The Week In Review: Manufacturing

IBM job cuts; Applied-TEL update; Lam’s results and outlook; CapEx race.


This week, IBM began to cut jobs amid lackluster results. Big Blue is also in the process of selling its chip unit to GlobalFoundries. GlobalFoundries said the jobs are safe at IBM Micro, at least for now, according to a report the Press and Sun-Bulletin.

What’s the latest with Applied Materials’ proposed acquisition with Tokyo Electron Ltd. (TEL)? “Germany, Israel and Singapore approvals are done,” said Srini Sundararajan, an analyst with Summit Research Partners. “AMAT suggested in its 8-K that it anticipates continuing and coordinating discussions with MOFCOM (China) and in the remaining jurisdictions of U.S., S. Korea, China.”

Lam Research posted its financial results for the quarter ended Dec. 28, 2014. In the quarter, shipments were up 12% from the prior quarter and revenue was up 7%. In a research note, Weston Twigg, an analyst with Pacific Crest Securities, said: “Lam is experiencing strong demand as it grabs market share and benefits from ongoing technology inflections. Memory demand (56% of shipments last year) should remain high as DRAM producers add capacity and as early 3D NAND work commences, and foundry demand should improve as finFET ramps begin this year, driving demand for more etch tools.”

Lam appears to be optimistic about 2015. “We estimate spending by our customers in 2014 WFE was approximately $32 billion,” said Martin Anstice, president and CEO of Lam, in a conference call. “Overall, we are modeling 2015 WFE in the range of $34 billion, plus or minus $2 billion for the year.”

North America-based manufacturers of semiconductor equipment posted a book-to-bill ratio of 0.98 in December, compared to 1.02 in November, according to SEMI.

Lattice Semiconductor will acquire Silicon Image for approximately $600 million in cash.

There is good news for fab tool vendors. Intel recently announced its capital spending plans for 2015, which was $10.5 billion, plus or minus $500 million. It appears that Intel has cut its CapEx. “The other big gorillas, TSMC and Samsung, are increasing their capex. TSMC increased its capex from $9.5 billion to $12 billion and Samsung is on record saying that they will increase their capex in 2015, which was at least $11.5 billion,” said Sundararajan of Summit Research Partners. “Micron had already increased in F15 capex by ~$1 billion and now, SK Hynix is increasing its capex from 4.8 trillion Won to 5.8 trillion Won. Inotera is more than doubling its capex from $0.73 billion to $1.7 billion.”

Memory suppliers account for more than 60% of the world’s 300mm wafer capacity, according to IC Insights. “As of December 2014, Samsung had the most 300mm wafer capacity at nearly 1.0 million wafers per month, which represented 23.5% of the world’s total 300mm wafer capacity,” according to the firm.Micron quickly moved into the number two position after acquiring Elpida and its 300mm wafer fab facilities. Toshiba/SanDisk and SK Hynix were ranked #3 and #4, respectively, in the list.

Juniper Research estimates that the number of smartphone shipments exceeded 375 million in Q4 2014, with an annual total of over 1.2 billion smartphones shipped for 2014, representing a 29% year-on-year growth. “Samsung shipped an estimated 315 million smartphones in 2014 accounting for 25% of all smartphone shipments; however, the company reported its first annual earnings decline in three years. The company witnessed another quarterly fall in shipments and market share, to just over 76 million in Q4 2014, representing a 3% decline,” according to the firm. “Meanwhile, Apple posted a record quarter of 74.5 million iPhone sales, representing q-o-q growth of 90% and y-o-y growth of 46% compared to Q4 2013. With the demand for iPhones driven by the 6 and 6 Plus models, the company for the first time ever, sold more iPhones in China than in the US. Despite closing in on Samsung in Q4, Apple had a market share of 15% for the full year in 2014.”

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