This year has been anything but predictable. The COVID-19 pandemic swept across the globe with an impact that has shut down several industries while elevating technology to the same level of food, water, and shelter as a basic necessity. The recent pandemic surge is fueling even more demand in everything from chips to servers so much that shortages of basic materials now threatens technology shipments. As a result, the technology outlook looks incredibly positive going into 2021 but there are caveats that warrant concern for the latter half of 2021 and beyond. The analysts at TIRIAS Research assembled the following review of key 2020 trends and an outlook for 2021, predictions for some of the major technology segments, and predictions on other issues such as trade and M&A activity.
The continued push for remote learning, working, and entertaining combined with a flurry of new software and hardware technology in areas like gaming continues to fuel strong growth in consumer and enterprise electronics, as well as servers and networking gear for cloud services and new networks like 5G. Tirias Research predicts that this demand will carry over into the first half of 2021. Economic stimulus by the U.S and other governments will also fuel demand. Tirias Research believes that continued growth will be strongest in gaming, 5G handsets and infrastructure equipment, industrial automation and robotic solutions, medical systems to handle the flood of new patients, and servers for a wide variety of applications including AI, HPC, and entertainment. This will translate into strong growth for semiconductors. However, that growth will be tempered by the shortages in raw materials that are emerging and shipment delays due to the pandemic.
Tirias Research sees growing concerns because of double ordering and order pull-ins that are occurring due to supply and embargo concerns, especially in China. In addition, the eventual end of government incentives and support programs, lingering high unemployment rates, and prolonged hardship in other industries threaten the long-term outlook. Likewise, the end of the pandemic could shift consumer spending to other areas, especially travel. There is also the concern that prior to the pandemic, most of the global economy was in a prolonged growth period that has been minimally affected by the pandemic. As a result, a broader correction may still be forthcoming in late 2021 or beyond.
Outlook & Predictions By Segment
Despite some science fiction-type conspiracy theories, 5G deployments hit full steam in 2020 with deployments in over 100 counties and nationwide deployments in China, the U.S., and several other countries. The concept of using open architectures or ORAN networks for cellular communication also gained strong interest based on the success of Rakuten in Japan. In 2021, 5G standalone (SA) networks will begin and the first mmWave networks will begin outside of the U.S in countries like China. New carriers will also enter the market leveraging ORAN. The most likely candidates are major internet service providers like Google, but there may be some new and unexpected entrants or startups as well. 5G smartphone sales will exceed 50% of all smartphones in 2021. And similar to PCs, smartphone demand will also be increasingly driven by gaming with devices like the Asus ROG.
Artificial Intelligence (AI) and Machine Learning (ML)
2020 saw considerable movement in the AI segment, including silicon delivered from several chip start-ups like Grog, Mythic, and Sambanova. Intel shifted from focusing on Nervana-based silicon to newly acquired Habana. Startup Cerabras won government and commercial contracts in pharmaceutical development with the company’s wafer-scale platform. And Nvidia stayed ahead of the pack with the new Ampere GPU architecture that proved well suited for both deep learning training and inference.
There was also a growing mantra to do more AI processing at the edge of the network. The predominant AI benchmark, MLPerf was expanded to include HPC workloads. Commercial deployments expanded for a wide variety of industrial applications, particularly agriculture, manufacturing, and medical applications. And more than anything, COVID-19 became a battle cry to combine resources to develop a vaccine.
The new year will bring more specific application models for areas such as predictive maintenance, network and system automated management, security, and human interfaces. This will also shift the focus from the hardware to the software as the differentiation between platforms. Nvidia has been a pioneer in this area with software platforms and frameworks like Isaacs for robotics, Clara for medical imaging, and Jarvis for Natural Language Processing to name just a few. At the same time, a growing number of middleware companies are providing customizable ML platforms for edge AI. Those that have the software will remain, the others will find themselves left out by the end of 2021.
Augmented reality (AR) continues to be a niche application for industrial applications while virtual reality (VR) continues to make strides with new applications, especially games, and shipping products in mainstream price points, such as the Oculus Quest 2, which sold out for the holiday season. Tirias Research believes that AR will still be out of reach for mainstream consumer price points in 2021 but newer technologies ranging from chipsets to displays could reduce the cost by upwards of 50%. VR, on the other hand, will see surging demand driven by gaming. This could double unit shipments of 2021.
The automotive segment took a beating in Q2 due to the pandemic but surged back in the second half of the year, particularly in China. The situation also forced many car vendors to accelerate plans to move to a higher percentage of electric vehicles (EVs) in preparation for autonomous vehicles. 2021 will be the year of the electric pickup truck as production units roll out from Chevrolet, Bollinger, GMC, Lordstown, and Rivian. Ford, Nikola, and Tesla will follow with EV Trucks in 2022. While the new EV trucks will be widely popular, they still won’t replace their gas counterparts anytime soon as they struggle to live up to the mileage ranges promised when consumers start using them like trucks – pulling boats and trailers and driving into the mountains for the weekend.
High-Performance Computing (HPC)
HPC became highly competitive in 2020 as Fujitsu captured the top spot in the TOP500 with an Arm-based processor and Nvidia captured the number five spot on the TOP500 and the top spot on the GREEN100 with its own Selene supercomputer. 2021 will bring new supercomputers into the mix especially from U.S government labs with new exascale systems, including the Aurora supercomputer at Argonne National Labs based on an Intel platform and the Frontier supercomputer at Oak Ridge National Laboratory-based on using an AMD CPU and GPU. Both of these supercomputers run on Cray (now part of HP Enterprise) platforms.
Industrial Internet of Things (IIoT)
Many companies, like BMW which announced the use of Nvidia Isaacs for materials handling, were already working to automate their facilities. But COVID-19 accelerated the plans of many companies considering automation to further reduce dependencies on human labor. As a result, 2021 will mark a turning point for many industries and companies that begin the transition to more fully automated systems. Likewise, COVID-19 drove more investment in automated and remote medical technology and systems. Tirias Research expects major developments in the use of AI for medical areas like radiology and anesthetics in 2021. This will be a major turning point in the use of AI for diagnosing and treating patients.
COVID-19 drove a surge in mobile PC sales in 2020 and renewed competition amongst the technology vendors. AMD entered the thin-and-light market with the Ryzen 4000U and Intel introduced the Tiger Lake process with the first version of the company’s Xe graphics. In addition, traditional smartphone processor vendors continued to push for more share of the PC market. PCs using Qualcomm’s first-generation Snapdragon 8CX began shipping as the company introduced its second generation of the 8CX for future products. Both MediaTek and Samsung pushed further into Chromebooks and Apple launched the first MacBook with its own M1 Arm-based SoC. What once appeared to be an x86 only market is turning into the Arm-x86 battle that was promised several years ago.
In desktops, AMD surged ahead with the 3rd generation of its Ryzen processors and inched closer to Nvidia in graphics with the Radeon 6000-series GPUs. However, Nvidia is not standing still and introduced an entire family of 3000 series GPUs based on the Ampere architecture that surpassed the performance levels of its previous generation. Nvidia also received critical support for ray tracing in 2020 with 26 games launched and 14 announced games coming shortly.
PCs remain exciting in 2021 with the launch of Intel’s first heterogeneous processor codenamed Alder Lake, the company’s first real threat to AMD’s Zen architecture, and new discrete Xe GPUs. The shortage of GPU cards in 2020 combined with the new products will result in an increase in shipments in both desktops and notebooks in 2021 as supply catches up with demand. In addition, the entrance of an M1-based MacBook and increased support from Microsoft for the Arm architecture will result in stronger interest in Arm-based PCs in 2021. Tirias Research also believes that with a push from Intel to integrate MediaTek cellular modems in mobile PCs, advancements in activating non-smartphone devices with cellular operators, and a continued push for the use of mobile processors in PCs and Chromebooks that cellular modems will become a key competitive differentiator by the end of 2021.
The pandemic lockdowns created more demand for home entertainment which included PC and console gaming. It also coincided with the introduction of the next-generation game consoles from both Microsoft and Sony. The new AMD CPUs and GPUs and the new Nvidia GPUs were met with enthusiasm, leading to product shortages. The same was true for the consoles – the Microsoft Xbox Series X and Series S and the Sony PlayStation 5 have been sold out the holiday season. The strong demand will continue into 2021. Shortages may not be corrected until the second quarter of 2021. Additionally, mobile gaming will continue its surge based on the new 5G chipsets from Apple, MediaTek, Qualcomm, and Samsung.
Personal Connectivity (LAN/PAN)
WiFi 6 gained traction in 2020, especially as consumers sought to upgrade their home networks during the pandemic. In 2021, support for WiFi 6e will grow and new products, especially smartphones using Qualcomm’s new Snapdragon 888, are introduced.
The space race became real in 2020 as the US launched its Space Force defense agency, SpaceX started shuttle service to the International Space Station (ISS), Japan retrieved a sample from an asteroid, China retrieved rocks from the moon. With manned missions to the moon and Mars still a few years off, Tirias Research believes 2021 will be about more testing of future platforms and satellite communications as StarLink starts satellite internet service using the hundreds of satellites it has been launching over the past few years. Tirias Research’s Jim McGregor, who lives in the middle of the mountains, is anxiously awaiting the ability to test the satellite internet service.
Other Industry Issues
The FTC lost a major battle with Qualcomm in 2020 and faces an uphill battle to force a breakup of Facebook. Tirias Research believes that the new administration will have little impact on the direction being pursued by the FTC or that this or any other FTC suits will be resolved in 2021. However, 2022 may mark another crushing defeat for the FTC as it continues to go against industry norms and market momentum.
Mergers and Acquisitions
Despite the political and trade war between China and the U.S in 2020, M&A activity gained steam in the latter half of the year with some large semiconductor announcements, including Analog Device’s Acquisition of Maxim, Nvidia’s acquisition of Arm, and AMD’s acquisition of Xilinx to name the biggest deals. While none of these are expected to close quickly due to global regulatory review, they may be quicker than planned due to changes in the China-U.S. relationship expected under the new Biden administration. In addition, M&A activity in AI, RF, FPGAs, and sensors, especially LiDAR for automotive applications, will increase. The likely acquirers are the major chip companies (AMD, Broadcom, Intel, Nvidia, NXP, Microchip, Qualcomm, ST Marvell, Microelectronics, Samsung, etc.) as well as OEMs and internet service providers looking to develop their own technology, such as Amazon, Apple, Facebook, Google, Microsoft, etc.
The U.S. declared a trade war on China in 2020 with technology embargoes, especially on cellular infrastructure equipment providers Huawei and ZTE. The fear was that the trade ware would expand under the current administration. While the new administration has indicated that it will not act swiftly to change the current position of the U.S., TIRIAS Research believes that by mid-2021 the new administration will reach new trade agreements and/or end the current embargoes in an effort to demonstrate success in international policy. However, Huawei and ZTE will still be locked out of many 5G network rollouts. In addition, Huawei will have to rely on chipsets for new smartphones from partners MediaTek and Qualcomm for the next generation of handsets, but the company will quickly shift back to HiSilicon chipsets for its premium tier handsets in 2022.
2021 is shaping up to be an incredibly positive year across the technology industry because of technology innovation, the continuation of COVID-19, especially when coupled with government stimulus and support, and a new U.S. administration. The second half and beyond still possess downside risk due to general economic factors and the potential shift in spending away from technology, especially by consumers. However, the pace of technology innovation has never been faster, and this will help propel technology like AI into almost every aspect of the industry and the lives of consumers.