The Week In Review: Manufacturing

Intel invests in China assembly plant; Applied-TEL deal update; fab tool forecasts; lame ducks.

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Intel announced plans to invest up to $1.6 billion in the next 15 years to upgrade its Chengdu, China factory for die prep, assembly and test operations, as well as to bring Intel’s latest Advanced Test Technology to China. Advanced Test Technology is Intel’s internal ATE capabilities. “It is also the single biggest investment by Intel in Chengdu,” said William Holt, executive vice president and general manager of Technology and Manufacturing Group. Intel Chengdu, which is located in Chengdu Hi-Tech Zone and wholly owned by Intel, was announced in 2003 and started operations since 2005. Previously, Intel has accumulated $600 million investment into Chengdu facility where die prep, package assembly, and final test operations are running for a broad base of products.

Applied Materials’ proposed move to buy Tokyo Electron Ltd. (TEL) is making progress. “Now, in the Korea Times, it is suggested that Samsung is in talks with the (Korea) Fair Trade Commission to approve Applied Materials’ purchase of Tokyo Electron. The new entity – Applied-Tokyo Electron – will collaborate with Samsung on next-generation memory chips,” said Srini Sundararajan, an analyst with Summit Research Partners, in a research note. “As a result, we believe that AMAT-TEL will receive conditional approval for their merger in South Korea by March/April 2015. We also consider as very positive the fact that MOFCOM, JFTC and KFTC are collaborating on reaching a decision and that Samsung will likely be an important factor in South Korea and China. In any case, in Japan, TEL is playing to the home crowd just as AMAT is doing so in the U.S.”

Check out the latest forecasts from Applied Materials and Lam Research from this week’s Credit Suisse Annual Technology Conference in Scottsdale, Ariz.

SEMI projects that worldwide sales of new semiconductor manufacturing equipment will increase 19.3% to $38.0 billion in 2014. In 2015, strong positive growth is expected to continue, resulting in a global market increase of 15.2% before moderating in 2016.

Congress must act and pass a manufacturing bill during the lame duck session, according to a commentary from SEMI.

Looking at the handset segment of the wireless equipment market, Canaccord Genuity analyst Michael Walkley said: “We forecast a 40% LTE smartphone unit growth CAGR from 2014 to 2016, resulting in LTE handset unit sales of 823 million units in 2016, up from 422 million units in 2014. In addition to the growing mix of LTE smartphones, we believe 3G smartphone unit sales will increase 3.8% from 2014 to 2016 as the large base of 2G feature phone users upgrade to entry-level 3G smartphones.”

Intel and Luxottica unveiled a multiyear R&D collaboration to fuse premium, luxury and sports eyewear with smart technology.

Cypress Semiconductor and Spansion announced a definitive agreement to merge in an all-stock transaction valued at approximately $4 billion. The post-merger company will generate more than $2 billion in revenue annually and create a leading provider of microcontrollers and specialized memories.

Freescale Semiconductor has acquired Zenverge, a fabless semiconductor company and a developer of advanced HD content processing ICs.