The Week In Review: Manufacturing

Toshiba saga; Applied touts AI; fab auction; memory prices.

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Chipmakers
Who will buy Toshiba’s memory business? In the latest of what is becoming a confusing saga, Toshiba has signed a deal to sell its memory unit to a group led by Bain Capital. The Bain-led consortium will hold a 49.9% stake in the memory unit, while Toshiba will hold 40.2% and Japan’s Hoya will own 9.9%. Other members in the group include Apple, Dell, Kingston, and Seagate. In addition, SK Hynix is also part of the group. But hang on! Western Digital, which is Toshiba’s fab partner, appears to be seeking an injunction to block the deal. “We think this is far from over as at minimum the deal is subject to anti-trust approvals, Japanese national security related approvals, shareholder approvals and could be blocked by the arbitration initiated by WDC against Toshiba,” said Amit Daryanani, an analyst with RBC.

Intel has introduced its so-called Loihi test chip, a self-learning neuromorphic chip that mimics how the brain functions by learning to operate based on various modes of feedback from the environment.

For some time, rumors have been running rampant that Samsung would spin off its foundry business into a separate company. That didn’t happen—yet. Recently, though, Samsung’s foundry unit became a division within its semi unit. Now, Samsung plans to form an advisory panel within its chip unit to “enhance its foundry business,” according to a report from BusinessKorea. Last year, TSMC had 50.6% market share, while Samsung had 7.9%, according to the report. Not long ago, Samsung gained steam when it won the Qualcomm foundry business from TSMC. That was for the 10nm node. However, TSMC won part of Qualcomm’s foundry business back from Samsung. That is for 7nm.

The MRAM market continues to heat up. Samsung Electronics has expanded its 28nm FD-SOI process technology by offering derivatives that include RF and embedded MRAM. Separately, Crocus, a developer of magnetic sensor technology and embedded MRAM, has announced volume manufacturing of its technology using TowerJazz’s 130nm CMOS process.

Cree has announced the appointment of Gregg Lowe as president and chief executive. Lowe succeeds Chuck Swoboda, who stepped down in May.

Fab tools and test
Applied Materials has unveiled a new three-year financial outlook amid strong demand in the market.

For Applied, the traditional drivers for fab equipment include 3D NAND, logic/foundry, patterning and displays. In addition, AI and big data are also sparking a renaissance in chip design with new types of processors in development by a larger set of companies.

Based on this and the continued growth of silicon content in smartphones, Applied expects wafer fab equipment (WFE) spending in 2017 and 2018 combined to be $90 billion. The company is targeting non-GAAP adjusted earnings per share (EPS) of $5.08 for fiscal 2020 based on a $45 billion WFE market.

“Our markets are strong and getting stronger. New technology inflections like AI and big data will increase demand for high-performance semiconductor processing and storage,” said Gary Dickerson, president and CEO of Applied Materials.

“The move to artificial intelligence signals a new era for computing that is driving major changes to the way logic and memory chips are designed and manufactured,” said Dickerson. “New materials and innovative chip architectures will increasingly be needed to bring faster processors and more efficient memory to market.”

The company also announced a new share repurchase program authorizing up to an additional $3 billion in repurchases. As of the end of the company’s fiscal third quarter, approximately $995 million remained available under the prior authorization.

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Chipmakers are moving ahead with transistor scaling at advanced nodes, but it’s becoming more difficult. The industry is struggling to maintain the same timeline for contacts and interconnects, which represent a larger portion of the cost and unwanted resistance in chips at the most advanced nodes. In a blog, Lam Research provides details about interconnects and the challenges with this technology.

Reno Sub-Systems, a developer of RF matching networks, power generators and gas flow management systems for semiconductor manufacturing equipment, has closed its Series C funding. Samsung Venture Investment led the round. Hitachi High-Technologies and SK Hynix join Reno’s list of strategic investors. Existing investors, Intel Capital, Lam Research and MKS Instruments, also participated in this funding round.

Chris Mack, chief technology officer at Fractilia, has an interesting blog about the recent BACUS and EUV event. “Many speakers discussed the imminent availability of the 250W EUV light source from ASML. Word on the street (or at least the conference halls) says Samsung is getting this first 250W source on their first NXE:3400B scanner. It has already shipped is supposed by be up by the end of this year with first results in early 2018. Everyone will be waiting anxiously for those results, I am sure,” he said. Fractilia, the pattern roughness company, recently released MetroLER–the first software tool developed exclusively to enable semiconductor engineers to accurately measure scanning electron microscope (SEM) images for pattern roughness.

Hamamatsu Photonics of Japan has announced an agreement to acquire Energetiq Technology, a manufacturer of laser driven light sources and extreme ultraviolet (EUV) light sources. The consideration for the deal is $42 million plus company cash.

The Branford Group, a global industrial auction company, will conduct an online auction for the surplus assets of Oracle’s 6-inch fab and MEMS foundry equipment. The facility is located in Louisville, Colo. The auction will open Dec. 12 and will close Dec. 13.

Advantest has issued a call for papers for its VOICE 2018 Developer Conference. The event will focus on test solutions for system-on-chip (SoC) and memory semiconductor devices, handler solutions and best practices. The 2018 conference will return to the 2016 host cities of San Diego, and Hsinchu, Taiwan on May 15-16 and May 23, respectively.

Market research
The memory business is booming. For example, Micron posted its results and boosted its guidance. It also raised its capital spending from $5.1 billion in fiscal 2017 to $7.5 billion, plus or minus 5%, in fiscal 2018, according to KeyBanc Capital Markets. “The big increase is to accommodate aggressive node transitions to 1xnm DRAM and 64-layer 3D NAND,” said Weston Twigg, an analyst with KeyBanc Capital Markets.

Twigg also raised his estimates for Micron amid a memory boom cycle. “The industry is experiencing shortages of DRAM, driving ASP up 57% y/y in F4Q, and likely going higher this quarter,” he said. “NAND demand is still strong, but price increases are slowing. We expect industry DRAM pricing to increase through the end of C2018, with modest declines likely in early 2018 and larger declines late in 2018 as new capacity comes online. We expect industry NAND pricing to flatten for the rest of the year, and to begin to decline by early 2018 as the 64-layer ramp brings substantial new capacity to the market.”

Demand has exceeded supply for NAND flash since the third quarter of 2016, according to the DRAMeXchange, a division of TrendForce. DRAMeXchange’s NAND flash market outlook indicates that supply and demand will reach a balance in 2018. Next year, global NAND flash bit supply growth rate is currently projected at 42.9%, while the bit demand growth rate is projected at 37.7%.

The second quarter of 2017 was a big quarter for business smartphones and tablets, as the market showed signs of a rebound, according to Strategy Analytics.