The Tech Week that was.. Oct 10~14

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’s news includes TSMC Q3 earnings call, Taiwan’s OSAT September and Q3 revenues, news and analysis on the impact of the latest US semiconductor chip and equipment restrictions, and much much more.

Number 1 foundry TSMC held it’s Q3 earnings call this week, reporting revenue of US$20.23billion, up 11.4% sequentially and 36% yoy in $ terms. Revenue was driven by strong demand from 5nm & 7nm nodes, which together accounted for 54% of revenue.?TSMC guided Q4 revenue to a midpoint of US$20.4billion, up 0.4% sequentially.?TSMC expect 2023 to be a growth year but didn’t specify how much.?They expect the current smartphone and PC inventory correction to last until mid-2023, but this will be offset by 5nm growth.?They also announced that 2022 capex spend will be reduced from US$40~44billion to US$36billion due to both capacity adjustment and also tool delivery challenges.

This week the leading OSAT’s in Taiwan announced their September and Q3 results.?Apart from ASE, quarterly results were down sequentially, whilst September revenues were down sequentially across the board as the impact of the smartphone and PC inventory correction starts to hit.

?Taiwan’s leading OSAT group, ASE, announced its ATM group revenue which includes OSAT’s ASE and SPIL, revenues in September were down -3.5% sequentially to S$1.06billion.?This was also down year on year by -3.1%.?For Q3 as a whole revenues were US$3.28billion, up 1.2% sequentially and up 1.3% yoy.

OSAT Powertech (PTI) reported September revenue of US$208million, down -6% sequentially and -8% yoy, the 3rd consecutive month of -ve sequential revenue growth. For Q3, revenue was US$669million, down -8% compared to Q2.

?OSAT ChipMOS also reported declining revenues for the 4th consecutive month. For September revenue was US$50million, down -7% sequentially and down -32% yoy.?For Q3, revenues were US$171.7million, down -26% sequentially.

Test provider KYEC reported September revenue of US$91.6million, up 1% sequentially, but down -2% yoy. For Q3, revenues were US$282million, down -8% compared to Q2.?

According to reports from Bloomberg, Intel is planning a major reduction in headcount possibly as early as the end of this month as the impact of the PC downturn impacts Intels earnings.?Analysts are predicting Intel revenue will drop around 15% in Q3 .?The headcount cuts could be severe number in the thousands with some divisions seeing reductions up to 20% according to sources.

?The recent additional US restrictions on sales of advanced chips and also semiconductor equipment to China will have an impact on both Chinese as well as US semiconductor companies. US companies like equipment maker LAM derived 30% of its sales revenue from China, whilst design software maker Cadence derived 45% of its revenue from China in Q2’22. Certainly, the ban will also have a severe impact on China’s ability to develop advanced technologies like autonomous driving, AI & HPC sectors which use advanced chips and also it would impact China’s ability to manufacturer advanced chips.?Here are a couple of articles looking at the impact of the restrictions, one from a US point of view and another an Asian view.

US equipment maker Applied Materials estimated that the ban would impact sales by US$250~$550 million in the current quarter ending October with a similar impact expected next quarter.??

?US chip toolmaker KLA Corp is reported to have decided to would cease offering some supplies and services from this week to China-based “advanced fab” customers including South Korea’s SK Hynix Inc in compliance with recent US regulations.?China accounted for 30% of KLA’s revenue according to its’ annual report filed in June’22.

?Meanwhile several Korean and Taiwanese companies have been given waivers for 1 year to allow them to continue expansion plans at their Chines Fabs.

?Samsung and SK Hynix are reported to have been granted by the U.S. Bureau of Industry and Security (BIS), 1 year waivers from the latest US restrictions, allowing them to continue to import semiconductor equipment to their China factories for 1 year without requiring licenses.?Samsung operates its Chinese Fab in Xi'an whilst SK hynix has a Fab in Wuxi.

TSMC also announced that it had received a 1yr US license for it’s Nanjing Fab to allow the 28nm expansion there to continue.

In market research news…

The global PC market saw its steepest decline on record as economic uncertainty and a glut of unsold inventory dented shipments for the fourth quarter in a row according to Gartner.?Worldwide shipments of desktop and laptop computers fell by 19.5% to 68million units in Q3 compared with a year earlier.

?The indium phosphide (InP) market will grow from $2.5bn in 2021 to about $5.6bn in 2027, according to the latest report from Yole.?The largest markets will remain telecom and datacom photonic markets due to the high-volume adoption of high-data-rate modules (above 400G), by big cloud services and national telecom operators requiring increased fiber-optic network capacity.?Wearable sensing, automotive lidar and consumer sensing segments will all grow with a CAGR of over 30%, with consumer sensing showing the largest growth potential.

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As COVID numbers start to rise in many countries, stay safe and healthy... bye