The Week In Review: Manufacturing

Fab equipment rankings; Lam’s results; 3D NAND surge; analog outlook.

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Fab tool vendors
In the wafer fab equipment (WFE) rankings, Applied Materials was the leader in terms of market share in 2016, according to Gartner. For WFE, Lam Research jumped from fourth place in 2015 to second place in the rankings in 2016, according to Gartner. ASML was third, followed by TEL. Meanwhile, VLSI Research recently released its ranking for both front-end and backend equipment.

For the March 2017 quarter, Lam Research posted revenues of $2.154 billion and net income of $575 million, or $3.10 per diluted share. This compares to revenue of $1.882 billion and net income of $333 million, or $1.81 per diluted share, for the quarter ended Dec. 25, 2016. Lam posted strong results due in part to a surge in 3D NAND. “Lam Research posted a beat-and-raise amid very high equipment demand for memory (73% of shipments in FQ3), predominately for 3D NAND,” said Weston Twigg, an analyst with Pacific Crest Securities, in a report. “Lam noted that it now has a stronger demand view for 2017 than in last quarter, with the increased conviction coming two-thirds from NAND and one-third from logic.”

ASML posted strong sales in the quarter. “ASML noted a significant increase in memory demand this year, prompting higher estimates. EUV demand is increasing, with three new orders in the quarter, though shipment and revenue timing remain hard to predict,” Twigg said in a separate report. “ASML’s 2017 demand outlook improved significantly over the last quarter, and its view should be fairly reliable given long lead times for its equipment. As a result, we’re raising our estimates meaningfully. We’re increasingly bullish on the EUV ramp as momentum continues to improve after years of slow progress.”

Chipmakers
Samsung Electronics’ second-generation 10nm finFET process, dubbed 10LPP (Low Power Plus), has been qualified and is ready for production. 10LPP allows up to 10% higher performance or 15% lower power consumption compared to the first generation 10LPE (Low-Power Early) process with the same area scaling.

NXP has sold its shares in Advanced Semiconductor Manufacturing Corp. (ASMC), a Chinese foundry vendor.

Market research
Pacific Crest’s Twigg is bullish about semi equipment. “Given Lam’s strengthened outlook, we now have more conviction in higher capex from NAND producers. We expect overall fab equipment demand to grow 10% in 2017, up from our prior view of up 5%, with NAND tracking up 25% this year,” Twigg said.

Twigg’s bullish forecast is primarily due to Samsung’s expansion in 3D NAND. Samsung’s overall CapEx is projected to jump 29% in 2017, compared to 14% in the prior forecast, he said. Samsung’s new Pyeongtaek-based fab is expected to ramp only 3D NAND. “Samsung still anticipates just low-30% NAND bit growth this year, but it expects to hit 70,000 installed wafer starts per month (wspm) in its new Pyeongtaek plant by the end of the year. As a result, we would expect 3D NAND bit growth to increase meaningfully in 2018—we model Samsung bit growth +37% y/y in 2018 and +33% in 2017—and for Samsung’s NAND capex to trend higher in 4Q17 and into 2018 (we model Samsung’s NAND capex at $6.8 billion in 2017),” Twigg added.

The new, higher-speed DDR4 DRAM generation gained market share in 2016, representing 45% of total DRAM sales, according to IC Insights. IC Insights expects DDR4 to become the dominant DRAM generation in 2017 with 58% market share versus 39% for DDR3.

2016 worldwide analog semiconductor revenue was up 6%, a significant growth compared to the overall industry that has remained flat, according to Databeans. “This year, in 2017, the analog market is expected to rebound significantly with a growth rate predicted at 11%,” according to the firm. “Texas Instruments remains the largest analog IC supplier in the world with nearly 17% share. Its nearest competitor is Analog Devices with over 6% share. Analog Devices grew share in 2016 thanks to a strong market for data converters which grew 15% in 2016 in terms of global revenue. This moved Analog Devices up in the ranking from fourth position to second.”

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