Opportunities for Satellite Communication

In 2024, opportunities for low Earth orbit (LEO) satellites will expand, and existing companies will continue to expand services. For example, Starlink will deploy in Asia, South America, and other regions. OneWeb will cooperate with telecom operators in India and Taiwan, planning to start services in 2024. High Earth orbit (HEO) and medium Earth orbit (MEO) satellite company Echostar will cooperate with LEO satellite companies to expand services. At the same time, LEO satellite companies will develop more diverse user terminal devices in response to mobile services, lightweight applications, and enterprise applications. Satellite direct-to-phone services will also make more progress in 2024. Many major mobile phone brands will join related functions in new phones, and LEO satellite service providers are optimistic about satellite communication opportunities. Leading and startup manufacturers have already invested in this area. Taiwan's manufacturers have entered the supply chain of international LEO satellite communication service providers, mainly providing terrestrial equipment and related components. It is expected that with the expansion of services by existing providers and the entry of more providers, equipment and component suppliers will be driven, attracting more companies to invest and strengthen key component technology layouts.

Overall Environmental Trends: Nearshore Outsourcing and Strong Countries Intensify Protection of Key Emerging Technologies

Looking ahead at the development of the overall environment, the MIC points out that nearshore outsourcing and the intensification of strong countries' protection of key emerging technologies will continue to impact global industrial development. Globalization is undergoing a transformation, with some countries attempting to bring industries back to their homelands through policies in the past few years. However, the global industrial structure is hard to shake, leading nearshore outsourcing to gradually become a mainstream production model, forming new industry supply chains around major markets. It is expected that the global supply chain and division of labor system will continue to undergo restructuring, with more new regions and countries being included.

Apart from the United States, many countries are beginning to propose measures to protect domestic key industries and technologies. A wave of technological nationalism is sweeping the globe, resulting in two major influences. Firstly, industries and companies pursuing global development will inevitably face more restrictive policies, including tariffs, as well as controls over key technologies, mergers and acquisitions, and exports. Secondly, the relationship between upstream and downstream industries will emphasize trust even more. Companies and organizations will need to propose more serious and concrete measures for technical protection; otherwise, it will impact collaboration opportunities. Trust issues are expected to become more critical in 2024.

About Market Intelligence & Consulting Institute (MIC):

Established in 1987, Market Intelligence & Consulting Institute (MIC) is a division of III (Institute for Information Industry), a major government think tank, and one of the leading IT research institutes in Taiwan. MIC specializes in industry and market research. With over three decades of experience, MIC provides valuable insights and data-driven recommendations to assist businesses in making informed decisions.

To know more about this topic, please visit:Stay Ahead: 2023 Semiconductor Industry Research Value PackRelocating Manufacturing Bases: The Industrial Policies of the Six Countries amid Taiwan's New Southbound PolicyAnalysis of The Taiwanese EMS Industry's Net Zero Emissions Strategy (pre-order)Key Technologies and Applications of 5G and Wi-Fi Heterogeneous Networks (pre-order)

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