The Tech Week that was... Feb 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 the Nvidia Arm merger is called off, the latest foundry and OSAT revenue news, plus the European Chips Act is revealed, and lots of other news.

NVIDIA has announced that it has called off it’s planned US$40billion acquisition of Arm due to lack of regulatory approval.?The US$40billion acquisition of Arm was first agreed in Sept 2020 with Softbank, it’s current owners, but since then significant regulatory challenges have arisen in the UK, Europe, US and China as a result of which NVida and Softbank agreed to call off the deal.?Softbank will now receive US$1.5billion and have announced that they will now prepare a public offering for the Arm.?In addition Arm chairman Simon Segars has stepped down and been replaced by Rene Haas with immediate effect.?Haas was previously president of Arm’s IP Products group. ?

In foundry news..

US based Foundry GlobalFoundries has reported that revenue grew 36% in 2021 to US$6.6billion.?It announced revenue in Q4’21 hit a record at US$1.85billion, up 9% sequentially.?In it’s earnings announcement it reported that it has entered into 30 significant long term customer agreements worth more than US$3.2billion that provide revenue visibility for 2022. ??

Chinese foundry SMIC also reported record revenue of US$5.44billion in 2021, up 39% year on year. The company said ?“the global shortage of chips and the strong demand for local and indigenous manufacturing brought the Company a rare opportunity, while the restrictions of the ‘Entity List’ set many obstacles to the Company’s development”.?SMIC said that it plans to invest US$5billion in capex in 2022 on it’s 3 new plants in Beijing, Shanghai and Shenzhen.

This week we get the first glance at 2022 foundry and OSAT revenue as the Taiwan manufacturers report their January revenue and 2022 is continuing on the bullish trend from 2021 with most silicon manufacturers reporting record monthly revenue and very high double digit year on year growth..

The worlds largest foundry TSMC reported that January sales reached a new record to reach US$6.2billion, a 11% sequential increase and up 36% yoy.?TSMC is predicting a strong Q1 with revenue around US$16.9billion, up 7.4% compared to Q4’21.?Based on its robust outlook for high performance computing, automotive electronics, IoT and smartphone sales, TSMC said it expects sales to grow by 25-29% ?in U.S. dollar terms in 2022, outgrowing the general foundry market.

Taiwans number 2 foundry UMC also reported record revenue of US$733million in January, up 1% sequentially and up 32% year on year.??Specialist foundry Vanguard International Semi (VIS) reported revenue of US$150million in January 2022, up 50% year on year but down 10% on its record December’21 revenue.?Memory foundry Powerchip (PSMC) reported record monthly revenue of US$247million in January, up 64% year on year.

For compound semiconductor foundry AWSC the news is not so good with the company reporting monthly revenue of US$8.9million in January, down 28% sequentially and down 31% yoy.

Assembly and Test provider ASE reported revenues of US$997million in January for its ATM group which includes OSAT’s ASE and SPIL.?This is up 14% year on year but down 10.7% sequentially as ASE sold 4 sites in China, excluding these sites, revenue would have been down 3.8%.?ASE?has said that capital expenditure this year will exceed the US$2billion spent in 2021 as it believes the current capacity and supply constraints will last beyond 2023.

OSAT Powertech reported revenue of US$259million, up 19% yoy abut down 1% sequentially.?Test house KYEC reported revenue of US$110million, up 20% yoy but down 5% on its record December revenue

Industry news

This week equipment maker ASML accused Chinese rival Dongfang Jingyuan Microelectronics Technology of possible IP infringements in products it is currently marketing, but has yet to instigate legal proceedings.??In 2019 ASML successfully won a legal battle in the US which found the company had stolen ASML trade secrets.?Dongfang Jingyuan Microelectronics Technology has released a statement denying any underhand activities and pledging that it’s work was based solely on independent R&D

This week the European Commission announced its European Chips Act to attract semiconductor manufacturers to set up plants in Europe.?The act will provide US$17billion to support the entire supply chain from semiconductor research & development to industry production that meet the “first of a kind’ test. Europe has the goal of having 20% market share of worldwide chips production in Europe by ?2030.?The act still needs to be debated and approved by the European Parliament.

Kioxia announced this week that it had a contamination issue at 2 factories in Japan in late January, at its Yokkaichi Plant in Mie prefecture and ?Kitakami Plant in Iwate prefecture.?The contamination issue of materials used in its flash chip production has hurt production output at the 2 plants, estimated to total around 16 exabytes, or about 10% of quarterly total market consumption.?Kioxia’s partner Western Digital has said it will be impacted by a reduction of at least “6.5 exabytes” in supply.

Toshiba has announced it will restructure into 2 standalone companies instead of 3 as previously announced.?Under the revised plans, Toshiba and Infrastructure Service Co will remain as one entity, while Device Co will be spun out, as initially planned.?The Device Co. take over Toshiba’s electronic device and storage solutions business which will include power semiconductors, optical semiconductors, analog ICs, disk drives, and semiconductor equipment.?The reorganization is on track to be completed in the second half of fiscal year 2023.

Market Analysis

Industry Association SEMI reported that worldwide silicon wafer area shipments in 2021 increased 14% to 12.6million square inches while wafer revenue rose to record levels of US$12.6million, up 13% compared to 2020, topping $12 billion.

Market researcher Trendforce expects 8” wafer capacity to remain tight into 2023 as capacity expansion focuses on 12” wafer capacity.?Trendforce estimates that the foundry compound annual growth rate for 12” equivalent capacity will be 10% between 2020 and 2025, with most companies focusing on 12” capacity which will have a CAGR of 13%.?At present, mainstream products produced using 8” wafers include large-sized panel Driver IC, CIS, MCU, PMIC, Power Discrete (including MOSFET, IGBT), Fingerprint, Touch IC, and Audio Codec. To alleviate the capacity shortage there are plans to gradually migrate Audio Codec and PMICs to the 12-inch process.?However it will take until 2nd half 2023 or 2024 to migrate a large enough number of mainstream products to alleviate the current shortage.

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Stay safe and healthy... bye.