The Tech week that was... Aug 7~11

Welcome to the latest edition of my weekly newsletter bringing you all the key semiconductor and technology news from around the world in one easy read.?

This week, TSMC announces it’s new JV 300mm Fab in Germany, and there is a lot of positive data to indicate that a muted recovery is starting, though we have a long way to go to get back to 2022 levels and the exact timing of the recovery is still very unclear. Plus all the other important news stories.

Finally, it is official, TSMC have announced it will build a new Fab in Dresden, Germany in partnership with Bosch, NXP and Infineon.?Total investment is expected to around US$11billion.?The joint venture, called European Semiconductor Manufacturing Co (ESMC) GmbH, is to be 70% owned by TSMC, while customers Robert Bosch GmbH, Infineon Technologies AG and NXP Semiconductors NV would each hold 10% stake. The Fab is expected to have a monthly production capacity of 40,000 12-inch wafers manufactured using TSMC’s 28/22nm and 16/12nm process technologies, targeted at automotive and industrial sectors.?Construction is expected to begin 2nd half of 2024 and start production at the end of 2027.

In financial news..

?US foundry Globalfoundries released their Q2 2023 results this week reporting revenue of US$1.85billion, down -7% YoY and flat compared to Q1’23. Wafer shipments were down -9% to around 573k 12” wafer equiv.?By market, smart phone and personal computer revenue were both down YoY whilst both IoT and automotive were up.?For Q3 they forecast revenue will be approx. flat at approx. US$1.85billion.?Utilization rates were expected to be low to mid 80%.?Capex for 2023 is now expected to be slightly reduced from the previous forecast to US$2billion.

Chinese foundry SMIC also reported Q2 revenue this week, reporting revenue of US$1.56billion, up 6.7% sequentially and down -18% YoY. Chinese sales accounted for almost 80% of revenue.??12” wafer shipments accounted for 75% of revenue, with Fab utilization of 78%, shipping around 620k 12” equiv wafers.?They are forecasting revenue to increase ~4% in Q3.

With both GF and SMIC now having reported Q2 revenue, all major foundries and OSAT’s have now reported Q2 earnings.?Overall Q2 revenues were generally flat or slightly up compared to Q1 but still significantly down compared to a year ago.?In Q3 we see a muted recovery with most foundries up sequentially. ?Below is a summary of all the foundry and OSAT results that been reported over the last few weeks.

Also this week, Taiwan foundries and OSATs released their July revenue results. The muted recovery continues in July, with revenues slightly up or flat compared to June but though still down on 2022 levels. For the foundries, ?TSMC reported revenue of US$5.6billion, up 14% compared to June but down -5% compared to July last year.?UMC reported revenue of US$597million in July, flat compared to June and down -23% YoY. Powerchip reported revenue of US$108million, essentially flat compared tov June but down -49% YoY.?Vanguard (VIS) reported July revenue of US$112million, up 14% compared to June and down -23% YoY.

For the OSATs, ASE ATM group which includes OSATs ASE and SPIL reported July revenue of US$867million, essentially flat compared to June and down -23% YoY.?PowerTech (PTI) reported revenue of US$194million up +4% sequentially and down -20% YoY.?Test house KYEC reported revenue of US$90million, up +2% sequentially and down -10% YoY.

In other news..

This week President Biden signed an executive order that will prohibit some new U.S. investment in China in sensitive technologies like semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems and will require government notification in other tech sectors.?

It is the one year anniversary of the signing of the CHIPS and Science Act in law in the US. The act makes a nearly US$53billion investment in US U.S. semiconductor manufacturing, research and development, and workforce.?According to the US government since the CHIPs act was signed, companies have announced over US$166 billion in investments in manufacturing in semiconductors and electronics, and at least 50 community colleges in 19 states have announced new or expanded programs to support the semiconductor industry.?However CNBC reports that companies are still waiting for the subsidies and so far no funding set aside by the legislation has been awarded.?Many projects and companies are depending on being awarded federal funds before they can move ahead, and so the projects remain in the planning phase unable to proceed.

China’s chip imports fell -17% to 270billion units in the first 7 months of 2023 compared to the same period last year as the tech war and weak demand continue.?July did see a slight uptick in IC imports increasing 2.6% to 42billion units according to Chinese customs data. China’s domestic chip production is starting to pick up as China produced 32billion units in June, up 5.7% YoY.?Also smartphone shipments in China posted a smaller decline in Q2’23, declining -2.1% according to IDC.

Japan's Toshiba?said that a US$14 billion tender offer to take the industrial conglomerate private will be launched on Tuesday - an effort that will, if successful, buy out activist investors and return the company to domestic hands.

In market research news..

?Worldwide sales of semiconductors totaled US$124.5 billion in Q2’23, an increase of 4.7% over Q1 2023 but down -17.3% less than the second quarter of 2022, according the latest data from the World Semiconductor Trade Statistics (WSTS) organization.?In June revenue increased 1.7% sequentially to record the 4th consecutive quarter of increased revenue.?

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Stay safe and healthy... bye

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