The Tech Week that was.. Dec 19 ~ 23

Merry Christmas and Happy Holidays.?Welcome to the last update of 2022 of my weekly newsletter bringing you all the key semiconductor and technology news from around the world in one easy read.?Unfortunately there is not much Christmas cheer around at the end of a year that start so optimistically.?In fact Scrooge seems to be the flavor of the month with a lot of negative news around.?On a more positive note, what goes down will go back up as those that have been around this industry will know. This downturn may last well into 2023 but things will turn around and the good times we have enjoyed over the last few years will return.

News reports in Germany from regional newspaper Volkkstimme, indicate that Intel is backtracking on its plans to start construction of it’s new Fab in Magdeburg, Germany next year.?Construction of the fab, announced in March, was scheduled to start in H2 2023 and was supposed to come online in 2027. The initial investment was planned to be approx. US$18 billion, of which the German government subsidies would cover US$7.2billion. Now, Intel says costs have risen to US$21 billion and the company wants more subsidies from Germany to cover these extra costs.

Broadcoms planned US$61billion acquisition of VMware faces an in-depth probe by the EU, after EU regulators warned that the deal could lead to “higher prices, lower quality and less innovation” for business customers.?The EU set a new deadline of May 11 to review the deal, saying its decision to open an in-depth probe does not prejudge the final result of the investigation.?The deal also risks a review by the UK’s merger watchdog, which last month was calling for comments from interested parties, saying it wanted to see if the acquisition could result in a substantial lessening of competition in the British market.

?Micron has announced it will reduce headcount by about 10% globally in 2023 and is also suspending 2023 bonuses, and reduce capex in 2023 by -40% yoy as the memory slowdown starts to hurt.?Micron has about 48,000 employees, and the company said it would hit its reduction target through voluntary departures as well as layoffs.?Micron announced it’s fiscal Q1 2023 quarterly results this week as the company reported the memory sector is experiencing the most severe imbalance between supply and demand in both DRAM and NAND in the last 13 years.?The company expects industry profitability to remain challenged through calendar 2023.?Total fiscal Q1 revenue was approximately $4.1 billion, down -39% sequentially and down -47% yoy.?Micron is forecasting fiscal Q2 revenue will further drop to around US$3.8billion.

South Korea's leading semiconductor makers Samsung Electronics and SK Hynix face a grim outlook in their fourth quarter sales due to sluggish demand for memory chips, a report said this week.?The report expects Samsung electronics to report revenue of US$56billion in Q4, down -4% yoy due to weakening prices and demand for memory chips in the global market.?The report forecasts that SK Hynix’s revenue will drop -35% in Q4 to US$6.25billion.

?Last week Globalfoundries cut 148jobs at its Essex Junction fab in Vermont, mostly in non-manufacturing positions.?The cuts are in response to the slowing economy and reduced global demand for semiconductor chips, are part of a plan to lay off approx. 800 staff globally (~5% of the global workforce) announced at the beginning of December.?Layoffs also occurred at Globalfoundries Singapore complex the previous week.

Foxconn reached an agreement to sell its indirect stake in Tsinghua Unigroup to Yantai Haixiu IC Investment Center for around US$771 million.?Hon Hai said the decision to dispose of the Tsinghua Unigroup stake was intended to avoid uncertainty about the company's investment strategies resulting from a delay of the deal.?

Let’s end with some positive news..

Sony is reported to be planning to build a new smartphone image sensor plant in Kumamoto prefecture, Japan, near to the new TSMC Japan Fab.?The US$6billion factory is planned to start construction in 2024 bringing the plant online in 2025.

Applied Materials has announced to make multibillion dollar investments to increase its R&D infrastructure in the US and expand it’s manufacturing capacity in Austin and Singapore?over the next 7years.?Subject to government funding, Applied Materials plans to build a next-generation R&D center in Sunnyvale, California, as well as expand its manufacturing factories in Austin.?This week Applied Materials held a ground breaking ceremony for it’s new $600million plant in Singapore.?The new facility in Tampines Industrial Crescent will be spread over 700,000 sq ft and create 1000 new jobs.?

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Happy Holidays... rest, recover and recharge and stay safe and healthy... bye