The Tech Week that was... Dec 27~31

Happy New Year and 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.?

As we move the end of 2021, let's look back on what a stellar year it was for the semiconductor industry.?The industry has been on turbo charged journey to new heights driven by the pandemic with almost continuous month on month growth throughout the year with no end in sight in the short term. According to SIA, 2021 global semiconductor sales are forecast to exceed US$550billion, up almost 26% compared to 2020, and the highest growth seen since 2010.

Foundries and OSAT’s also had a record year, with revenue from the top 10 foundries expected to exceed US$100billion for the first time, an increase of 20% year on year according to Trendforce. Whilst TSMC is predicting that its revenue will grow 24% to around US$57billion in 2021.?The OSAT market is doing similarly well with revenue of the top 10 OSAT’s reaching USD 8.89 billion in Q3’21, a 31.6% YoY increase, according to TrendForce.

Equipment sales are also growing month on month, based on data from SEMI, global equipment sales for 2021 are expected to reach a record US$103billion up 45% compared to 2020 driven, by Fabs and OSAT’s expanding capacity.

?This global shortage has led many companies to announce plans to build new Fabs and facilities.?Based on data from SEMI it is estimated that 30 new Fabs will start to be built by the end of 2022 with production expected to start by the end of 2023 or in 2024 and more maybe announced. China and Taiwan lead the growth in new Fabs followed closely by the US, where TSMC, Intel and Samsung have all announced new Fabs to be built.?23 out of the 30 new Fabs will be 300mm facilities, of which 15 will be foundries.??

?Whilst 2020 was a record year for semiconductor merger and acquisition with deals worth US$118billion, 2021 has been much quieter with acquisitions valued only around US$22billion as of end September. This maybe in part due to the difficulty in getting regulatory approval for acquisitions in the current climate with 2 of the mega deals from 2020 still pending regulatory approval. ?NVidia’s US$40billion bid for ARM is facing additional regulatory scrutiny by UK, ?Europe, US and China regulators, whilst AMD’s US$35billion acquisition of Xilinx is still pending Chinese approval.? 2 large deals from 2020 that did receive approval from China were, Analog Devices closing its US$21billion acquisition of Maxim in August and SK Hynix has just received regulatory approval for its US$9billion acquisition of Intel’s NAND business.?In 2021 the biggest deals were II-VI acquiring Coherent for US$7billion after a 3-way bidding battle, whilst Renesas agreed to acquired Dialog for US$5.7billion in Feb and closed the deal in September.?Whilst Globalfoundries went IPO in October with its owner Mubadala raising US$2.5billion whilst retaining 89% stake, valuing the company at US$25billion.

?Although it is the holiday period the semiconductor industry still moves on. Here are the major news stories from the last 2 weeks

SK Hynix has received conditional approval from Chinese regulatory authority to purchase Intel’s NAND memory chip business, with restrictive conditions to remain effective for 5 years.?This is the final regulatory hurdle of the US$9billion acquisition agreed in Oct 2020.?SK Hynix has completed the first phase of the acquisition with the transfer of US$7billion, with the 2nd phase expected to be paid in March 2025.?SK Hynix has established a new US subsidiary called “Solidigm”.?With the purchase SK Hynix will have greater than 90% market share of the enterprise class SATA SSD market and more than 80% market share of the enterprise class PCIe SSD market.

The COVID-19 pandemic continues to potentially impact the semiconductor supply chain due to the latest lockdown measures to contain the recent outbreak in China. ?Both Samsung?Electronics and Micron Technology have warned that the Covid-19 lockdown in the Chinese city of Xi’an could affect their chip manufacturing bases in the area.?Samsung?Electronics said that it will temporarily adjust operations at its Xi’an manufacturing facilities for NAND flash memory chips, used for data storage in data centers, smartphones and tech gadgets, though a present the Fab is reported to be running without significant disruptions. Whilst Micron have said the lockdown could lead to delays in the supply of its DRAM memory chips due to reduced manpower levels.

?According to the latest update from SEMI, North America-based semiconductor equipment manufacturers posted ?a new record of $3.93 billion in billings worldwide in November 2021 (three-month moving average basis. This is 5.0% higher than final October 2021 billings of $3.74 billion and 50.6% higher than billing from Nov 2020. SEMI CEO Ajit Manocha said that “Billings of North America-based semiconductor equipment manufacturers extended a robust uptrend to reach another new record in November despite persistent supply chain challenges.”

Ams OSRAM has announced that it has agreed to sell its horticulture lighting systems business and brand Fluence to Signify for US$272million.?This transaction is in line with ams OSRAM’s strategy to focus and re-align its business portfolio to its core technology areas in illumination, visualization and sensing, which continues to include advanced LED solutions for horticulture lighting. ams OSRAM will continue to be a strategic LED supplier to the combined business for horticultural applications.?The acquisition is expected to close in the first half of 2022.?

What does 2022 hold in store…

?Looking ahead to 2022 the current boom in semiconductors is expected to continue. The current global chip shortage is expected to continue into 2022, with foundry and OSAT capacity reported to be fully booked in 2022.?Global semiconductor sales are expected to increase a further 9% in 2022 to exceed US$600billion according to SEMI.?Whilst Trendforce is predicting that Foundry revenue is also expected to grow in 2022 and reach around US$118billion, a 13% increase on 2021's record revenue. Equipment sales are also expected to continue to increase a further 11% in 2022 to reach US$114billion.?Enjoy the ride everybody.

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Stay safe and healthy... bye.

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