The Week In Review: Manufacturing

Chipmakers
Faced with a huge write-down at its nuclear operations, Toshiba is looking to spin off its semiconductor division, which makes NAND. As expected, Toshiba seeks investors in the new company, according to Nikkei. Western Digital (WD) is one potential investor. Foxconn is another possible investor, according to CNBC.

Peregrine Semiconductor has rolled out its latest RF SOI process. The technology, dubbed UltraCMOS 12, boasts the industry’s lowest RonCoff performance level of 80fs—a 25% improvement over the last generation. The technology is based on 300mm wafers and fabricated on a foundry basis by GlobalFoundries.

United Microelectronics Corp. (UMC) reported its results for the fourth quarter of 2016. Sales were flat sequentially, but were up 13.2% from a year ago. Overall capacity utilization reached 94% in the period. UMC’s capital spending reached $2.8 billion in 2016, while its 2017 CapEx plan is budgeted for $2.0 billion. “During the quarter, our 28nm and 40nm utilization rate continued to exceed 90%, while strength in 8-inch consumer and communication demand raised 8-inch fab utilization to nearly 100%,”said Po-Wen Yen, chief executive of UMC. “We also realized a noteworthy milestone in November with the grand opening of our 300mm Fab 12X in Xiamen, China, which began shipping 40nm customer wafers.”

As previously reported, UMC plans to enter the 14nm finFET market. “With regard to our advanced 14nm technology, we have recently made substantial progress for this advanced node. Following intensive engineering activities with our customer, UMC’s 14nm transistor performance has delivered speed and leakage results which are comparable with the industry’s 14nm standards. Our yields have fulfilled customer requirements, and we anticipate 14nm wafer shipments to commence in 1Q17,” Yen said.

Samsung posted mixed results in the quarter. Fourth-quarter earnings were driven by its memory and display businesses. “Robust sales of high-end, high-performance memory products and expanded process migration in V-NAND, plus strong shipments of OLED and large-size UHD panels contributed to profitability,” according to Samsung.

“Samsung’s semiconductor capex was exactly in line with (its) plan at 13.2 trillion KRW (US$11.4 billion) in 2016, while some OLED capex slipped into 2017 as we expected,” said Weston Twigg, an analyst with Pacific Crest Securities, in a research note. “We are increasing our Samsung 2017 semiconductor capex forecast moderately (to 15 trillion KRW, up from our previous estimate of 14.3 trillion KRW) to reflect the increasing U.S. dollar, the confirmation of some new DRAM capacity (likely 30,000 wafer starts per month in line 17), and the likelihood of a strong NAND capex year to support Samsung’s 3D NAND lead and Pyeongtaek (fab) build-out. Samsung noted that it expects to bring new 3D NAND capacity online at its new Pyeongtaek facility by mid-year, but it refused to discuss how much capacity. Overall, we model Samsung’s foundry capex to decline 15% y/y, its DRAM capex to increase 16% y/y, and its 3D NAND capex to increase 22% y/y.”

Fab tools
For the December quarter, Lam Research posted sales of $1.882 billion and a net income of $333 million, or $1.81 per diluted share on a GAAP basis. This compares to revenue of $1.632 billion and net income of $264 million, or $1.47 per diluted share, for the quarter ended Sept. 25, 2016.

“Lam posted very good results and guidance,” Pacific Crest’s Twigg said. “More notably, it bumped its FQ3 shipment guidance even higher than the already really high projection offered at its analyst event last fall; it now expects FQ3 shipments to be $2.35 billion +/- $75 million (it indicated $2.3 billion previously). To put this in perspective, Lam just posted an all-time record shipment quarter in December, at $1.92 billion. In other words, demand is really, really good.”

Twigg added: “We model semiconductor capex flat y/y in 2017. And while our wafer fab equipment estimate of $33.7 billion for 2016 is pretty close to Lam’s estimate, Lam thinks this could grow to $37 billion +/- $2 billion in 2017.”

In a blog, Applied Materials talks about the display trends coming out of this year’s Consumer Electronics Show in Las Vegas.

SurplusGlobal, a secondary semiconductor equipment company, will be trading on the KOSDAQ market with the symbol SGLOBAL. SurplusGLOBAL has overseas operations in China, Taiwan and the U.S. Their main business objective is to purchase excess equipment from top global semiconductor companies.

Packaging and test
STATS ChipPAC has been ranked among the world’s top-10 semiconductor equipment manufacturing companies in the 2016 Patent Power Scorecards published by the Institute of Electrical and Electronics Engineers (IEEE), the world’s largest professional association for the advancement of technology. This is the seventh consecutive year that STATS ChipPAC has been recognized in the annual scorecards.

Advanced Semiconductor Engineering (ASE) said fourth-quarter sales were up by 2% year-over-year and up by 6% sequentially. Net income was also up for the quarter. “Growth (was) driven by continuous increase in backend outsourcing,” according to ASE. There was also a “strong design-in pipeline in bumping, flip-chip and WLP,” according to the company.

National Instruments (NI) announced fourth-quarter revenue of $329 million, down 2% year over year with core revenue up 3% year-over-year. The company’s definition of core revenue is GAAP revenue excluding the impact of NI’s largest customer and the impact of foreign currency exchange.

Market research
In total, worldwide electronic system production is expected to reach $1.493 trillion in 2017, up a mere 2% over 2016, according to IC Insights. “That’s a very slow increase,” said Bill McClean, president of IC Insights, at an event. “The long-term average over the last 15 or 20 years is around 5%. It’s coming down. It used to be around 6%.”

On the other hand, 2017 appears to be a good year for semiconductors. In total, the IC market is expected to reach $384.7 billion in 2017, up 5% over 2016, according to McClean. In 2016, the IC market saw 2% growth, according to the firm.

For 2017, the top-growing IC market is 32-bit MCU (12%), followed in order by auto-based application specific analog (11%), DRAM (11%), NAND (10%), industrial-based application specific analog (9%), consumer-based application specific analog (8%), signal conversion (8%) and NOR (7%), according to the firm.

At the event, McClean said semiconductor capital spending is projected to reach $71.3 billion in 2017, up 5% over 2016. In 2016, semiconductor capital spending was up 4%.

In total, the overall pure-play foundry market is expected to reach $54.6 billion in 2017, up 8% over 2016, according to McClean. This compares to 11% growth in 2016. IDM foundry sales are projected to grow from $5.3 billion in 2016 to $5.5 billion in 2017, according to IC Insights.