The Tech week that was... Jan 30~Feb 3

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.?

?In company news…

Qualcomm reported their fiscal Q1 results for the quarter ending Dec 31st this week.?Revenue dropped -12% sequentially to US$9.46billion with handset revenue dropping -18%. They see that their handset manufacturers will continue to draw down on inventory for at least fiscal Q2 and Q3, and are optimistic that demand and channel inventory may normalize in the 2nd half of 2023. As a result for the coming quarter, they forecast revenue will further decline to a midpoint of US$9.1billion.?Qualcomm said that with the current macroeconomic and demand environment, they will be implementing further spending reductions and streamlining operations.?Qualcomm did say that despite near-term headwinds, their long-term growth opportunities remain unchanged.

?Samsung Electronics intends to maintain it’s capex spending in 2023 at the same level as last year despite the slump in the memory market and declining revenues. Samsung Electronics reported revenue of US$56billion for the 4th quarter, down -8% sequentially due to the drop in demand for memory chips and smartphones. Looking ahead Samsung forecasts that demand for smartphones across all price ranges is expected to decrease on a quarterly basis in Q1, and they expect foundry utilization to drop in Q1 due to continued inventory adjustments.?For 2023?outlook they see a possible recovery in the 2nd half for memory dependent on macroeconomic environment, whilst for foundry they expect to increase orders for their 3nm technology.

Samsung Electronics recently announced that construction of phase 1 of it’s new US$17billion semiconductor Fab in Texas was on schedule to start production by next year.?

Samsung ?Electronics is hoping to outgrow the current slump in smartphone sales by focusing on demand for premium devices to drive double digit growth despite signs that the global market might contract for the 2nd straight year as they released their Galaxy S23 premium phone lineup this week.?They aim to expand into China and regain market share from Apple.

SK Hynix reported quarterly revenue of US$6.2billion for Q4 2022, down -30% sequentially and down -38% yoy as it suffers from the severe downturn in the memory market.?For the full year revenue was almost US$36billion, up 4% yoy.?For 2023 they are predicting negative PC shipment growth and only slight growth in the mobile market, with demand recovery in the 2nd half.?The company will half it’s capex spend in 2023 to around US$7.5billion, focusing investment on the ramp up of new products.

German semiconductor manufacturer Infineon maintained it’s full revenue forecast ?of US$16.8billion as it said automakers have stepped in to fill the gap left by slowing demand from PC & mobile makers. For fiscal Q1 2023 , Infineon reported revenue?of US$4.3billion, down -4.6% sequentially. For fiscal Q2 they are predicting revenue of US$4.2billion. Infineon CEO Jochen Hanebeck said that "Infineon is staying on course in choppy waters” “Substantial parts of our business have proved robust even in a weaker macroeconomic environment"

German silicon wafer manufacturer Siltronic announced preliminary results reporting record sales in 2022, revenue was almost US$2billion up 28% yoy. For Q4 revenue was flat at approx. US510million.?For 2023 they said “at the beginning of 2023, loading for 200- and 300 mm wafers continues to be high, although some customers see a weaker order situation in H1 2023” due to declining demand and unfavorable exchange rate they predict revenue will reduce by around USD70million in 2023.?They said that “the construction of our new 300 mm fab in Singapore is progressing well and the first machines have already been installed”

Intel cut employee and executive pay and lowered it’s 401k payments this week in a bid to further cut costs as their revenue has recently plunged due to the downturn in the PC market. According to sources in Intel, mid level engineers took a 5% pay cut, whilst VP’s are taking a10% cut.?The executive leadership team is taking a 15% cut with the CEO taking a 25% cut.

Other industry news..

Wolfspeed has announced it will build a new 200mm Fab to manufacture Silicon Carbide devices in Saarland Germany.?The US$3billion investment?will be a highly automated 200mm Fab with construction of the first phase expected to be completed by end of 2024.?Construction will start as soon as subsidy approval by the European Union is received, and automotive supplier ZF is reported to investing US$185million for a stake in the Fab.

US defense electronics suppler Mercury Systems said it has hired financial advisers to help explore a possible sale of the company.?

Separately Bloomberg reported that Cobham, a UK based global technology company is considering acquiring Mercury Systems. Cobham is owned by Boston based Advent International.

Japanese state backed chip venture Rapidus will need around US$54billion to begin mass producing advanced logic chips by 2027, most of the money is expected to come from the government.?The chip venture was formed last year to revive the semiconductor industry in Japan and signed an agreement with IBM in Dec to develop leading edge 2nm technologies. Rapidus will announce the location of the new Fab in March.

The automotive industry is still facing chip shortages which is causing lost production and these are expected to continue into 2023, but the impact is not even.?Ford seems to be particularly badly hit as they claimed they have lost 100,000 vehicles in Q4 due to lack of chips, General Motors said that whilst short term disruptions would continue to occur overall the supplies were improving due to deals with chipmakers. VW said it expected 2023 production to remain challenging due to the ongoing shortage of chips. Whilst automotive tier 1 supplier Denso warned that the chip shortage could cause auto production cuts in 2023.

In updates of the geopolitical war between US and China, Japan’s government will begin restricting exports of advanced semiconductor manufacturing equipment to China in Spring after it amends a foreign exchange law to allow the change according to Kyodo news.??This is after last week Japan and the Netherlands agreed to join the United States in halting shipments of semiconductor manufacturing equipment to China.

Also this week it is reported that the U.S. has stopped granting export licenses to US companies to export most items to China's Huawei according to sources.

?Market Research news..

McKinsey looks at the challenges the US faces with the upcoming investment in new Fabs by 2030.??They estimated that between US$223 to over US$260billion worth of US-based semiconductor projects are either under way, announced or under consideration through 2030.?Some of the key challenges these projects face are lack of construction company talent with experience, capabilities, and expertise required to deliver these specialized semiconductor fabs. Also there is a greater need for sustainability to be considered ?in building new fabs, the complexity of the supply chain, the capability to successfully negotiate government and local incentives, as well the ability to be able to deliver the projects on time.

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Stay safe and healthy... bye