The Tech Week that was... July 24~28

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.?

The German government is planning to spend an extra US$22billion in subsidies to support semiconductor manufacturing in Germany.?The off budget spend will come from a fund called KTF which was originally set up to invest in the decarbonization of the economy, but its scope has been expanded as Germany seeks to rein in regular government spending.?The vast majority of the subsidy will go to Intel where US$11billion in subsidies have already been agreed, and the government is in the process of agreeing up to US$5.5billion in subsidies to TSMC and US$1billion to Infineon.?This leaves around US$4billion in subsidies for additional projects.

GlobalFoundries CEO, Tom Caulfield, has expressed his opposition to subsidies to be offered to TSMC saying it will distort the competition in an interview with the Financial Times.?In June, it was announced GlobalFoundries and STMicroelectronics they would build a new US8billion joint venture 300mm Fab in France after receiving around US$3.1billion in subsidies from the French government.

Samsung reported US$47.1billion in revenue for Q2, down -6% sequentially and -22% down YoY.?Samsung will continue to reduce semiconductor output during the latter half of the year to accelerate earnings recovery by reducing inventory. ??SK Hynix also reported this week that it would carry out an additional 5 to 10 percent reduction in NAND flash output during the second half of this year.?Samsung said that despite the reduced production it would still increase investments in infrastructure, R&D and packaging technology, to bolster competitiveness over the mid- to long-term period.

Intel reported Q2 revenue of US$12.9billion, down -15% YoY, but up 10% sequentially as the company report better than expected results, suggesting that the personal computer market slump maybe nearing an end in the 2nd half, but the company still sees significant inventory in data centre market.?

TSMC says it plans to invest US$2.9billion to expand its advanced chip packaging capacity in Miaoli County, Taiwan to cope with customer demand especially driven by the AI demand.?TSMC chief executive officer C.C.Wei told investors “We cannot fulfill 100 percent of customers’ needs,” for it’s advanced packaging technologies and that TSMC “are increasing capacity as quickly as possible.”

Foundry UMC says it sees “uncertain” outlook in Q3 due to the prolonged inventory correction in the supply chain.?Whilst the short term outlook is uncertain, ?UMC is keeping it’s capex spending unchanged at US$3billion for 2023 as it gears up to fulfil demand?from the emerging AI market customer demand. UMC reported revenue of US$1.8billion in Q2, up 3.8% sequentially and down -22% YoY.?

Taiwans leading OSAT, ASE forecasts revenue for ?Q3 will increase mid-to high single digits for it’s core assembly and test ATM group. With revenue slowly rising there is hope of a recovery but revenue in Q3 will still be around -17% down year on year.?ATM group Q2 revenue was US$2.44billion, up 3.8% sequentially but down -23% (in US$ terms) from a year ago.?ASE believes that the inventory correction and the weak market consumption will continue into Q4.

US chipmaker Maxlinear has announced that it is has terminated it’s proposed US$4billion acquisition of Taiwan based Silicon Motion which was originally agreed in May 2022.?The notice of termination was made just hours after Chinese regulators approved the merger.?However Silicon Motion has said that th etemrination is invalid and that it “intends to enforce” the merger agreement.

In market research news..

According to the latest study by SIA/Oxford Economics, the US faces a shortage of 67,000 skilled workers (Technicians/computer scientists and engineers) in the semiconductor industry by 2030, and a gap of. 1.4million such workers across the broader US economy.?This is due to the expanding US semiconductor economy spurred on by the CHIPs Act. To address this gap the report makes a number of recommendations.

An article in the EETimes also looks at the manpower shortage in the US semiconductor industry where the manpower shortage runs from construction workers to engineers who run fabs and design chips, and despite significant increases in pay levels this has not helped the supply of qualified workers.

The worldwide semiconductor OSAT market grew 5.1% YoY in 2022 to US$44.5billion , according to the latest data from IDC.??IDC predict that the overall OSAT market will drop around -13% in 2023 due to inventory correction and slower demand, but IDC expects the market to recover and show growth again in 2024. ?Among the worldwide top 10 OSAT vendors, there are six in Taiwan, three in China, and one in the United States, with a total market share of 80.1%. Vendors in Taiwan include ASE, PTI, KYEC, Chipbond, ChipMOS, and Sigurd; vendors in China include JCET, TFME, and Hua Tian; and the US vendors are represented by Amkor.

According to the latest report by Knometa Research, 13 new 300mm Fabs will open in 2023 despite the current market downturn taking the total number of 300mm wafer Fabs to 180 worldwide, producing IC’s including CMOS image sensors, and non-IC products such as power discretes.?A further 15 300mm Fabs will be brought online in 2024, and an additional 17 Fabs in 2025, though some of the 2024 Fabs could be delayed to 2025 due to spending cutbacks.?By 2027 they forecast the total number of 300mm Fabs worldwide will be over 230.?Of the 13 300mm wafer fabs opening in 2023, five are focused on the production of non-IC products, with three of them located in China and two in Japan.

Worldwide silicon wafer shipments increased 2.0% quarter-over-quarter to 3,331 million square inches in Q2, down -10.1% compared to the same quarter last year, according to the latest data from SEMI. Anna-Riikka Vuorikari-Antikainen, Chairman of SEMI SMG said “The semiconductor industry continues to work through excess inventory in various market segments, necessitating that fabs operate below full capacity,”

Smartphone shipments in Mainland China fell by 5% year on year to 64.3 million units in Q2 2023 according to Canalys.?Vivo took first place with 18% market share from OPPO and Apple.?They are forecasting that the mainland China market is likely to recover moderately in the 2nd half.

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