The Tech Week that was... July 19~23

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.?

Last week the possibility of Intel acquiring Globalfoundries for around US$30billion was reported, and the rumour is still generating a lot of discussion in the industry. ?This week Globalfoundries CEO Tom Caulfield denied the rumour and told Bloomberg that he still plans to have an initial public offering (IPO) next year for the company and “There’s nothing there in that discussion,”?regarding the rumour of Intel acquiring Globalfoundries.

Intel’s foundry ambitions could be hampered by the lack of acquisition targets if the Globalfoundries acquisition doesn’t go through, as becoming a foundry is not as easy as it seems and they may need to buy a foundry to get the right type of experience to be successful. The article mentions that it took Samsung 10 years to build a foundry business.?Even for Globalfoundries, they had to buy Chartered Semiconductors to learn how to become a successful foundry.

Globalfoundries was in the news this week on it’s own right as they announced that they will spend US$1billion to expand production at the existing Fab 8 in Malta USA, to add 150,000wfrs per year capacity, and following that they intend to build a new Fab on the Malta site financed through?private-public partnerships including?customers,?federal and?state?investments.

This week GF also rolled out new branding for the company, with a new brand story and visual identity designed by Siegel+Gale.?Its new marketing effort is designed to position the company as a leader in producing technology for growth markets such as 5G-enabled smartphones, conveying its role in products that improve people’s lives, and describing innovation that makes chips smarter, not just smaller.

?The current global chip shortage continues, and although there are some early?indicators that some segments maybe showing signs of easing, it looks like capacity will be tight at least till the end of the year, and possibly into next year.?Most of the focus in the news is on leading edge capacity especially for automotive and there are numerous projects ongoing to add 300mm capacity to existing lines and also build new 300mm fabs.?For mature nodes on 200mm the situation is even tighter as new capacity is not so easy to add and there are less projects ongoing.?This article in Semiconductor Engineering looks at the mature node situation in depth looking at MCU’s, PMICs and display drivers and image sensors that typically use mature nodes above 40nm.

US government officials say they are starting to see signs of relief for the global semiconductor supply shortage, including commitments from manufacturers to make more chips for automakers that have had to idle production.

Earning News

The first major chip companies are starting to report Q2 earnings numbers, and give predictions for Q3. ?Most companies reported good revenue growth for Q2 just finished, but the outlook for Q3 is generally flat.?The historic pattern of traditional strong and weak quarters seems to no longer hold post pandemic.

Texas Instruments revenue increased to US$4.58billion, up 7% from the previous quarter driven by strong demand in industrial, automotive and personal electronics, the analog segment growing 6%, ?Embedded processing growing 2% and other segments growing 30%. ?For Q3 guidance revenue was flat with a midpoint guidance of US$4.58billion.

Intel reported Q2 revenue of US$18.5billion on continued strength in the PC business and earlier-than-expected recovery in both the IOTG business and the enterprise portion of the data center segment.?PC volumes were up 33% compared to a year ago, but showing signs that the boom is over. For Q3 intel is guiding revenue essentially flat at US$18.2billion.

Disk Drive manufacturer Seagate reported the highest quarterly revenue in 6 years of US$3.01billion for the quarter just ended (FQ4).?For the full year Seagate revenue was US$10.68billion, up 1.6% compared to 2020. For next quarter (FQ1)they are forecasting revenue of US$3.1billion

Equipment manufacturer ASML, reported Q2 revenue down 9% at US$4.71billion which they attributed to a number of systems not completing factory acceptance tests as systems were released early into production, so this revenue will be reported in coming quarters. In Q2 ASML shipped 10 EUV systems, one more than the previous quarter. ASML reported very strong order intake for both EUV and Deep UV systems due to strong global demand environment across all markets. Logic fabs accounted for 71% of bookings and were the largest market for EUV systems. ?For Q3 ASML is forecasting revenue of US$6.24billion.

Other Industry News

Some interesting facts about Penang in this blog from SEMI. The state of Penang in Malaysia accounted for 5% of global semiconductor exports in 2019, with the state housing 350 MNCs and exports continued to rise in 2020.?In 2019 and 2020 the state attracted US$7.5billion in direct manufacturing investments with prominent investors including Lam Research, Bosch Group, Ultra Clean Holdings, Dexcom and Smith+Nephew.

In the latest report from Strategy Analytics RF GaAs device revenue returned to growth in 2020 after the first decline in more than a decade in 2019 driven by 5G device and network deployments.?They forecast the market for RF GaAs device will grow to around US$9.5billion by 2025.

Trendforce is predicting that the intensifying pandemic in India and Vietnam will reduce annual smartphone production in 2021 from 1.367billion to 1.347billion, and warn that smartphone production in the 2nd half may have further decline as the pandemic is not showing signs of slowdown.?Vietnam, where Samsung primarily manufactures smartphones, has imposed lockdown restrictions in it’s major cities of Ho Chi Minh and Hanoi as numbers of new infections continue to increase recently.?Production at Samsung’s plants is reported to have seen a 24% decline to 58.5million units in Q2. ?

SK Hynix still pending approval from China for it’s acquisition of Intel’s NAND Flash business.?The SK Hynix acquisition has been approved in 7/8 major countries after Singapore approved the deal last week. SK Hynix announced it’s US$9billion acquisition of Intel’s NAND flash unit in October 2020.

The controversy over the acquisition of welsh Fab Newport Wafer Fab by Nexperia continues.?This week Nexperia board member and general counsel Charles Smit, stated that the Nexperia is "not owned by the Chinese state, the Chinese state is not involved in Wingtech."?On 5th July Nexperia announced it had acquired 100% ownership of the Newport Wafer Fab in which it was previously the a minority shareholder for around US$90million and has plans to invest and expand the site but members of parliament have requested an investigation of the acquisition on security grounds.

That's all for this week. If you enjoyed what you read, why don't you subscribe to my free newsletter and automatically stay up to date with all the industry news.

Stay safe and healthy... bye.

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