“Development of smartphone features is approaching its zenith, so the bar for innovations is being raised ever higher as well,” said Ila Huang, TrendForce semiconductor analyst. The slowdown of consumption in China this year has been a major challenge to the shipments of high-end smartphones such as iPhone 6s. Sales of high-end devices will continue to struggle in 2016, negatively affecting the revenue growth of IC industry.

TrendForce pointed that Apple will probably again rely on TSMC’s 14/16nm FinFET technology for the production of its next iPhone chipset (also referred as “A10”) in 2016. Other smartphone vendors will also follow to show their competitiveness, giving foundries a reason to maintain their prices for 14/16nm FinFET products.

With the Chinese economy entering a rough period, more attention has been paid to emerging markets such as India and ASEAN countries, where price is still the top factor for smartphone buyers. In these markets, demand for low-end and mid-range smartphones with upgraded features is anticipated to rise, which in turn drive the demand growth for 28nm production. Expansion of the 28nm capacity by foundries, however, will also lead to a small decrease in the margins of products based on this technology.

System-in-packaging (SiP) technology holds numerous benefits such as advanced integration, low cost, and fast product development cycle. This technology meets the demands of the current smartphone markets and the demands that are to be addressed in development of the Internet of Things.

Huang noted that rising SiP demand next year will create attractive high-margin opportunities. More IC packaging and testing companies will therefore engage in research and development of the technology.