UMS Holdings

[specuvestor]

IMHO I'm not sure if Maybank is using the term S.I. as we understand it. DMX and Datacraft are S.I. that basically do integration work and not really produce much. Silverlake has some S.I. component to it. Basically S.I. deals with end clients trying to make the equipments fit into the operations, I wouldn't call Foxconn an S.I because they assemble different components together to make it into a handset "system"

UMS does actually MAKE the metal components.

As to the maths, if UMS is only 10% of Endura sales what does that tell you about the value add of UMS to AMAT? I'm not sure which angle are you on when you say it doesn't make sense? They should charge more because they add high value?

Let's assume the margins of Endura is the same as SSG. SSG 2013 sales was US$4.775b with 42% non GAAP GPM. Out of which US$166m or 3.5% is acquisition cost. Depreciation cost is US$410m which we assume US$260m is for SSG based on proportion to net sales. That is 5.4%. Actual BOM is roughly 33.1% (and possibly much lower due to direct cost accounting)

So if Endura sales is US$1.2b and UMS make 80%, the BOM of USD960m sales is around US$318m on the high side. UMS account for about 1/3 of the BOM without the high tech electronics. I would think 1/3 BOM looks roughly reasonable for an OEM for the metal parts.

NB since I was expecting a respectable results and it turned out to be pedestrian, my hope for a 2 quarter rebound should be made invalid by VB who follow this thread. Will revisit the thesis again in 6 months.

[Boon]

System integration: S.I.

In engineering, system integration is defined as the process of bringing together the component subsystems into one system and ensuring that the subsystems function together as a system.

http://en.wikipedia.org/wiki/System_integration

Definition of 'Original Equipment Manufacturer - OEM'

1. The original definition: a company whose products are used as components in another company's product. The OEM will generally work closely with the company that sells the finished product (often called a "value-added reseller" or VAR) and customize the designs based on the VAR's needs.

2. The more recent definition: a company that buys a product and incorporates or re-brands it into a new product under its own name.

http://www.investopedia.com/terms/o/oem.asp

What is “OEM”?
What is “S.I.”？
Is UMS more like “OEM” than “S.I.” or the other way round ?

Different definition or different understanding of “OEM” and “S.I.” would lead to different conclusion.

UMS does supply components.
UMS does supply sub-systems.
UMS does system integration work for AMAT.

Unfortunately, UMS does not give breakdown on its semiconductor revenue into component supply and system integration work.

FY2010 :
Endura Sales = USD 1,220 million (estimate from graph - post#870)
UMS Semicon Revenue = USD 119 / 1.29 = USD 92 million
Revenue Ratio: UMS Semicon Revenue/ 80% of Endura Sales = 9.5%

FY2011 :
Endura Sales = USD 1,280 m (estimate from graph)
UMS Semicon Revenue = USD 107 / 1.30 = USD 82 million
Revenue Ratio: UMS Semicon Revenue/80% of Endura Sales = 8.0%

FY2012 :
Endura Sales = USD 1,260 m (estimate from graph)
UMS Semicon Revenue = USD 107 / 1.22 = USD 88 million
Revenue Ratio: UMS Semicon Revenue/80% of Endura Sales = 8.7%

FY2013 :
Endura Sales = USD 1,250 m (estimate from graph)
UMS Semicon Revenue = USD 118 / 1.27 = USD 93 million
Revenue Ratio: UMS Semicon Revenue/80% of Endura Sales = 9.3%

Having getting into doing system integration work for AMAT in 2010, UMS’s semicon revenue as % of 80% of Endura sales has been estimated roughly to be around 8% to 9.5% range – if one could get hold of Endura sales figures, I reckon this is the best “measure” of AMAT-UMS relationship.

Unfortunately, AMAT doesn’t provide Endura sales figures.

(vested)

[Boon]

Overall, the size of semiconductor equipment pie seems to have grown bigger so far this year than last year - according to SEMI.

On closer look, 1H2014 revenue for both AMAT and UMS were better than corresponding period last year - hence, there is consistency and no "disconnect" as I originally thought - ha-ha !

It remains to be seen how 2H2014 would eventually play out amid slightly weaker 3Q outlooks among major industry players.

"Billings" (=sales) has been trending down a little since May - this seems to be consistent to the expectation of a weaker 3Q.

"Bookings" for July dipped a little compared to June but still stays above the USD 1.4 billion mark.

For 2H2014, if 3Q turns out to be just a small dip and 4Q turns out to be a strong rebound just like 2H2013- overall, 2014 could still turn out to be ok for UMS - but ultimately, it is dependent upon "Endura sales".

(vested)
________________________________________________________________________________________________________________

North American Semiconductor Equipment Industry Posts July 2014 Book-to-Bill Ratio of 1.07

SAN JOSE, Calif. — August 21, 2014 — North America-based manufacturers of semiconductor equipment posted $1.41 billion in orders worldwide in July 2014 (three-month average basis) and a book-to-bill ratio of 1.07, according to the July 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.

The three-month average of worldwide bookings in July 2014 was $1.41 billion. The bookings figure is 2.8 percent lower than the final June 2014 level of $1.46 billion, and is 17.1 percent higher than the July 2013 order level of $1.21 billion.

The three-month average of worldwide billings in July 2014 was $1.32 billion. The billings figure is 0.7 percent lower than the final June 2014 level of $1.33 billion, and is 9.4 percent higher than the July 2013 billings level of $1.20 billion.

“Order activity for semiconductor equipment has held at a steady level so far for 2014,” said Denny McGuirk, president and CEO of SEMI. “This trend, along with improvements in semiconductor device sales and unit shipments, is consistent with our outlook for strong equipment sales growth this year.”

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of U.S. dollars.

Billings (3-mo. avg)
Bookings (3-mo. avg)
Book-to-Bill

January 2014
1,233.2 ( 27.0% HIGHER than January 2013 billing of USD 0.968 billion )
1,280.3 ( 19.0% HIGHER than January 2013 booking of USD 1.08 billion )
1.04

February 2014
1,288.3 (32% HIGHER than February 2013 billing of USD 0.9747 billion )
1,295.4 (21.0% HIGHER than February 2013 booking of USD 1.07 billion )
1.01

March 2014
1,225.5 (23.7% HIGHER than March 2013 billing of USD 0.991 billion)
1,297.7 (18% HIGHER than March 2013 booking of USD 1.10 billion)
1.06

April (2014)
1,403.2 (28.7% HIGHER than April 2013 billing of USD 1.09 billion)
1,443.0 (23.3% HIGHER than April 2013 booking of USD 1.17 billion)
1.03

May 2014
1,407.8 (15.4% HIGHER than May 2013 billing of USD 1.22 billion)
1,407.0 ( 6.6% HIGHER than May 2013 booking of USD 1.32 billion)
1.00

June 2014 (Final)
1,327.5 (9.7% HIGHER than June 2013 billing of USD 1.21 billion)
1,455.0 (9.4% HIGHER than June 2013 booking of USD 1.33 billion)
1.10

July 2014 (prelim)
1,317.6 (9.4% HIGHER than July 2013 billing of USD 1.20 billion)
1,413.7 (17.1% HIGHER than June 2013 booking of USD 1.21 billion)
1.07

http://www.semi.org/en/node/51061?id=highlights

[Boon]

Global Semiconductor Market Maintains Broad, Consistent Growth in July

Global sales increase by 9.9 percent over last year; industry posts month-over-month growth across all regions and product categories

Published Tuesday, September 2, 2014 4:00 pm

by Dan Rosso

WASHINGTON—Sept. 2, 2014—The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing and design, today announced that worldwide sales of semiconductors reached $28.1 billion for the month of July 2014, the industry’s highest-ever monthly sales total and an increase of 9.9 percent from July 2013 when sales were $25.5 billion. Global sales from July 2014 were 2.4 percent higher than the June 2014 total of $27.4 billion. Regionally, sales in the Americas increased by 8.1 percent compared to last July, and Europe posted its strongest year-over-year growth (14.9 percent) since October 2010. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

“The global semiconductor industry posted its highest-ever monthly sales in July and remains on track for a record year in 2014,” said Brian Toohey, president and CEO, Semiconductor Industry Association. “All regions posted both month-over-month and year-over-year increases for the third straight month – the first time that has happened in over four years – and sales increased in July across all semiconductor product categories, signifying the market’s broad and consistent strength.”

Regionally, year-to-year sales increased in Europe (14.9 percent), Asia Pacific (11.2 percent), the Americas (8.1 percent), and Japan (2 percent). Sales were up compared to the previous month in the Americas (3 percent), Europe (2.9 percent), Asia Pacific (2.3 percent), and Japan (2 percent).

http://www.semiconductors.org/news/2014/...h_in_july/

July 2014 chart and graph
http://www.semiconductors.org/clientuplo...elease.pdf

(vested)

[kyle]

Semicon Taiwan 2014---Key Take away

Most equipment vendors at the Semicon Taiwan were quite bullish, with expectations of a 4Q14 recovery in capex spending and strong progress in advanced process nodes (14/16nm and 10nm R&D progress). Advanced packaging is seeing a lot of attention from Foundries and OSATs, while most vendors are counting on the Internet of Things to drive the next leg of growth.

■ Wafer level packaging accelerating, substrate-less solutions in vogue:
Foundries and OSATs are both exploring wafer level packaging options, for both legacy products (conventional wafer level packaging) and advanced products with larger pin count (Fan out wafer level packaging). Several vendors talked about reducing substrate content in advanced packaging – with core-less substrate, using Lead-frames for flipchips, etc. We came away feeling more negative on the substrate market and also worried about the competition between Foundries and OSATs in wafer level packaging.

■ Semiconductor capex likely to bounce back from 4Q14 or 1Q15:
Most equipment vendors expect the current trough in equipment spending to recover from 4Q14 or 1Q15 at the latest. IDM orders (likely Intel 14nm) and Foundry is likely to lead the recovery in the short-term. Looking into 2015, Memory appears to be growing the fastest, followed by Foundries competing for 14nm/16nm, while IDMs should remain largely stable.

■ 8” Foundry tightness–High degree of optimism on MEMS and IoT:
Most market participants expect 8” wafer capacity tightness to last into 2015 and are placing high degree of faith on take-off of MEMS and Internet of Things market to drive continued 8” demand. However, a minority (where we also fall) are concerned about conversion of some large volume applications (Fingerprint sensors, Power management ICs) to 12” which could lead to supply easing out.

■ TSMC’s 10nm progress confirmed, EUV commentary getting better:
Several equipment vendors showed a high degree of confidence in TSMC’s 10nm process plans and confirm an acceleration of schedule, including two or more fabless vendors entering tape-out stage in 2H15. Most vendors are looking at production starts in late 2016 and large volume production in early 2017. EUV progress also appears good with our checks confirming that TSMC also is hitting 600 wafer per day throughput rates with its tools.

■ Apple's next SoC – TSMC likely to do iPads, Samsung/ GF with iPhones?:
Current consensus among industry participants appears to be that Samsung/ GF may win the iPhone application processor socket in 2015, while TSMC could continue to produce iPad APs. However, most metrology vendors agree that 14nm is still seeing yield issues, which could prolong the transition to 14nm.

■ E-Beam Inspection to see more traction at 10nm:
Hermes Microvision (NC) is seeing good traction for 10nm for its e-Beam inspection tools in R&D as well as production stage, with a potential doubling of tool set per customer, compared to 16nm, according to management. Progress on multi-column e-beam is ongoing but tangible demand for in-line deployment is still not yet clea

[Tiggerbee]

Does anyone own Avago shares? This is the real kick ass outperforming semicon company.

[Boon]

Equipment Spending Shows Strong Growth for 2014 and 2015; Slow Capacity Additions

SAN JOSE, Calif. — September 9, 2014 — Front End fab equipment spending (including new, used, and in-house) is projected to increase up to another 20 percent in 2015 to US$ 42 billion, according to most recent edition of the SEMI World Fab Forecast. In 2015, equipment spending could mark a historical record high, surpassing the previous peak years of 2007 ($39 billion) and 2011 ($40 billion). In 2014, the report predicts growth of approximately 21 percent for Front End fab equipment spending, for total spending of $34.9 billion.

Seven companies are expected to spend $2 billion or more in 2014, representing almost 80 percent of all fab equipment spending for Front End facilities; a similar pattern is expected in 2015. About 90 percent of all equipment spending is for 300mm fabs.

According to the World Fab Forecast, in 2014, the five regions with the highest forecast spending on equipment are: Taiwan ($9.7 billion), Americas ($7.8 billion), Korea ($6.8 billion), China ($4.6 billion), and Japan ($1.9 billion). In 2015, the same regions will lead: Taiwan ($12.0 billion), Korea ($8.0 billion), Americas ($7.9 billion), China ($5.0 billion), and Japan ($4.2 billion). Spending in Europe is expected to nearly double (from 2014 to 2015) to $3.8 billion.

As Figure 1 illustrates, before the last economic downturn, most equipment spending was for new additional capacity. SEMI reports that in 2010 and 2011, fab equipment spending growth rates increased dramatically, but installed capacity grew by only 7 percent in both years. In 2012 and 2013, installed capacity grew 2 percent or less. Some industry segments, such as foundries, see continuous capacity expansion, while other segments show much lower growth — pulling down the total global growth rate for installed capacity to below the 3 percent mark.................................................

http://www.semi.org/en/node/51346?id=highlights
________________________________________________________________________________________________________________

TSMC reports record high revenues for August

Josephine Lien, Taipei; Steve Shen, DIGITIMES [Wednesday 10 September 2014]

Taiwan Semiconductor Manufacturing Company (TSMC) has announced record high revenues of NT$69.28 billion (US$2.31 billion for August 2014, an increase of 6.7% from the previous month and 25.8% from a year earlier. The August figures met the company's guidance and market expectations.

Accumulated revenues for January through August 2014 totaled NT$465.44 billion, an increase of 17.6% from a year earlier.

TSMC has estimated its third-quarter revenues will reach NT$206-209 billion, increasing 12.6-14.2% from a quarter earlier.

http://www.digitimes.com/news/a20140910PB202.html

(vested)

[Boon]

Two years of plenty coming for chip industry, says analyst

September 11, 2014 // Peter Clarke

Amid an abundance of market opportunities both in terms of applications and regions, the chip market is showing clear signs of a recovery, according to Malcolm Penn, CEO and principle analyst with market research firm Future Horizons Ltd.

Speaking at a briefing in London, Penn said that after reviewing World Semiconductor Trade Statistics for the first six months of 2014 he has decided to move his forecast for global chip market growth in 2014 up to 10.7 percent, equivalent to an annual market of $338 billion. This move is up from an 8 percent forecast for 2014 Penn gave in January.

At that time he said that the market was set to increase by between 4 and 14 percent. At the latest meeting Penn said he had kept his sequential quarterly growth forecasts for 3Q14 and 4Q14 at 8.8 and -1.5 percent, respectively although the "balance of risks remains more upside centric, especially given tight leading-edge fab capacity and ASP [average selling price] impact."

For 2015 Penn is predicting at least 15 percent growth resulting from sequential quarterly growth figures of -0.5, 5.5, 11.5 and 0.0 percent, in chronological order ..........................................................

http://www.electronics-eetimes.com/en/tw...2332&vID=8

(vested)

[Boon]

Seems consistent to expectations of slightly weaker 3Q2014 - overall, monthly bookings and billings figures in 2014 continue to trend well above 2013 levels.

(vested)
________________________________________________________________________________________________________________

North American Semiconductor Equipment Industry Posts August 2014 Book-to-Bill Ratio of 1.04

SAN JOSE, Calif. — September 18, 2014 — North America-based manufacturers of semiconductor equipment posted $1.35 billion in orders worldwide in August 2014 (three-month average basis) and a book-to-bill ratio of 1.04, according to the August EMDS Book-to-Bill Report published today by SEMI. A book-to-bill of 1.04 means that $104 worth of orders were received for every $100 of product billed for the month.

The three-month average of worldwide bookings in August 2014 was $1.35 billion. The bookings figure is 5.0 percent lower than the final July 2014 level of $1.42 billion, and is 26.5 percent higher than the August 2013 order level of $1.06 billion.

The three-month average of worldwide billings in August 2014 was $1.29 billion. The billings figure is 2.0 percent lower than the final July 2014 level of $1.32 billion, and is 19.5 percent higher than the August 2013 billings level of $1.08 billion.

“The SEMI Book-to-Bill ratio has been at or above parity for 11 consecutive months, and both current month bookings and billings continue to trend well above 2013 levels,” said Denny McGuirk, president and CEO of SEMI. “Strong equipment spending growth for the year is observed across the fab and test and assembly segments.”

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of U.S. dollars.

Billings (3-mo. avg)
Bookings (3-mo. avg)
Book-to-Bill

January 2014
1,233.2 ( 27.0% HIGHER than January 2013 billing of USD 0.968 billion )
1,280.3 ( 19.0% HIGHER than January 2013 booking of USD 1.08 billion )
1.04

February 2014
1,288.3 (32% HIGHER than February 2013 billing of USD 0.9747 billion )
1,295.4 (21.0% HIGHER than February 2013 booking of USD 1.07 billion )
1.01

March 2014
1,225.5 (23.7% HIGHER than March 2013 billing of USD 0.991 billion)
1,297.7 (18% HIGHER than March 2013 booking of USD 1.10 billion)
1.06

April (2014)
1,403.2 (28.7% HIGHER than April 2013 billing of USD 1.09 billion)
1,443.0 (23.3% HIGHER than April 2013 booking of USD 1.17 billion)
1.03

May 2014
1,407.8 (15.4% HIGHER than May 2013 billing of USD 1.22 billion)
1,407.0 ( 6.6% HIGHER than May 2013 booking of USD 1.32 billion)
1.00

June 2014
1,327.5 (9.7% HIGHER than June 2013 billing of USD 1.21 billion)
1,455.0 (9.4% HIGHER than June 2013 booking of USD 1.33 billion)
1.10

July 2014 (Final)
1,319.1 (9.9% HIGHER than July 2013 billing of USD 1.20 billion)
1,417.1 (17.1% HIGHER than July 2013 booking of USD 1.21 billion)
1.07

Aug 2014 (prelim)
1,293.3 (19.5% HIGHER than August 2013 billing of USD 1.08 billion)
1,346.2 (26.5% HIGHER than August 2013 booking of USD 1.06 billion)
1.04

________________________________________________________________________________________________________________

STAMFORD, Conn., September 17, 2014

Gartner Says Worldwide Smartwatch and Wristband Market Is Poised for Take Off

By 2015, Android-Based Smartwatches Will Average $150 as Chinese OEMs and ODMs Capture the Consumer Mass Market in China and Internationally

As smartphone vendors and component suppliers continue to expand into the wearables market, Gartner, Inc. predicts that by 2016 smartwatches will comprise about 40 percent of consumer wristworn devices. Gartner said that nine out of the top 10 smartphone vendors have entered the wearables market to date or are about to ship a first product, while a year ago only two vendors were in that space.

"Apple has finally unveiled its Apple Watch, which we expect to trigger more consumer interest once it starts shipping in 2015," said Angela McIntyre, research director at Gartner. "Apple introduced three smartwatch models that will sell at a wide price range, with the lowest starting at $349. As with the iPhone, Apple's high-price strategy for the Watch will limit its market share; yet, with its attention to design and the user interface, we believe this product will attract many users."

"The Sony Smartwatch products and the Samsung Gear were early products that received much attention in the press but less enthusiasm from consumers due to their unclear value proposition and flawed design," said Annette Zimmermann, research director at Gartner. "In 2014 we are seeing a few more positive developments in terms of design and user experience (UX) and we therefore expect consumers to show more interest in these products in the second half of the year."

Ms. Zimmermann said that the latest smartwatches show much improvement in design compared with earlier smartwatches as well as providing an idea of the features that Android Wear brings to the user, including voice search, turn-by-turn navigation, contextual reminders and taking notes via voice input — basically a Google Now experience on a smaller screen.

A recent consumer study conducted by Gartner at the beginning of the third quarter of 2014 gave some indication of the current installed base of fitness wearables and dedicated sports watches. The results showed that fitness wristbands and "other fitness trackers" combined are already represented in more U.S. households than sports watches. Sports watches, such as dedicated running watches, have been around for many years, but such products are not for everyone and hence do not have mass market appeal. Gartner expects this trend to continue in the next few years as fitness wearables proliferate.

There is still a lot of room for growth and the trend around the "quantified self" will drive adoption of these devices over the next few years. However, despite the growing interest from the market, there are several hurdles that still need to be overcome and that vendors need to consider in their products.

In recent tests, different models of smartwatches and fitness wristbands reduced the battery life of the connected smartphone. Depending on the product and the phone this was in the range of two to eight hours of reduced usage time. Having the smartphone run for only half a day until it needs a new charge is not ideal and this is likely to put off most users who use smartphones without an exchangeable battery.

Of the devices that were tested, the battery life could last up to five or six days. However, as consumers add more devices to their households the number of gadgets that need to be charged is expected to reach a point where it becomes a burden for the consumer. Here the discussion arises again of the trade-off between design and usability — a more efficient battery would likely not allow for a light and sleek design — and yet a desirable feature for a smartwatch would be a battery that lasts for several months.

"We are currently seeing two opposing trends in the market with regards to form factor evolution. On the one hand there are vendors offering smart wrist-wearables in a familiar watch-like form factor," said Ms. Zimmermann. "On the other hand in the past six to nine months, we have seen vendors launching products that resemble the early fitness wristbands, but come with displays that add significant functionality, including message and call alerts. These cross-over products are generally marketed as fitness devices, but with the strong slant toward the communication aspect."

In addition to the established vendors, original design manufacturers (ODMs) and semiconductor vendors in China are ready to take on the next generation of consumer. There are a growing number of local Chinese vendors that have launched fitness wrist bands, putting pressure on established players such as Fitbit and Jawbone. Although these vendors currently have a primarily local market focus they will eventually turn to international expansion.

"Products and offerings among Chinese vendors are similar to those of other vendors with a variety of form factors, operating systems, connectivity and sensor options," said Ms. McIntyre. "International expansion will start to accelerate in 2015 and in this context we expect several Chinese vendors to build on Android Wear in parallel to create more appeal. Certainly, they are faced with the same hurdles regarding design as all international vendors, but we also expect them to leverage one thing that has been to their constant advantage in the smartphone and tablet market: the cost advantage of the Chinese supply chain ecosystem. Chinese vendors might well be able to bring Android Wear based smartwatches to very affordable price points below $150 with decent designs and sensors — driving mass market adoption."

http://www.gartner.com/newsroom/id/2848817

[Boon]

RESEARCH BULLETIN, BY IC INSIGHTS, INC.

SEPTEMBER 25, 2014

Leading-Edge IC Foundry Market Forecast to Increase 72% in 2014

TSMC expected to have $10.3 billion in ≤28nm sales and control 84% of the total ≤28nm pureplay foundry market this year.

IC Insights has just released its September...................................

http://www.icinsights.com/data/articles/...ts/724.pdf

(vested)