UMS Holdings

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very interesting. please share more on these videos haha. it's going to be a slowdown but once they have new products the capex will come back swiftly.

any good videos on banks cutting down on lending? this is imo the most direct and fundamental place to look for source of problem in any industry.

Sent from my SM-N9005 using Tapatalk

The Philadelphia semicon index has been making highs due to the recent spate of M&A deals or potential M&A deals. Typically, when technology companies' earnings growth starts to stagnate and the companies start to acquire other companies to boost their EPS instead of investing on innovation to drive future growth, that tells us that the cyclical peak is already over.

TSMC's update on global demands, particularly China.
https://www.youtube.com/watch?v=X5XMmxTjOLs

The Price Of Consolidation
Rising costs and the difficulty of shrinking features are changing the dynamics of who buys IP, tools and chips.
SEPTEMBER 24TH, 2015 - BY: ED SPERLING

Consolidation is causing far-reaching changes across the global semiconductor ecosystem due to the size of companies being bought and the dearth of startups to replenish those being acquired.

Coupled with the rising cost and difficulty of shrinking features down to advanced process nodes—many argue that is the largest driver of consolidation—the market dynamics for who’s buying IP, EDA tools and chips has changed for the foreseeable future. That isn’t bad news for everyone. There are winners and losers in these kinds of market disruptions and portfolio realignments, and some companies will see very little direct impact to their businesses. But all agree that when the dust settles, the industry will look far different than before this latest round of acquisitions began...........................................

http://semiengineering.com/the-impact-of-consolidation/
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[Boon]

Chip equipment stocks gain after Intel unveils flash investment plans

Oct 20 2015, 15:58 ET | By: Eric Jhonsa, SA News Editor 

http://seekingalpha.com/news/2840976-chi...ment-plans
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Intel to Convert Processor Chip Factory in China to Make Memory Chips

Semiconductor maker may spend up to $5.5 billion on Dalian facility

By DON CLARK
Updated Oct. 20, 2015 

http://www.wsj.com/articles/intel-to-con...1445368532
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[Boon]

Interesting ! Two of AMAT's major competitors LRCX and KLAC have agreed to merge - but would the US regulatory authority approve it - having only recently disapproved the AMAT/TEL merger ?

What are the implications to AMAT, if it is approved?
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Lam Research to Combine with KLA-Tencor, Creating a New Capability Paradigm to Serve a Transforming Semiconductor Industry
- Creates a premier semiconductor equipment company with industry leading and complementary capabilities in wafer processing and process control
- Helps customers extend Moore's Law by delivering variability reduction at the atomic level
- Company will serve ~ 42% of Wafer Fabrication Equipment (WFE) market immediately upon closing
- Expect to realize $250 million in annualized cost synergies within 18-24 months of closing
- Accretive to non-GAAP earnings and free cash flow per share during the first 12 months

FREMONT, Calif. and MILPITAS, Calif., Oct, 21, 2015 /PRNewswire/ -- Lam Research Corporation (Nasdaq:  LRCX) ("Lam") and KLA-Tencor Corporation (Nasdaq:  KLAC) ("KLA-Tencor") today announced that they have entered into a definitive agreement, unanimously approved by the boards of directors of both companies, for Lam Research to acquire all outstanding KLA-Tencor shares in a cash and stock transaction...............................................................

http://www.prnewswire.com/news-releases/...63633.html
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[Boon]

North American Semiconductor Equipment Industry Posts September 2015 Book-to-Bill Ratio of 1.07

SAN JOSE, Calif. — October 22, 2015 — North America-based manufacturers of semiconductor equipment posted $1.60 billion in orders worldwide in September 2015 (three-month average basis) and a book-to-bill ratio of 1.07, according to the September EMDS Book-to-Bill Report published today by SEMI.  A book-to-bill of 1.07 means that $107 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 September 2015 was $1.60 billion. The bookings figure is 4.1 percent lower than the final August 2015 level of $1.67 billion, and is 35.1 percent higher than the September 2014 order level of $1.19 billion.

The three-month average of worldwide billings in September 2015 was $1.50 billion. The billings figure is 4.6 percent lower than the final August 2015 level of $1.58 billion, and is 19.7 percent higher than the September 2014 billings level of $1.26 billion.

“Both bookings and billings trended slightly lower in the September three-month average compared to August,” said Denny McGuirk, president and CEO of SEMI. “While year-to-date billings through the first three quarters are above 2014 billings, uncertainty with semiconductor demand has dampened expectations with capex plans in the near-term.”....................................................................................

http://www.semi.org/en/node/59196?id=highlights
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[Boon]

IC Insights Lowers its 2015 IC Market Forecast from +1% to -1%

Slowing China economy, strong U.S. dollar, and falling DRAM ASPs all contributing to weaker IC market outlook.

21 Oct 2015, by IC Insights.

http://www.icinsights.com/data/articles/...ts/825.pdf
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[Boon]

Interesting insights.................
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Foundry Sales Defy IC Decline

TSMC’s market impact exceeds Intel's

Bill McClean, IC Insights
10/22/2015 

The importance of the wafer foundry business continues to grow in the IC industry, according to a new report from one veteran electronics analyst. 

Nearly 38% of worldwide integrated circuit sales to systems manufacturers in 2015 are coming from products fabricated by silicon foundry services compared to 26% in 2010 and about 21% in 2005, based on an analysis by IC Insights in the new 2016 edition of The Foundry Almanac, which is a jointly produced annual report with the Global Semiconductor Alliance (GSA).

The new report shows total IC foundry sales to fabless semiconductor suppliers, integrated device manufacturers (IDMs), and systems companies reaching a record-high $50.1 billion in 2015, but the revenue growth this year is expected to be about 5% compared to much stronger increases of 14% in 2013 and 13% in 2014.  Many major pure-play foundries have cut their outlooks for growth in the second half of 2015 because of economic uncertainty, delays in wafer purchases, and continued reductions of IC inventories by customers.  A surge in the value of the U.S. dollar, especially against the Taiwan dollar, has also played a factor in suppressing global foundry growth, which is measured in U.S. dollars.

While total foundry sales are expected to rise by a modest 5% this year, IC Insights is forecasting a 1% decline in the worldwide integrated circuit market in 2015.  Foundry demand is forecast to strengthen slightly in 2016 with sales rising 7% to set another record-high level of $53.8 billion, according to the five-year outlook in the newly released 2016 Foundry Almanac, which is now available from the GSA.

With foundry revenues hitting record-high levels, it is important to recognize that foundry-made devices are accounting for even more sales volume in the global IC market.  IC Insights believes the “final” market value of foundry-made integrated circuits sold to electronic systems producers is 2.22x the total IC foundry sales number. 

The 2.22x multiplier assumes a 55% gross margin for foundry customers when their ICs are purchased by systems companies for end-use products (computers, cellphones, automobiles, consumer electronics, and other equipment).  Using the multiplier, the “final” sales value of foundry-made ICs reaches $111 billion in 2015, or about 38% of the worldwide total amount spent on integrated circuits for electronic systems.  In 2019, the “final” foundry sales value is expected to reach 42% of the total IC market.

To illustrate the increasingly important role that foundries play in the worldwide IC market, IC Insights applied a sales multiplier to revenues generated by Taiwan Semiconductor Manufacturing Co.  Since TSMC’s sales are more heavily weighted toward leading-edge devices (e.g., application processors for Qualcomm and Apple), it is estimated that gross margins for the foundry giant’s customers average 57% (which equates to a 2.33x multiplier for a “final” IC market value). 

Using this multiplier, IC Insights shows that TSMC’s “final” IC sales value in the market first surpassed Intel’s IC sales in 2Q13 and exceeded Intel’s sales by 29% in 2Q15 (as shown in Figure 1).  Thus, in 2015, TSMC essentially has had a greater impact on the total IC market than any other company, including Intel.

[Image: TSMC-vs-Intel.jpg]

The “final” foundry sales figures help to explain why capital expenditures of Intel and TSMC were fairly close in size in 2014 ($10.1 billion for Intel and $9.5 billion for TSMC).  TSMC lowered its capex guidance in October, but it is still expected to outspend Intel in 2015 (about $8.0 billion versus $7.3 billion for Intel).   

Currently, about 90% of contract wafer-processing revenues are generated by pure-play foundries with the remaining 10% coming from IDMs that fabricate ICs for other companies.  Pure-play foundry sales are forecast to strengthen slightly in 2016 and grow 8% to $48.4 billion after increasing 6% in 2015.  Meanwhile, foundry sales by IDMs are expected to grow 4% in 2016 to $5.4 billion after rising just 2% in 2015.  Only two IDMs (Samsung and Fujitsu) are among the top 10 IC foundry suppliers in 2015 with the rest being pure-play foundries, according to the company ranking in the new Foundry Almanac.

Looking ahead, IC Insights believes that most IDM foundries will focus on manufacturing limited volumes of specialty IC devices using non-leading-edge technologies.  As a result, it is expected that Intel and Samsung will be the only IDM companies seeking high-volume production levels of leading-edge IC foundry business during the next five years. 

The growth and concentration of leading-edge IC processes at the largest pure-play foundries (such as TSMC, GlobalFoundries, and United Microelectronics Corp.) will further reduce the IDM share of wafer foundry sales to about 9% in 2019 versus 10% in 2015 and about 14% in 2009, based on IC Insights’ projections in the new Foundry Almanac report.

--Bill McClean is president of IC Insights, a market research form headquartered in Scottsdale, Arizona.

http://www.eetimes.com/author.asp?sectio...id=1328090
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[Boon]

First Look: 5nm
Initial test chips are out the door, but there’s a lot more work and uncertainty ahead.
OCTOBER 15TH, 2015 - BY: ANN STEFFORA MUTSCHLER

By the time the 5nm semiconductor manufacturing process node reaches mass production readiness, the hurdles and challenges will no longer be open for discussion. But as of this moment, some of them seem almost insurmountable, raising new questions about the continued viability of Moore’s Law..................................................

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Money talks
One question that is being asked more frequently across the semiconductor industry is how many companies in the world will be able to afford the investment in 5nm. In fact, a long-running joke is that the number of customers will match the process node number.

“Many people say the end is near, but the reality we see is that the end is not near,” Gerousis said. “We see creativity coming in and innovation coming in. That will continue to evolve. People who always will look for technology innovation have a few customers that can invest. Also, from the foundry perspective there are main foundries that will continue to invest because that’s their bread and butter. For customers, the most advanced customers will continue to push in this area – primarily because they need to stay competitive, although the numbers will be fewer than usual going from one node to the next node.” Raghavan agreed it all boils down to the economics.......................................

.......................................................So by the year 2020 or 2021 will 5nm be ready for mass production, as per the ITRS roadmap? Given the creativity and innovation in this industry, it wouldn’t be surprising. ........................................

http://semiengineering.com/first-look-5nm/
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[Boon]

Chance upon this document, published more than a year ago, on innovation in the semiconductor equipment industry.
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Innovation in the Semiconductor Equipment Industry
(Incremental Innovation vs. Radical Innovation) 

Jimin Kim 
May 2014 
University of Manchester 

https://ughandbook.portals.mbs.ac.uk/Por...%20Kim.pdf
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[Boon]

Chip Mergers, Impacts Still Ahead

Rick Merritt
10/26/2015 

SAN JOSE, Calif.—The consolidation of the semiconductor industry is far from over and most of its impacts on employment and chip pricing are still ahead.
Experts see more mergers in sectors ranging from memory and storage to networking, processors and analog. Just who will be involved is as hard to predict as the numbers of layoffs and impact on prices once the year’s big deals start to close.

What’s clear is the rationale.

“The cost of developing new chips is going up, so you need more revenues [per product] -- the consolidation is good for that because it gives you more pricing power, but it’s bad for [OEM] customers who have less choices in who they deal with and you will have a lot of people on the street,” said Handel Jones, chief executive of International Business Strategies (Los Gatos, Calif.).

Mark Edelstone, managing director of Morgan Stanley’s investment banking division in Silicon Valley, predicted the consolidation a year ago and participated in some of the deals.

“I expected things would be dramatic because the industry has to transform itself meaningfully,” said Edelstone, who has tracked 18 transactions over $100 million totaling $110 billion in value so far this year. “That’s more than the sum total of deals in dollars in the prior ten years -- that’s amazing to think about,” he said.

[Image: Morgan-Stanley-semi-M&A-2019-2015.jpg]
Last year saw more chip M&A deals but the value of deals this year so far far exceeds the last several years combined, says Morgan Stanley.

The changes will be healthy for the industry, Edelstone believes, suggesting layoffs will be minimal.

“The number of people dislocated will be relatively small on a percentage basis …[but] we need to see a shift from one part of tech sector to another [because] in a maturing industry, you at some point have less people,” Edelstone said, noting “the tech world is still vibrant” overall with opportunities in systems, new applications and software.

“Every industry goes through this [and] consolidation is healthy [because] companies will be stronger -- that’s good for shareholders and everyone wants to work for strong companies,” Edelstone said.

The layoffs so far

The tech industry has sent out tens of thousands of pink slips in the past year related to a mix of mergers, market slowdowns and corporate woes.

Among chip companies, Cypress reportedly laid off 20% of staff or 1,600 people in March after its $4 billion merger with Spansion. Qualcomm laid off 15% of its staff or 4,700 people in July under pressure from investors.

Their customers have also made deep cuts. In June, Ericsson laid off 2,100 people including 1,700 in R&D. In August Taiwan’s HTC laid off 2,250 people, and China’s Lenovo laid off 3,200, following its acquisition of Motorola’s cellphone business and IBM’s server division. Last year, Microsoft announced plans to lay off 18,000 employees, two-thirds of them related to its acquisition of Nokia’s cellphone business.

Jones of IBS believes this year’s semiconductor mergers will vary in how many jobs they shed depending on their product and financial goals. For example, he expects fewer layoffs from the $16.7 billion Intel/Altera and $10 billion NXP/Freescale deals and more from Avago’s $37 billion bid for Broadcom.

“Historically Avago has made big headcount reductions and we don’t see that pattern changing,” said Jones, believing the company will use the deal to prepare for still more acquisitions.

Broadcom had already cut 2,500 jobs in July 2014 when exited the cellular baseband business. Combined with Qualcomm’s cuts it suggests Southern California could take an outsized hit of the job losses in semiconductors.

[Image: Semi-mergers-as-of-Aug-2015.jpg]
          
2015 semiconductor mergers as of August. Source: IC Insights

“Southern California was hit before when the aerospace industry consolidated at the end of the cold war – it’s part of the nature of the tech industry, but we are concerned to see the number of tech professionals losing jobs in a relatively small area,” said Russ Harrison, government relations director for the IEEE-USA.
Harrison expressed concern corporations may be getting more callous about layoffs.

“It used to be companies took more responsibility for their employees so when one part of the company had trouble it would retrain workers to move to another part, but now employees seem to be disposable cogs,” he said, pointing to big cuts in Microsoft’s Nokia group.

Harrison also noted the local power utility, Southern California Edison, announced in February plans to shift 500 jobs to India. “People are saying they can’t find good Americas to fill jobs, but Microsoft and Qualcomm are laying off thousands of them,” he said.

Deals in memory/storage yet to come

Whatever the numbers, layoffs from the latest chips mergers are largely still to come, and the mergers aren’t over yet. “We know a number of options are being evaluated now,” said Jones.

Edelstone agreed. “My expectation is there isn’t a deal that’s too big to be done anymore,” he said. “Any company in the digital domain with less than a billion dollars in annual revenues is relatively small to deal with current industry challenges,” he said.

Analog companies are in play too, he added. “In the past analog companies that had annual revenues in the hundreds of millions were considered nimble and able to have a vibrant business, but I think that situation will increasingly become more difficult -- the dividing line of size-for-success will move up,” he said.

Indeed Analog Devices and Maxim were recently reported to be in merger talks.

Both Jones and Edelstone expect to see more mergers in storage along the lines of the merger announced last week between Western Digital and SanDisk, combining a hard drive and flash maker. The growth in cloud computing is expected to attract combinations of giants that make a mix of DRAM, NAND and solid-state and hard drives.

China wants to be a player here with a public and private war chest of about $40 billion earmarked specifically for memory. One China group already made a $23 billion bid for Micron in July that no one expects would be approved by U.S. regulators.

Overall, “China will be forced to move faster -- if they don’t there will be nothing left,” said Jones.

[Image: China-recent-deals.jpg]
China has just started to weigh in on chip deals. Source: IC Insights

Jones sees image sensors, networking and processors as other areas where more consolidation will come. The trend to vertical integration is already turning giants such as Amazon, Apple and Google into good candidates to acquire smaller chip companies, said Edelstone.

Long term, Edelstone remains bullish on the semiconductor industry that reaps $350 billion in revenues today and was just $50 billion when he started his career as an analyst.

“The law of large numbers causes slower growth, but this industry will still grow faster than GDP,” he said. “It would be hard to replicate the impact of PCs and cellphones, but there are plenty of meaningful drivers with the Internet of Things, cloud computing, the autonomous car and medical electronics,” he said.
So far buyers of semiconductor stocks are giving the big deals a thumbs down.

“Amid the current M&A frenzy we note that reaction to the recently announced deals has been mostly negative for buyers’ shares [except for the Lam/KLA-Tencor deal], a notable change from ‘both sides win’ reactions prevalent in the last two years,” wrote analyst Ross Seymore in a report for Deutsche Bank.

http://www.eetimes.com/document.asp?doc_...e_number=1
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[Boon]

Smartphone Shipments Reach Second Highest Level for a Single Quarter as Worldwide Volumes Reach 355.2 Million in the Third Quarter, According to IDC 

28 Oct 2015 
https://www.idc.com/getdoc.jsp?containerId=prUS25988815
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Tablet Shipments Decline -12.6% in the Third Quarter as Many Vendors Get Serious About Moving from Slate Offerings to Detachables, According to IDC 
29 Oct 2015 
https://www.idc.com/getdoc.jsp?containerId=prUS25989015
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China’s Fab Tool Biz Heats Up

There is plenty of money for investments and acquisitions, but China also has its share of challenges.
OCTOBER 28TH, 2015 - BY: MARK LAPEDUS
http://semiengineering.com/chinas-fab-to...-heats-up/
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How Will China Spend $120B?

It all depends on what other governments allow, and that may never be clear.
OCTOBER 22ND, 2015 - BY: ED SPERLING
http://semiengineering.com/how-will-china-spend-120b/
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