The Week In Review: Manufacturing

Embedded flash; Xcerra deal delayed; IC forecasts; AI jobs.

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Chipmakers, LCD suppliers
United Microelectronics Corp. (UMC) has announced the availability of the company’s 40nm process platform that incorporates Silicon Storage Technology’s (SST) embedded SuperFlash non-volatile memory. The 40nm SST process features a >20% reduction in eFlash cell size and 20-30% macro area over UMC’s 55nm SST technology. Toshiba Electronic Devices & Storage has started studying the technical feasibility of UMC’s 40nm SST for their microcontroller (MCU) ICs.

Kilopass Technology has achieved a three-lot qualification on GlobalFoundries’ 14nm LPP (Low Power Process) technology platform for its one-time programmable (OTP) NVM technology.

Japan Display Inc. (JDI), which is cash-strapped, is discussing an investment of more than 200 billion yen ($1.8 billion) from three Chinese LCD makers, according to a report from Kyodo News. JDI was formed in 2012, when Hitachi, Sony and Toshiba combined their small-sized display units.

Packaging and test
Advantest has obtained ISO14001: 2015 certification on Nov. 28, 2017, establishing compliance with the latest revision of the international environmental standard.

Astronics has formed the Astronics Connectivity Systems and Certification (CSC) group by combining the recently acquired Telefonix PDT and Astronics Armstrong Aerospace. The new group will serve the needs of aerospace connectivity providers with a set of hardware, integration engineering, installation design, and certification services to enable aircraft in-flight entertainment and connectivity (IFEC). In addition, Astronics has approved a new share repurchase program, authorizing Astronics to repurchase in the aggregate up to $50 million of its outstanding common stock. This follows the completion of the $50 million share repurchase program originally approved in February of 2016.

A subsidiary of Singaporean OSAT vendor UTAC Holdings has filed for bankruptcy. The firm, called Global A&T Electronics, has filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.

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In April, Sino IC Capital and an affiliate, Unic Capital Management, entered into a definitive agreement under which it would acquire Xcerra for $10.25 per share in cash. The deal is worth approximately $580 million. The transaction was expected to close before the end of the calendar year.

Then, in August, reports surfaced that Cohu was attempting to block the sale, citing national security concerns.

Now, the deal has been pushed out in order to give regulators more time to review the deal. “On December 21, 2017, following discussions with the Committee on Foreign Investment in the United States (CFIUS), the parties submitted a request to withdraw and re-file their joint voluntary notice to CFIUS under the Defense Production Act of 1950, as amended, to allow more time for review and discussion with CFIUS in connection with the Merger,” according to a filing from Xcerra. “Once CFIUS grants the request and accepts the joint voluntary notice, it will commence a new 30-day review period, which may be followed by a 45-day investigation period.”

Xcerra is committed to completing the merger. “There can be no assurances, however, that CFIUS will ultimately agree that the parties may proceed with the Merger, and, if CFIUS ultimately makes a recommendation to prohibit or suspend the Merger, as to whether the President will decide to prohibit or suspend the Merger,” according to the filing.

Market research
The semiconductor equipment market is experiencing unprecedented growth in 2017, but what about 2018? As reported, it still looks like a strong year. Meanwhile, SEMI’s World Fab Forecast report is modeling that fab equipment spending in 2017 will total $57 billion, up 41% from 2016. In 2018, spending is expected to shoot up another 11% at $63 billion. “Many companies, such as Intel, Micron, Toshiba (and Western Digital), and GlobalFoundries, have increased fab investments in 2017 and 2018; however, the strong increases we see in both years are not caused by these companies but by one company and primarily one region,” said Christian Dieseldorff, an analyst with SEMI, on the trade organization’s Web site. “Samsung is expected to increase its fab equipment spending by 128 percent in 2017 from $8 billion to $18 billion. No single company has invested so much in a single year in its fabs and much of its spending is in Korea.”

In 2017, DRAM manufacturers have seen huge demand. Annual DRAM market growth of 74% is forecast for 2017, which would be the highest growth rate since the 78% increase in 1994—23 years ago, according to IC Insights. This is also 61 points more than the 13% average DRAM market growth rate from 1993-2017, according to IC Insights. “Strong, ongoing demand put significant upward pressure on DRAM average selling prices,” according to the research firm. “The forecast $21.1 billion sales level in 4Q17 would be an increase of 65% compared to the $12.8 billion DRAM market of 4Q16.”

Micron Technology announced results of operations for its first quarter of fiscal 2018, which ended Nov. 30. Micron posted revenues of $6.80 billion, 71% higher compared with the same period last year. Revenues for the first quarter of 2018 were 11% higher compared to the fourth quarter of 2017, reflecting increased demand for our mobile, server, and SSD products

IDC forecasts strong growth for the solid-state drive (SSD) industry as it transitions to 3D NAND. In a new SSD forecast update, IDC now expects worldwide SSD unit shipments to increase at a five-year compound annual growth rate (CAGR) of 15.1%. SSD industry revenue is expected to reach $33.6 billion in 2021, growing at a CAGR of 14.8%.

Artificial Intelligence will create 2.3 million jobs in 2020, but will also eliminate 1.8 million positions, according to a new report from Gartner. Through 2019, healthcare, the public sector and education will see continuously growing job demand, while manufacturing will be hit the hardest. Starting in 2020, AI-related job creation will cross into positive territory, reaching two million net-new jobs in 2025. “Many significant innovations in the past have been associated with a transition period of temporary job loss, followed by recovery, then business transformation and AI will likely follow this route,” said Svetlana Sicular, research vice president at Gartner.