UMS Holdings

[Boon]

The Internet of Things: The next growth engine for the semiconductor industry
 
A study of global semi­ conductor trends and powerful drivers behind them – special focus on the impacts of Internet of Things.
 
Published by PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft
By Raman Chitkara, Werner Ballhaus, Olaf Acker, Dr. Bin Song, Anand Sundaram and Maria Popova
 
May 2015, 36 pages, 8 figures
 
http://download.pwc.com/ie/pubs/2015-pwc...-paper.pdf
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[BlueKelah]

Applied Materials Dominates the Semiconductor Equipment Space in XLK

Overview of the firm

In this series, we’ll compare the performance of firms in the semiconductor equipment subsector such as Lam Research Corporation (LRCX), KLA-Tencor Corporation (KLAC) and Applied Materials (AMAT).

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Good write up...

[Boon]

The figures are still looking good but SEMI is anticipating an adjustment in the trends for the rest of the year.................................will see..
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North American Semiconductor Equipment Industry Posts August 2015 Book-to-Bill Ratio of 1.06

SAN JOSE, Calif. — September 17, 2015 — North America-based manufacturers of semiconductor equipment posted $1.67 billion in orders worldwide in August 2015 (three-month average basis) and a book-to-bill ratio of 1.06, according to the August EMDS Book-to-Bill Report published today by SEMI.  A book-to-bill of 1.06 means that $106 worth of orders were received for every $100 of product billed for the month.

SEMI reports that the three-month average of worldwide bookings in August 2015 was $1.67 billion. The bookings figure is 5.0 percent higher than the final July 2015 level of $1.59 billion, and is 23.8 percent higher than the August 2014 order level of $1.35 billion.

The three-month average of worldwide billings in August 2015 was $1.58 billion. The billings figure is 1.3 percent higher than the final July 2015 level of $1.56 billion, and is 21.9 percent higher than the August 2014 billings level of $1.29 billion.

"Given the trends through the year so far, the book-to-bill ratio stayed above parity on a three-month average basis,” said Denny McGuirk, president and CEO of SEMI. “An adjustment in the trends is anticipated for the rest of the year due to the near-term economic outlook and lower demand for electronics in some sectors.”..............................

http://www.semi.org/en/node/58006?id=highlights
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[weijian]

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.

[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

[Boon]

These were published a year ago .............................

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WE REFER to the article ("Clarity needed on whether chip dip a cause for worry"; Tuesday).

Singapore's electronics industry remains globally competitive. While there have been some recent consolidations and retrenchments, these are in line with the electronics industry's transformation towards higher value-added activities.

An indicator of an industry's competitiveness is its ability to attract new investments. Singapore's electronics industry attracted more than $16 billion in investments over the last three years, which will create 7,700 skilled jobs when fully realised. Through high-value-added components manufacturing, research and development, and headquarters activities, the industry creates good-paying jobs for Singaporeans.

Multinational corporations make decisions to shift their operations across different countries for various reasons...........................................

 

http://ifonlysingaporeans.blogspot.my/20...itive.html
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[Boon]

TSMC moves from 16nm to 10nm to 7nm
By Jeff Dorsch, Contributing Editor
http://semimd.com/blog/2015/09/21/tsmc-m...nm-to-7nm/
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Apple to split 14/16nm orders among foundries into 2016
September 18, 2015 // Alan Patterson
http://www.electronics-eetimes.com/en/ap...6090&vID=9#
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MEMS move to 300mm-diameter wafers
September 17, 2015 | Peter Clarke | 
http://www.analog-eetimes.com/en/mems-mo...644&vID=35
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Let's make MEMS suppliers rich, says Huawei
September 22, 2015 | Peter Clarke |
http://www.analog-eetimes.com/en/let-s-m...7651&vID=8
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Not Enough Money in MEMS, Own the Data, Says InvenSense CEO
Peter Clarke
9/22/2015 
http://www.eetimes.com/document.asp?doc_id=1327768
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We Must Teach Chips To Feel Pain
SEPTEMBER 17TH, 2015 - BY: KLA-TENCOR
http://semiengineering.com/we-must-teach...feel-pain/
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EUV: Cost Killer Or Savior?
SEPTEMBER 17TH, 2015 - BY: KATHERINE DERBYSHIRE
http://semiengineering.com/euv-cost-kill...st-savior/
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[Boon]

16 Insights on ICs (Part 1)

Industry ekes out just 2% growth in 2015
Rick Merritt
9/22/2015
 
SUNNYVALE, Calif. – The semiconductor industry is poised for slow steady growth that will drive more consolidation, but big technology transitions are just two to three years away. That was the conclusion of the annual fall forecast that Bill McClean, president of IC Insights, delivered here.
 
The semiconductor market is expected to be nearly flat this year up two percent to $362 billion, rising just 4.9% on a compound basis through 2019 to $450 billion. A world economy chugging along at a sluggish 2-3% GDP growth for the past several years is mainly to blame.
 
“This is very unusual, in 35 years I’ve been doing this, we have not seen a fairly flat five-year period of 2-3% GDP growth like this,” said McClean. “We won’t have a big cycle in semiconductors until there’s a big cycle in GDP growth, and it doesn’t seem like its coming,” he said in his annual talk here.
 
The forecast marks a big cut from predictions of 7% semiconductor sales growth in 2015 made in January.
 
[Image: 1-Top-line-growth.jpg]

An expected increase to 5% growth next year would only be about a 3-4% rise if not for the also unusual situation of the U.S. dollar outperforming all other world currencies.

The good news is unit sales of chips is rising at a steady 6% since the 2008 recession. “I think this could go to 7% over the next few years – there’s upside here,” McClean said.

[Image: 1b-Semi-forecast-2019.jpg]


The IoT won’t help much

 [Image: 2a-Analog,-Logic-etc.jpg]

Although unit sales of ICs will rise about 6% this year, average selling prices are faling about 5%, leaving the market value about flat in 2015 (see above).

The rise in sales of 32-bit processors (below) suggests the Internet of Things is gaining traction, but McClean is skeptical of the emerging market’s strength. “In general IoT doesn’t look like the savior for returning this industry to 10% growth rates…something could hit with tremendous impact very quickly [and] as price per bit of memory comes down it opens up new applications [but] the world’s still looking for the next big thing in technology,” he said.

[Image: 2b-Growth-markets.jpg]


2015 strategy: Growth by acquisition

[Image: 3-M&A-value-spikes.jpg]

The slow growth rates and lack of a hot driving market have made consolidation the main road to higher sales and profits in 2015.

“Financial analysts are saying if you haven’t bought anyone in a year or two something’s wrong with you -- the mentality now is acquire or you’re not doing your job,” said McClean.

Inside the 25 chip companies

[Image: 4a-Top-25-3Q-estimates.jpg]

The impact of M&A can be seen among the top 25 companies where Samsung continues to slowly gain ground on Intel. Globalfoundries rose thanks to its acquisition of IBM’s chip division, and the combinations of Avago/Broadcom and Freescale/NXP are poised to nudge up in the rankings.

Among the fastest growing, Samsung, Sony and China’s HiSilicon topped the list (below). Only Samsung broke into double digits.

Among the biggest losers were Qualcomm which lost sockets in Samsung phones, also hurting its foundry TSMC. Toshiba had to restate its earnings following a scandal, and AMD reported its first quarter in many years under a billion dollars.

[Image: 4b-Top-25-Growth.jpg]

Outlook for DRAM, foundry, capex

[Image: 5a-CapEx.jpg]


By product, DRAM remains the largest slice of the chip market but it is expected to tumble from 34% growth last year to a one-percent contraction in 2015. Memory makers are boosting production today, but “over the next five years there will be a lot of upheaval because traditional memory architectures won’t be viable,” McClean said.

The foundry sector continues to outpace the industry, showing double-digit growth, but it comes at a cost. Samsung and TSMC continue to fight for Apple’s SoC business. Samsung lost a quarter of its foundry business last year as TSMC gave Apple as much as half its work, McClean estimates. Meanwhile Globalfoundries lost $1.5 billion over the past year as it rose to become the second largest foundry, said McClean.

“Intel is not on the map as a foundry yet,” he added. “I don’t think they have been very successful at all and they are acquiring one of their largest foundry customers in Altera,” he said.

The business dynamics as well as the increasing complexity of process technology will have an impact on capital equipment spending. Capex is expected to fall to 4% growth this year from a 15% surge in 2014, then go slightly negative for two years before recovering (see chart above). The trend comes despite the fact DRAM makers are poised to spend an estimated $10 billion, twice the level of a few years ago.

Samsung is the leading equipment buyer these days, spending a whopping $4 billion in the first quarter alone (see chart below).  Meanwhile Intel cut capex 24%, in a surprise push of its 10nm node out to 2017. TSMC is taking a middle ground, keeping capex about flat next year and slowly lowering spending from 40% to about 35% of sales.

Sony is making the biggest increases, tripling capex as it tries to gain share for its image sensors. Iotera is leaping to $1.8 billion in capex spending as it tries to ramp its DRAM business.

[Image: 5b-CapEx-by-company.jpg]

To be continued - Part 2

http://www.eetimes.com/document.asp?doc_id=1327772
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[Boon]

16 Insights on ICs (Part 2)

Rick Merritt
9/22/2015 

Crunch coming in 2018-2019

[Image: 6a-Process-road-map-for-logic.jpg]

“We’re just two or three years away from a time when a lot of things will be up in the air,” said McClean, noting Intel’s surprise move to push out its 10nm node to 2017 (above).

He cited a need to adopt III-V materials and gate structures for integrated circuits, as well as a need for a new kind of DRAM architecture. The growing complexity is one reason chip makers are consolidating.

Today 60 companies own all the world’s 200 mm fabs down from 76 a few years ago, and just 21 companies own all the world’s leading-edge 300mm fabs, down from 29.  “That will drop to below 20 in the next few years, and that’s a pretty small group,” said McClean.

The numbers will shrink even further at hugely expensive 10nm node and beyond. As for 450-mm, the next big wafer size, McClean expressed skepticism.

“Five years ago I was 95% sure it would happen in about five years, now its 50/50 whether it happens at all,” he said.

Nevertheless he noted the speed with which TSMC is ramping its latest processes such as the 20nm node (below) believed to be used to make Apple A8 SoCs. With everyone betting on getting the Apple business, “I think we may see some overshoot in leading edge foundry capacity,” he said.

[Image: 6b-TSMC-rev-at-leading-edge-node.jpg]

[b] The China wild card[/b]


[b][Image: 7a-China-GDP.jpg][/b]

China, long the wild card in the semiconductor industry, is slowing down with GDP declining to as little as five percent, according to some economists, McClean said. Indeed, this year for the first time India is expected to report a higher GDP than China, in part because of its younger population of consumers.

The country will make modest improvements by 2019 in its efforts to make more of the chips it uses, he added (see chart below). Nevertheless it is not currently poised to be among the giants: It made 13.3% of the world’s chips in 2007, a number expected to decline to 6.7% this year as Taiwan and Korea fabs rise.

[b][Image: 7b-China-production-vs-use.jpg][/b]

Despite its challenges in fabs, China has put nine fabless companies on the list of top 50 semiconductors players, he noted (see chart at bottom).

[b][Image: 7c-China-top-50.jpg][/b]

[b][b] The China wild card, Part 2[/b][/b]

[b][b][Image: 8a-China-breakdown.jpg][/b][/b]

China will consume a whopping 36% of all ICs this year and more than 40% of all DRAMs and processors, buying more than $100 billion in chips for the first time this year.


China’s success starting fabless companies nudged McClean into investigating the investment groups behind many of its recent deals. “They are very incestuous, they all own parts of each other and you can’t tell where one stops and another starts -- and it all tracks back to some government entity,” he said.


McClean predicted TSMC will announce plans for a 300mm fab in China within six months now that the Taiwan government has cleared the way for companies to have wholly owned operations there. Taiwan’s UMC and Powerchip are already developing joint venture fabs in China.

[b][b][Image: 8b-China-foundry-sales.jpg][/b][/b]



http://www.eetimes.com/document.asp?doc_id=1327772

[Boon]

Equipment vendors launch cost-saving programs for clients looking to migrate to 10nm
Josephine Lien, Taipei; Jessie Shen, DIGITIMES [Friday 25 September 2015]
http://www.digitimes.com/news/a20150923PD211.html
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TSMC’s 2015 Forecast May Be Warning for Supply Chain
Alan Patterson
9/24/2015 
http://www.eetimes.com/document.asp?doc_id=1327798
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M&A Activity Continues Through Uncertain Business Climate
Slowing economic growth in China and a cloudy global economic picture added to list of reasons for ongoing M&A activity in 2015. 
25 Sept 2015 by IC Insights
http://www.icinsights.com/data/articles/...nts/823.pd
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IDC's New Global IoT Decision Maker Survey Quantifies the IoT Opportunity 
22 Sep 2015
https://www.idc.com/getdoc.jsp?containerId=prUS25923515
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