UMS Holdings

[Zelphon]

I have spoken to their IR. Though they are not able to share any "insider" info or any additional info not discussed here, they are of the view that the company is still in good shape. Its also not easy to remove UMS as their vendor as a lot of biz are some kind of strategic partnership..maybe joint collaboration, etc.

So for those buddies that are holding on, just have to bite the bullet for now till the dust has settled.

Still vested.

I suppose you have to take it with a pinch of salt. You can't expect them to tell you to "run road".
Although I do agree that it is kind of pain to change supplier, especially those that involve precision engineering parts and system integration. To change to a new supplier, it involves recruitment and training of engineers, certifications, migration of processes, generation of documents, linking up both technical teams and lots of teleconferences.

Unless the supplier is simply intolerable....

All this can easily happen within 6 months...
Nowadays, Manufacturing is very efficient as well as transfer of technology..

Many semicon fabs consolidated and the equipment manufacturers also consolidated via M & A during the financial crisis..

I have witness how fast the transition can be...

Shifting manufacturing from USA to Singapore happened within 6 mths..
6 mths is all it took for everything to be up and running..

I am working in world no.4 semiconductor equipment company.. AMAT is no.1 ... Go figure..

[Greenrookie]

WOW!

No kidding ! Andy Luong sold 10 million shares yesterday.

What is going on?

http://infopub.sgx.com/FileOpen/eFORM1V2...eID=300592

(vested)

I have spoken to their IR. Though they are not able to share any "insider" info or any additional info not discussed here, they are of the view that the company is still in good shape. Its also not easy to remove UMS as their vendor as a lot of biz are some kind of strategic partnership..maybe joint collaboration, etc.

So for those buddies that are holding on, just have to bite the bullet for now till the dust has settled.

Still vested.

I suppose you have to take it with a pinch of salt. You can't expect them to tell you to "run road".
Although I do agree that it is kind of pain to change supplier, especially those that involve precision engineering parts and system integration. To change to a new supplier, it involves recruitment and training of engineers, certifications, migration of processes, generation of documents, linking up both technical teams and lots of teleconferences.

Unless the supplier is simply intolerable....

Just my 2 cents Kaypo...

Supplier competition does not jut restrict to new outsourced supplier B, but also AMAT strategic will or cost analysis to do in house. In terms of capability, it will definitely not be a issue to do inhouse, only when it makes cost efficient sense will a company outsourced its manufacturing to focus on higher value manufacturing. While the threat of a change of supplier might not be that big, that threat of lower margin is very real.

[Tiggerbee]

I have spoken to their IR. Though they are not able to share any "insider" info or any additional info not discussed here, they are of the view that the company is still in good shape. Its also not easy to remove UMS as their vendor as a lot of biz are some kind of strategic partnership..maybe joint collaboration, etc.

So for those buddies that are holding on, just have to bite the bullet for now till the dust has settled.

Still vested.

wat a good IR...

think AMAT will continue working with UMS as long as UMS can provide cheap and good jobs to them.. big corporate will want to have as many suppliers as they could so that the competition can bring down the cost..

1 weakness in UMS is whenever the price goes up, u can see Andy first to sell.. it's good for div play.. the value is there because Andy will keep selling now and then.. if not, I dun think it will trade as such price..

As I mentioned before, substantial shareholders can always off load shares through share placement or married deals. Unless there is no interest from institutions or investors. Then he can only sell in the open market.

[mslee888]

All have valid points, lets see how it will pan out.
IMO, UMS has a profitable contract with AMAT that will expire in 2017. Now is mid 2014. In the electronics industry, 3 yrs can be considered a very long time...If AMAT really decides to cut back or remove UMS as a supplier, I believe the board or Andy should hv ample time to secure new customers to fill the gap.

[efreet]

All have valid points, lets see how it will pan out.
IMO, UMS has a profitable contract with AMAT that will expire in 2017. Now is mid 2014. In the electronics industry, 3 yrs can be considered a very long time...If AMAT really decides to cut back or remove UMS as a supplier, I believe the board or Andy should hv ample time to secure new customers to fill the gap.

I think UMS already has Halliburton n Schlumberger in oil and gas sectors as customers. Now just need to find more. Btw, thanks for asking IR

[Boon]

It certainly looks like Endura will endure !
________________________________________________________________________________________________________________

Happy 24th Anniversary, Endura!

By Dr. Randhir Thakur

21-04-2014

Think about what you do on an average day – send emails, publish photos or status updates on social media, create spreadsheets or Word documents, make mobile phone calls, use appliances, make financial transactions and stream movies; each of these activities involves microchips. One of the things the vast majority of these microchips have in common, as well as virtually every copper chip made in the last 24 years, is that they were processed through a manufacturing system first introduced by Applied Materials this week back in 1990.

Called the Endura® system, it is recognized as the most successful metallization tool in the history of the semiconductor industry. Since its introduction, through continuous infusions of new innovations and process technologies, it has enabled customers to advance Moore’s Law from the .75 micron (750 nanometer) node to today’s sub-20 nanometer nodes, and can continue beyond to sub-10 nanometer designs.

To appreciate what made the Endura a truly landmark system, and how the value it provides has been sustained over decades, I’d like to reference the recent VLSIresearch feature and highlight some key points.

VLSIresearch Report from Applied Materials

There were many “firsts” that the Endura introduced, which had a significant impact in advancing the semiconductor manufacturing industry. It introduced the staged vacuum architecture creating the industry’s first ultra-high vacuum production system. This enabled the high film quality that chipmakers required to break through the 1 micron technology node barrier and to fabricate reliable devices with multiple layers of aluminum interconnects. The Endura system also set a high bar on system reliability and offered the revolutionary capability to mix and match process technologies (Cleaning, PVD, CVD and ALD) and chambers to create integrated multi-step process sequences without breaking vacuum. Based on these innovations, the Endura system has played an instrumental role in enabling major industry milestones and inflections, including:
•Scaling aluminum interconnects to sub-1 micron designs
•Revolutionary transition to copper dual damascene interconnect
•Groundbreaking materials and architectural change in transistors: metal gate and 3D FinFET

As the industry moves beyond the 20 nanometer node, there are complex device performance and yield challenges that must be solved with new materials and new techniques, requiring significant advances in precision materials engineering (PME). With continued scaling and the advent of 3D architectures, requirements for conformal films with atomic-level precision become more challenging. Interface engineering is becoming more critical as features become smaller and films become thinner and thinner. New innovations on the Endura system enable precision materials engineering solutions to address these tough challenges on over 100 applications.

The below list conveys the versatility of the Endura and the range of breakthroughs it pioneered:

1990 – First parallel-path staged vacuum architecture
1990 – First high productivity ultra-high vacuum processing environment
1990 – First magnetically-coupled vacuum robots
1993 – 100th Endura shipped
1994 – 250th Endura shipped
1996 – Ionized plasma PVD technology
1996 – Integrated CVD/PVD system
2002 – Industry’s first integrated ALD/PVD system
2003 – 3000th Endura shipped
2010 – 4500th Endura shipped
2010 – RF PVD technology
2012 – Reflow PVD technology

The Endura sytem remains the industry’s seminal integrated precision materials engineering system for interconnect, transistor, memory and packaging metallization applications. Its place in the history of the semiconductor equipment industry is undisputed and its success will endure.

http://blog.appliedmaterials.com/endura-anniv

(vested)

[Boon]

Outcome pending !
_______________________________________________________________________________________________________________

CCS CONSULTS ON THE PROPOSED MERGER BETWEEN APPLIED MATERIALS INC. AND TOKYO ELECTRON LIMITED

30 January 2014

http://www.ccs.gov.sg/content/ccs/en/Med...nd-to.html

(vested)

[Boon]

WOW!

No kidding ! Andy Luong sold 10 million shares yesterday.

What is going on?

http://infopub.sgx.com/FileOpen/eFORM1V2...eID=300592

(vested)

I have spoken to their IR. Though they are not able to share any "insider" info or any additional info not discussed here, they are of the view that the company is still in good shape. Its also not easy to remove UMS as their vendor as a lot of biz are some kind of strategic partnership..maybe joint collaboration, etc.

So for those buddies that are holding on, just have to bite the bullet for now till the dust has settled.

Still vested.

I suppose you have to take it with a pinch of salt. You can't expect them to tell you to "run road".
Although I do agree that it is kind of pain to change supplier, especially those that involve precision engineering parts and system integration. To change to a new supplier, it involves recruitment and training of engineers, certifications, migration of processes, generation of documents, linking up both technical teams and lots of teleconferences.

Unless the supplier is simply intolerable....

Just my 2 cents Kaypo...

Supplier competition does not jut restrict to new outsourced supplier B, but also AMAT strategic will or cost analysis to do in house. In terms of capability, it will definitely not be a issue to do inhouse, only when it makes cost efficient sense will a company outsourced its manufacturing to focus on higher value manufacturing. While the threat of a change of supplier might not be that big, that threat of lower margin is very real.

And that is a fundamental issue of putting too much fixed cost into the structures.................................
______________________________________________________________________________________________________________

AMAT was at Credit Suisse Technology Conference held on December 3, 2013 and during the Q&A session, the statement by Bob Halliday:

Question: John Pitzer – Credit Suisse

Well, Bob, when you think about the Tokyo Electron transaction the cake is truly the fundamental synergies on the product side. I would argue the icing is some of the financial advantages you will get.

Can you walk a little bit through those advantages and, just in general, your view of cash flow and uses of cash and return of cash to shareholders?

Answer : Bob Halliday (AMAT)

Yes, there's a couple of leverage points there. One is generating more income and the second one, which is really fundamental, is generating better cash flow for investors. I think we have a real opportunity for both.

Because the combined companies in the strong wafer fab equipment yield like 37, we said we could do 18 billion. But even in a lesser year, we think we can do significantly better operating margins and that is really my focus for Applied and the combined companies to generate significantly improved operating margins even regardless of the volume. Okay, the wafer fab equipment volume.

So if you can generate 20%, 25% operating margins – and that is very viable even in a low year. Because you look at 50% drop through pretty strong IPs, strong product positions, good service business, we model 25% operating margin. I think that is very doable even in an off year. I don't know why we can't get to 20% or so. So then, what gets to investors? Cash, right?

So if you look at the semi cap industry it is an industry that inherently can generate significant cash returns as long as you don't get too much fixed cost. Because the industry tends to cycle up and down.

So if you look at the history of the industry, you have one boom year, one year you are ascending, its chaos growing, one year you make a lot of money and one year you write off everything. And that is a fundamental issue of putting too much fixed cost into the structures, too much time, it takes too long.

So, if you take these costs and time out you can make 20%, 25% operating margins pretty much year in and year out. And it is cash margins if you do it right. Because we don't have to invest a lot in fixed assets. Its receivables and inventory we cycle up and down and so the cash-operating margin can be 20%, 25%.

And what this merger unleashed for us was almost a unique opportunity structurally to merge the companies. One of the Japanese operating companies was an American operating company and put the parent company structure in Holland and also put a lot of the manufacturing and intellectual property value added through Singapore, which we have already sampled out of that.

So what you get is a much greater flexibility of moving cash around the Company, and returning dividends and higher share buybacks to investors. So, I think it is almost uniquely positioned as a company that can generate high cash returns to investors. And if we are successful in growing the Company, it's a big tech, potentially strong growth. Very high cash-generating business.

http://seekingalpha.com/article/1875061-...art=single

(vested)

[Boon]

Many great points have been raised by fellow buddies in this thread especially recently with discussions on its business model, customer's intentions, macro outlook etc. Personally, I didn't find Andy's sale to be perplexing since I have seen him sell in great volume in the past while the business carried on steadily. But AMAT sale is different since it is unprecedented. I initially purchased UMS with the knowledge that with AMAT as a SSH, it implies that it has confidence in its subcontractor ability to deliver and the partnership is unlikely to be disrupted. With the stake sale, this premise no longer holds true - I am not saying that AMAT definitely has no more confidence in UMS but rather I cannot say that it definitely does. The fundamentals is no longer the same (to me) - there is an element of uncertainty as Specuvestor wisely wrote about. I did reduce my stake yesterday after contemplating about this. I am penning this now to avoid any hindsight bias but I do wonder will I regret parring down my stake when the dust settles (foresight bias ?) haha ! I hope the Board will issue a similar clarification like in 2012 to reduce this element of uncertainty.

(Vested)

At the infancy stage of the AMAT-UMS strategic partnership, a stake in UMS by AMAT would probably mean a great deal – it symbolized AMAT’s commitment and support to the new partnership.

The paring down of AMAT’s stake in UMS could symbolize the deterioration of the relationship – AMAT has lost confidence in UMS.

Or it could mean the relationship has now reached a mature, stable and robust stage.

Hence, the “strategic stake” in UMS is deemed to have served its initial purpose – it is now redundant as far as AMAT is concern.

From the perspective of capital allocation, it may no longer justifiable for AMAT to continue parking the money here which it should deploy elsewhere in compliance with its overall capital allocation objective - hence, the sell down.

I would tend to believe in the later - Of course, the possibilities are many – as always, one would have to draw his/her own conclusion.

Who is right and who is wrong – only time will tell.

(vested)

[heifien91]

Many great points have been raised by fellow buddies in this thread especially recently with discussions on its business model, customer's intentions, macro outlook etc. Personally, I didn't find Andy's sale to be perplexing since I have seen him sell in great volume in the past while the business carried on steadily. But AMAT sale is different since it is unprecedented. I initially purchased UMS with the knowledge that with AMAT as a SSH, it implies that it has confidence in its subcontractor ability to deliver and the partnership is unlikely to be disrupted. With the stake sale, this premise no longer holds true - I am not saying that AMAT definitely has no more confidence in UMS but rather I cannot say that it definitely does. The fundamentals is no longer the same (to me) - there is an element of uncertainty as Specuvestor wisely wrote about. I did reduce my stake yesterday after contemplating about this. I am penning this now to avoid any hindsight bias but I do wonder will I regret parring down my stake when the dust settles (foresight bias ?) haha ! I hope the Board will issue a similar clarification like in 2012 to reduce this element of uncertainty.

(Vested)

At the infancy stage of the AMAT-UMS strategic partnership, a stake in UMS by AMAT would probably mean a great deal – it symbolized AMAT’s commitment and support to the new partnership.

The paring down of AMAT’s stake in UMS could symbolize the deterioration of the relationship – AMAT has lost confidence in UMS.

Or it could mean the relationship has now reached a mature, stable and robust stage.

Hence, the “strategic stake” in UMS is deemed to have served its initial purpose – it is now redundant as far as AMAT is concern.

From the perspective of capital allocation, it may no longer justifiable for AMAT to continue parking the money here which it should deploy elsewhere in compliance with its overall capital allocation objective - hence, the sell down.

I would tend to believe in the later - Of course, the possibilities are many – as always, one would have to draw his/her own conclusion.

Who is right and who is wrong – only time will tell.

(vested)

True only time would tell. Being vested in UMS, I find that everything about them is almost perfect, fundamentally sound, strong earnings etc. only downside is that we shareholders have a CEO who doesnt seem to really show much confidence in his own company and constantly selling down his stake. In the past he has constantly sold down his stake to the extent that we shareholders have become nonchalant towards it. However, at this period when AMAT sold down their stake it would have been quite a confidence booster if the CEO could have increased or at least maintain his holdings.

(vested)