The Week In Review: Manufacturing

GF-AMD wafer deal; NI’s new CEO; no growth for smartphones.

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Chipmakers
AMD has entered into a long-term amendment to its wafer supply agreement (WSA) with GlobalFoundries for the period from Jan. 1, 2016 to Dec. 31, 2020. Today, GlobalFoundries’ Fab 8 in Malta, N.Y. is playing a big role in providing leading-edge foundry capacity for AMD’s graphics and processor products.

As part of the amended deal, AMD will grant to West Coast Hitech, a subsidiary of the Mubadala Development Co. PJSC, a warrant to purchase 75 million shares of AMD’s common stock at a purchase price of $5.98 per share. Mubadala Development is the parent company of GlobalFoundries. The warrant may be exercised in whole or in part prior to Feb. 29, 2020. The warrant is only exercisable to the extent that Mubadala or its subsidiaries do not beneficially own, either directly or indirectly, an aggregate of more than 19.99% of AMD’s outstanding capital stock after the exercise.

In addition, the new WSA also includes the following terms between AMD and GlobalFoundries:

•Covers a 5-year period, spanning from calendar year 2016 through 2020.

•Establishes a comprehensive framework for technology collaboration between AMD and GlobalFoundries for the 7nm technology node, building on the success of the 14nm node.

•Provides AMD with the flexibility to manufacture certain products with another wafer foundry.

•Sets annual wafer purchase targets from 2016 through the end of 2020, fixed wafer prices for 2016, and a framework for yearly wafer pricing.

In partial consideration for these rights, AMD will:

•Make a $100 million cash payment to GlobalFoundries, paid in installments beginning in Q4 2016 through Q3 2017.

•Make quarterly payments to GlobalFoundries beginning in 2017 based on the volume of certain wafers purchased from another wafer foundry.

AMD expects to record a one-time accounting charge in the third quarter of 2016 of approximately $335 million comprised of the $100 million payment and the $235 million value of the warrant.

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Samsung Electronics has begun mass production of Exynos 7 Quad 7570, the company’s newest mobile application processor built on 14nm finFET technology.

Renesas and TSMC are collaborating on a 28nm embedded flash process technology for use in microcontrollers (MCUs). The MCUs are targeted at next-generation vehicles.

ON Semiconductor has announced that the U.S. Federal Trade Commission (FTC) has accepted a proposed consent order for public comment and has terminated the Hart-Scott-Rodino waiting period applicable to the company’s proposed acquisition of Fairchild Semiconductor. As part of the acquisition, the FTC required that ON Semi dispose of its IGBT business. The company has entered into a definitive agreement with respect to the divestiture of the IGBT business to Littelfuse. In addition, On Semi has also entered into a separate definitive agreement with Littelfuse to sell its transient voltage suppression diode and switching thyristor product lines for a combined $104 million in cash.

The Semiconductor Research Corp. (SRC), a university-research consortium for semiconductors and related technologies, announced that NXP has signed an agreement to participate in multiple SRC research initiatives. ion

Fab tools and T&M
Alex Davern has been named president and chief executive of National Instruments (NI), effective Jan. 1, 2017. Davern will succeed James Truchard, who has served as the chief executive of NI since the company’s founding in 1976. Truchard will remain as chairman.

Davern will become a board memory by the end of January of 2017. He has served as chief operating officer of NI since 2010, and chief financial officer since 1997.

This transition is being undertaken as part of the board’s succession planning process. “It has always been my goal for NI to be a company built to last,” Truchard said in a statement. “Over the last decade, in the face of a weak industrial economy, I have focused my efforts on helping to ensure that we were making the long-term strategic investments necessary to set NI up for future growth. I believe these major platform investments, in key areas like PXI modular instrumentation, RF measurements, CompactRIO, and our entire software platform, will continue providing NI with disruptive platform capabilities needed to expand our long-term market opportunity. Given our significant progress, much of which was showcased at NIWeek earlier this month, I believe NI is well-positioned for the coming decade.”

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SEMI announced the appointment of Lung Chu as president of SEMI China effective Sept. 1, 2016. Most recently, Chu spent seven years as corporate vice president and president of China operations for Global Unichip.

Suss MicroTec has appointed Franz Richter as a new member of the management board. He will also assume his position as the new chief executive on Sept. 7.

Market research
Worldwide smartphone shipments are expected to reach 1.46 billion units in 2016, up a mere 1.6% from 2015, according to International Data Corp. (IDC) This is down from the 10.4% growth rate in 2015. The slowdown is attributed to the decline expected in developed regions in 2016, while emerging markets continue with positive growth.