The Week In Review: Manufacturing

Toshiba’s woes; GF’s parent; Applied’s results; R&D leaders.

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Chipmakers
Toshiba’s problems have gone from bad to worse. “Toshiba postponed its earnings call by up to one month, and the chairman resigned. The provisional results show large losses in its nuclear power business, while the NAND operations remain very profitable,” said Weston Twigg, an analyst with Pacific Crest Securities, in a research note. “The next few months appear very uncertain for Toshiba, and we view the likelihood of the sale of a stake in its NAND business as very high. In its provisional report, Toshiba noted that it will consider the sale of a majority stake in its NAND business, up substantially from previous reports that indicated a 20% to 30% stake. We believe a 50% stake could be worth between $4.5 billion and $9 billion.”

How does this impact the industry? It has a “near-term negative” for Toshiba’s NAND fab production partner–Western Digital, according to Twigg. “Other read-throughs include the risk of lower near-term NAND capex from Toshiba (a slowdown in its 3D NAND ramp), which would be a moderate near-term negative for equipment companies with exposure, such as LRCX, AMAT, AEIS, MKSI, and NANO; however, we would view the impact as relatively minor, given strong near-term equipment demand from other companies.”

The good news: “Any slowdown in the 3D NAND buildout at Toshiba could also be viewed as a positive for competing NAND producers, as it could help limit the risk overcapacity this year,” he added.

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Last year, Abu Dhabi’s two largest state-owned investment companies merged. The firms were International Petroleum Investment and Mubadala Development. GlobalFoundries is a wholly owned unit of Mubadala. This week, the new company–Mubadala Investment—has restructured the company into four units. One unit, Technology, Manufacturing & Mining, includes GlobalFoundries. No other changes were announced—yet.

Lee Jae-yong, vice chairman of Samsung Group and it heir apparent, was arrested on bribery and embezzlement charges, according to NPR and other reports.

GigPeak has entered into a definitive agreement to be acquired in an all cash transaction by Integrated Device Technology (IDT) for $250 million in cash.

Fab tool vendors
Applied Materials reported results for its first quarter ended Jan. 29. First quarter new orders were $4.24 billion, up 86% year over year. Net sales of $3.28 billion were up 45% year over year.

“Applied Materials is benefiting from extraordinarily high semiconductor and display demand, which resulted in record orders in FQ1 and should drive record revenue in FQ2,” Pacific Crest Securities’ Twigg said. “Semiconductor equipment demand is strong, but nerve-racking. Applied Materials thinks that semiconductor equipment demand will be up at least 5% in 2017, relatively in line with our semiconductor capex forecast of up 4%. However, orders were up 50% q/q in FQ1, and shipments will likely decline meaningfully in 2H, consistent with commentary by peers.”

More on Applied. Amit Daryanani, an analyst at RBC, added: “Display continues to surprise to the upside with OLED buildouts strengthening more than investors expect (this could also provide an offset to potential H2 softness in core NAND).”

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IMS Nanofabrication and JEOL have reached a long-term agreement to extend their business partnership for the production of the IMS’ MBMW-101, the world’s first multi-beam mask writer. Last year, IMS was acquired by Intel and it also rolled out its system.

Electro Scientific Industries (ESI) is reorganizing its management team from a business unit to a functional structure. It is also relocating sales, service and operations leadership positions to Asia. And it is closing its facilities in Montreal, Canada, and Napa, Calif., downsizing its Sunnyvale, Calif. facility, and making other select reductions across the company.

Test
Optimal+ has joined the Industrial Internet Consortium (IIC), a global, member-supported organization that promotes the accelerated growth of the Industrial Internet of Things (IIoT).

Market research
Intel continued to top all other chip companies in R&D expenditures in 2016, according to IC Insights. The chip giant’s R&D spending reached $12.7 billion and represented 22.4% of its semiconductor sales last year. Click here for the top R&D spenders.