UMS Holdings

actually guys i have a theory perhaps you guys can correct me.

in the last few semi conductor cycles, the end demand is driven by dram and chips for the pc and servers industries. its only after 2007 that smartphones and tablets are more prevalent, and it may be that chips will be more used in more appliances.

could we see a smoother cyclical cyle?

or is it the industry is just so prone to over production and barren periods.

Quote:or is it the industry is just so prone to over production and barren periods.

i had worked in Texas Instruments. The company just have to use the "Hire & Fire" policy. Sometimes, plus OT every SAT & SUN, just can't meet the demand. i don't know about current situation. But i think semi-conductor industry is just like that. - quite cyclical.

(10-05-2013, 12:03 PM)Drizzt Wrote: actually guys i have a theory perhaps you guys can correct me.

in the last few semi conductor cycles, the end demand is driven by dram and chips for the pc and servers industries. its only after 2007 that smartphones and tablets are more prevalent, and it may be that chips will be more used in more appliances.

could we see a smoother cyclical cyle?

or is it the industry is just so prone to over production and barren periods.

Mobiles/Mobility is certainly one of the biggest factor

Mobiles 'to outnumber people next year', says UN agency
9 May 2013 Last updated at 14:59 GMT

There will be more mobile subscriptions than people in the world by the end of next year, according to a UN agency report.

The International Telecoms Union predicts that subscriptions will pass seven billion early in 2014.

There are currently 6.8 billion mobile subscriptions and 7.1 billion people.

The ITU World in 2013 report also found that more than a third of the global population are online.

The Commonwealth of Independent States, the alliance of countries formerly in the Soviet Union, has the highest mobile penetration with 1.7 subscriptions for every person.

Africa has the least, with 63 subscriptions per 100 inhabitants.

"Every day we are moving closer to having almost as many mobile cellular subscriptions as people on earth," said Brahima Sanou, director of the ITU Telecommunication Development Bureau.

"The mobile revolution is 'm-powering' people in developing countries by delivering ICT applications in education, health, government, banking, environment and business."

'Two-thirds locked out'

But in some countries, such as India, mobile growth is slowing.

The report also found that 2.7 billion people, almost 40% of the world's population, are online.

Europe has the highest penetration (75%), followed by the Americas (61%). Asia has 32% of its population online, Africa 16%.

ITU secretary-general Hamadoun Toure said the progress was "extraordinary" but that more needed to be done.

"Two-thirds of the world's population, some 4.5 billion people, is still offline," he said.

"This means that two-thirds of the world's people are still locked out of the world's biggest market."

http://www.bbc.co.uk/news/technology-22464368

(10-05-2013, 12:03 PM)Drizzt Wrote: actually guys i have a theory perhaps you guys can correct me.

in the last few semi conductor cycles, the end demand is driven by dram and chips for the pc and servers industries. its only after 2007 that smartphones and tablets are more prevalent, and it may be that chips will be more used in more appliances.

could we see a smoother cyclical cyle?

or is it the industry is just so prone to over production and barren periods.

Hi Drizzt, base on your questions it's obvious that you are no where near the semicon industry. the semicon cycle is not just in the end use products, it is also in the technology manufacturing area. in fact in this area the rate of change is even greater. this also partly explains the falling price of end use products. with each change in the packaging of the chips, there comes the huge capex. those with the deep pockets will enjoy the huge upswing only to be followed shortly by the rest and there goes the over investment until the next technology change. as a technology person myself, I have seen too much and to stay away on my investments. You can invest if you know how to catch the technology cycle which means you have to keep very close to the industry.

hi jacmar,
i am not in the semi con industry though my company has dealings with 2of the largest semi con in the world.
could i say that if one has a 20y holding time frame, then such cycles would not matter very much?

(10-05-2013, 12:33 PM)Jacmar Wrote: Hi Drizzt, base on your questions it's obvious that you are no where near the semicon industry. the semicon cycle is not just in the end use products, it is also in the technology manufacturing area. in fact in this area the rate of change is even greater. this also partly explains the falling price of end use products. with each change in the packaging of the chips, there comes the huge capex. those with the deep pockets will enjoy the huge upswing only to be followed shortly by the rest and there goes the over investment until the next technology change. as a technology person myself, I have seen too much and to stay away on my investments. You can invest if you know how to catch the technology cycle which means you have to keep very close to the industry.

Correct me if I am wrong. Applied Material is seated at the top of the semiconductor food chain that supplies semiconductor equipment to semi-conductor plants. Technically speaking, Applied Materials enjoyed the highest profit margin and the least fluctuation from the semi-conductor boom-bust cycles. But, applied material incurs large R&D costs in order to be ahead in semiconductor technologies.

UMS holdings benefits from this relationship as long as Applied Materials does not forsake it and look for another alternative supplier. I think UMS has no direct competitor in Singapore.

Normally, for technological developer like Applied Materials, it is a pain to switch suppliers since they will have to go through another round of QC, IP transfer, training and certification. And Applied Materials does not have enough volume to keep two suppliers in Singapore afloat.

It is sort of like Apple and Foxconn. Naturally, Apple can look for another manufacturer to build iphones but it is ultra painful to make the switch since apple will need to re-certify the manufacturing process again.

(10-05-2013, 12:30 PM)Temperament Wrote:

Quote:or is it the industry is just so prone to over production and barren periods.

i had worked in Texas Instruments. The company just have to use the "Hire & Fire" policy. Sometimes, plus OT every SAT & SUN, just can't meet the demand. i don't know about current situation. But i think semi-conductor industry is just like that. - quite cyclical.

thanks for sharing.

---

thanks Jacmar. you are right i am not in the industry. i have an opinion similar to yours and i know that its not just the pc and server, just that it drives the demand for chips and semi conductors.

think nick highlight one point is that, the concern here should not be the semi conductor demand but perhaps we can measure the capex of tsmc, intel and samsung over a longer duration.

TSMC reiterates plans for 18-inch wafer manufacturing

Josephine Lien, Taipei; Jessie Shen, DIGITIMES [Friday 10 May 2013]

Taiwan Semiconductor Manufacturing Company (TSMC) has reiterated plans to build its first 450mm (18-inch) pilot production lines, which will offer FinFET transistor technology at 10nm and 7nm nodes, in 2016-17.

TSMC also hopes to adopt extreme ultraviolet (EUV) lithography to make 10nm chips, with equipment move-in slated for the end of 2017.

JK Wang, VP of operations for 300mm fabs for TSMC, indicated that equipment suppliers were previously hesitant about pouring cash into fab tools for 18-inch wafer manufacturing. However, the industry is now aware of the upcoming transition to 18-inch wafers, Wang said.

Every major equipment maker has allocated about 15% of their R&D capex to develop manufacturing equipment for 18-inch wafer production, Wang observed.

TSMC is looking to finish installing most of its required equipment for 18-inch wafer manufacturing by the end of fourth-quarter 2015, and expects to construct its first 18-inch pilot lines between 2016 and 2017, Wang disclosed. In addition, installation of EUV equipment as well as 193nm wavelength immersion scanners is set to complete by the end of 2017, Wang said.

TSMC's 18-inch facilities will enter 10nm and 7nm process generations , Wang noted.

In addition, Wang revealed that TSMC will expand its 28nm foundry capacity to a monthly level of 100,000 12-inch wafers at the end of 2013. The foundry is also gearing up for 20nm chip production in 2014, Wang added.

http://www.digitimes.com/news/a20130509PD214.html
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Smart mobile device shipments exceed 300 million in 1Q13, says Canalys

Press release, May 10; Joseph Tsai, DIGITIMES [Friday 10 May 2013]

http://www.digitimes.com/news/a20130510PR202.html

(10-05-2013, 11:03 AM)Drizzt Wrote: i think we all havent really see a really down cycle. the one where order to book is around 0.46

Hi Drizzt,

Historical Book-To-Bill Press Release Data is available on the following SEMI webpage - dated back to Jan 1991 - the fluctuation of the ratio below and above 1 gives a good indication on the cyclicality of the industry

The ratio did go as low as 0.44 (Apr 2001)

http://www.semi.org/MarketInfo/Book-to-Bill

(10-05-2013, 11:56 AM)freedom Wrote: recent quarter result also aided by foreign exchange gain, if I am not wrong. comparatively, in Q1 2012, there was foreign exchange loss.

Hi Freedom,

You were right, there was a FX gain of SGD 530K in the 1Q2013 profit, which if deducted, would bring the NPM down to 17% - still an enviable margin

Applied Materials 2Q2013 result is out - it is at the high end of expectation. Overall, a good set of result – optimism remains high – business outlook remains good.
Revenue up 33.2% QoQ
New order up 13.8% QoQ

SSG : Revenue (USD million):
1Q2012 = 1,344
2Q2012 = 1,777
3Q2012 = 1,545
4Q2012 = 870
1Q2013 = 969
2Q2013 = 1,291 (This is 33.2% higher than 1Q2013)

SSG : New Orders USD million)
1Q2012 = 1,418
2Q2012 = 1,969
3Q2012 = 1,166
4Q2012 = 741
1Q2013 = 1,363
2Q2013 = 1,551 (This is 13.8% higher than 1Q2013)

SSG : Backlog (USD million)
1Q2012 = 1,056
2Q2012 = 1,208
3Q2012 = 855
4Q2012 = 704
1Q2013 = 1,071
2Q2013 = 1,265 (This is 18.1% higher than 1Q2013)

Key points gleaned from results briefing:

1) “At this point in the year 2013 is shaking up largely as we have expected. Demand for semiconductor equipment is healthy; utilization at our customers’ factories is steadily increasing…….”
2) “Major industry trends are expanding our served available market imply to our strengths in precision materials engineering. We expect to grow our share of wafer fab equipment this year while winning key development tool at record positions that provide a foundation for additional share gains in 2014 and beyond”.
3) “We are focusing our R&D investments on key programs that support our strategic priority to increase our share on wafer fab equipment”
4) “In semiconductor, the mobility trend remains the biggest factor influencing industry growth. The global appetite for always on, always connected mobile devices continues to strengthen and now the value of silicon being consumed by smartphones and tablets has surpassed that being used by PC. Around 200 million smartphones and 35 million tablets shipped in the first calendar quarter of 2013. That’s in line with expected annual growth rate of 35% for phones and 55% for tablets. Demand for the advanced application and baseband processors used in smartphones and tablets is fueling investment by foundries as they add capacity at 28 nanometers, begin 20 nanometer pilot production and accelerate the development of 3D transistors.
5) “Transistor requirement is the key battleground for our foundry customers. In it’s latest earnings call, Morris Chang described how TSMC’s has differentiated offering in high-K metal gate delivers better performance for their customers’ products. Applied’s clear leadership in the transistor module enables us to help our customers solve their high value device performance challenges and we are earning share gains at the leading founders. The mobility trend also represents a tremendous demand driver for NAND Flash memory. With big growth in the 40% to 50% range and supply and demand relatively well-balanced today, we believe NAND manufacturers will increase their investment levels in the second half. As sales figures for the first quarter clearly indicate, the PC market is navigating some challenging times. And as a result, customers are reducing capital spending plans for logic. Consumption of mobile DRAM has surpassed PC DRAM for the first time. Manufacturers have been migrating capacity to mobile and with tightening supply, prices have been rising.
6) “To meet near-term demand, we are seeing some incremental investment, primarily focused on technology conversions. We believe DRAM trends bode well for increased investment levels in the medium-term. Well, there have been some shifts in customers’ investment plans towards mobility, we maintain our view that 2013 wafer fab equipment will be in the range of $27 million to $30 billion, reaching the high-end of the range, we’ll require accelerated build-out of the 40 nanometer node, and a further uptick in memory investment.”
7) “Overall, as we look to the second half of 2013 we see spending, spread across broader base of semiconductor customers, memory investments look incrementally more positive and demand in this way is strengthening. More importantly at Applied we are building momentum towards profitable growth, we are focused on the strategy execution and winning those critical tool selection that support share gains while in parallel making changes to the organization that will allow us to deliver stronger operating margins and increase our investment in attractive growth opportunities.
8) “We are leveraging our strength to help customers make major transistor and memory transition that will happen in 2014 and 2015. And we are building profitable growth in additional segments that will provide significant improvement in our overall operating margins. In order to accelerate the execution of our strategic plans, we are strengthening our organizations and business processes. We are aggressively managing our cost to drive improvement in operating margins and taking further steps to reduce overhead expenses. We are actively managing our product portfolio by focusing on our best opportunities and increasing funding for those programs that really moves the needle for our customers and for Applied.”
9) “In addition, we continue to our product development engine to improve our ability to the [defined winning] product and increase the velocity of our development process. Our customers are faced with increasing complexed device performance in the old challenges as they transition to new device technology and new materials. This is driving significant pull from our largest foundry, logic and memory customers for earlier and deeper collaboration on our next generation products as they focus on accelerating technology development and technology transfer into high volume manufacturing. These broader and deeper collaboration spend are current areas of Precision Materials Engineering market leadership and additional market segments where we have significant potential to grow share as future device technology is adapted.”
10) “Applied’s position as the leader in enabling Precision Materials Engineering technology is giving us insight into future device performance and yield problems that are critical for our customers. In our early engagements, we see an increase in atomic level customization of our precision films combined with enabling technologies including Precision Materials Modification, materials removal and interface engineering on applied materials platforms. This gives applied a unique opportunity to solve some of our customers’ challenges with new solutions that leverage our strong materials engineering technology portfolio. Some emerging materials engineering examples include improving films stability and very high – ratio structure, film densification, material productivity for deposition and – and atomic level interface engineering to improve device performance and yield by preventing corrosion and metal oxide growth.”
11) “To support broader and deeper customer relationship, we are strengthening our technical teams in the field by moving key people into higher impact position and bringing new talents into the company. In semiconductor, key market inflections are growing our available market while creating opportunities for Applied to demonstrate leadership and (inaudible). as the foundries start their transitions to 20 nanometer technology, we see Applied serves the market opportunity growing, approximately 25% relative to the 28 nanometer baseline. Our strongest positions are at the foundries, and as they focus our new transistor technology, this placed to our strength and provides a great platform for us to grow share with our leadership products.The architectural advantages offered by our epi, thermal, metal deposition, CMP and implant product, combined with our ability to integrate these processes are enabling customers to solve major division performance in the yield challenges, associated with the move from [OXY95] transistor schemes to a high K metal gate glass devices.”
12) “In addition, we see increased urgency in the development of FinFET technology where the interplay between deposition, annealing and implant steps is even more important. When the FinFET inflection occurs, we expect our served markets to incrementally grow by signs of 10% on top of the 25% increase during the 20 nanometer transition. Beyond our increasing opportunity in foundry and logic, we expect our served market to grow by about 25% on our labor stock basis as memory customers’ transition from plain NAND to first generation 3D device technology.”
13) “We anticipate shipping production equipment for 3D NAND in the fourth quarter of 2013 for the initial ramp of these new devices. Another market that has potential for profitable growth CMP,we are seeing an increase in the number of CMP tech for leading edge device technology. We recently began shipments of new CMP technology that we anticipate will enable us to increase share starting this year and we’ve already secured new positions with large foundry customers. We are also building profitable growth in additional segments. Inspection represents an attractive and a great opportunity for profitable growth and we are focusing on segments of the market while we are strong and have differentiated technology.”
14) “We are demonstrating solid momentum in wafer and inspection and with recent wins at leading foundry and logic customers we are very well positioned for share gains in 2013 and 2014. [In that] our strategy in to increased share and applications in foundry where we have valuable and sustainable differentiations. In the past quarter, we received production orders from memory customers and one new development tool record positions that gives us momentum to deliver a significant improvement in Edge financial performance.”
15) “In summary, our semiconductor and display customers are in rates to deliver differentiated products to gain share and mobility. This is driving a big push by customers to accelerate time to market of new devices and new materials. These inflections create a great opportunity for Applied to leverage our leadership in Precision Materials Engineering and earlier and deeper engagement with customers to solve their major device performance and yield challenges and drive profitable growth. We are building momentum by strengthening the Applied team and focussing our investments to deliver growth and revenue and operating profit. We are very excited about the momentum we are building for profitable growth and will discuss our plans and opportunities in more detail at the Analyst Meeting on July 8.”

(Vested)