UMS Holdings

[BlueKelah]

views still seem positive about the industry...but i have friends who are working in various local semicon companies, all I hear from the 'yumcha' sessions are, "no bonus", "factory shut down", "clear leave"..

possibly its the move of production facilities to other asian countries like Vietnam/Malaysia/Thailand. High labour cost and expiration of tax incentives are also possibly motivators of relocation. A similar situation of closing of older fabs in Japan is happening as well. All the production is now moving to Taiwan and Korea.

So long you still see people lining up and splashing big money on the latest iPhones and Tablets, the industry should still be stable and profitable. Looking at the August Book to bill its 1.02 which is not too bad as well. Considering other sectors are seeing a sustained downtrend, being stable with low growth or sideways would be considered something quite good..

We are talking about high end semiconductor fabs and technology, not the backend testing type. In SG, the 200mm legacy fabs are all producing the high end/high gross margin products like MEMS, while the memory/foundry fabs are all 300mm. These 300mm Fabs cost at least 2bil USD to build/stock up and not so easy to just 'move to Taiwan or Korea'. Granted a new fab in SG was quite some time ago (excluding current MICRON's Fab 10 extension at Admiralty West Rd), the opportunity costs to move a Fab that is less than 20years old with no buyers in sight, is not going to happen overnight. EDB is still working hard on giving the appropriate incentives for the wafer fabs to continue to operate in SG.

There will always be people lining up and splashing big $ on the latest technology fad. There will always be the Black Friday/Christmas in the Western hemisphere. But the semiconductor industry is notoriously cyclical with demand and supply always in reflexivity mode. The industry will not be stable and at times, will be unprofitable if supply chain/business unit makes the wrong call.

I am one of those average engineers laboring in the semiconductor industry for years. What jjlim84 said is true and based on my nose, i smell a high possibility of blood coming.

semicon has been cyclical and possibly could be going forward with shortages followed by oversupply. this is unavoidable in any capital intensive industry with largely undifferentiated products. Hehe actually quite a bit like shipping cycles ;D

but if there is blood coming, it will likely be due to anemic global economy and not due to an overexpansion of semicon production. After all, AMAT has reported that orders for next generation 3dNAND tech and also 10nm which intel gonna launch in 2017 is ramping up.

Over the long term, semicon revenue has been increasing with dips during post 1997 AFC, 2000 Tech crash and during GFC. Granted there was a jump of ~10% in semicon revenue from 2013 to 2014, and this year growth in revenue is projected to be only 2%+, unless there is some major economic crisis happen, semicon industry should not be too badly hit, unlike OnG or Commodities sector.

In any case, if blood coming, better UMS drop till 20cent again become super undervalued, can wack gao gao