The Week In Review: Manufacturing

Applied-TEL scrap merger; Samsung’s CapEx plans; China fab; unloading fabs.

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After several delays due to a myriad of complex regulatory issues, Applied Materials’ proposed deal to buy Tokyo Electron Ltd. (TEL) has been scrapped. Now, Applied Materials and TEL are separately re-grouping, and are back to where they originally started as competitors in the fab tool market.

Applied Materials held a conference call to explain the situation with TEL.

Applied Materials has approved a new share repurchase program authorizing up to $3 billion in repurchases over the next three years beginning in the third quarter of fiscal 2015.

Samsung posted its results for the quarter. “On its earnings call, Samsung indicated that it now expects CapEx to be similar to 2014, with a strong possibility that it may increase. On its prior earnings call, Samsung suggested that CapEx would be up year-over-year in 2015, specifically citing higher capex for foundry and NAND. We view this as a slight downtick in guidance,” said Weston Twigg, an analyst with Pacific Crest Securities, in a report. “Samsung did not break out semiconductor CapEx from total CapEx, so there is a lot of leeway in this guidance. We are lowering our Samsung semiconductor CapEx estimate to 14.5 trillion KRW (US$13.1 billion), down from our prior estimate of 15 trillion KRW (US$13.5 billion). Its semiconductor CapEx in 2014 was 14.3 trillion KRW, so 14.5 trillion KRW represents a 1% year-over-year increase. Given the strengthening U.S. dollar, this constitutes a 4% decline in USD. Samsung spent 4.4 trillion KRW, or US$4 billion, in Q1. Samsung has not been ordering much foundry equipment, in our view, and DRAM equipment demand appears to be slowing as line 17 becomes nearly filled. We also recognize that CapEx could increase quickly in the second half of 2015 as Samsung works though 28nm equipment reuse for 14nm and as 3D NAND activity increases.”

In a separate research note, Srini Sundararajan, an analyst with W.R. Hambrecht + Co./Summit Research, said: “There is some confusion at this point about whether Samsung’s current capacity at System LSI is enough for both Apple and for Samsung’s Exynos chip, or (else) about ~30k-40kwspm capacity has to be added. If GlobalFoundries’ yields are not up to the mark in 2015, then Samsung will have to come through with additional capacity for Apple and that might result in additional CapEx. In addition, if one includes potential Qualcomm business, there is likely to be additional fab capacity needs.”

Where else is Samsung’s CapEx budget going? “We think that Samsung will spend additional money on 30kwspm of 3D NAND capacity capable of 48 layer devices during 2015. In addition, we expect Micron, Toshiba and SK Hynix to at least fab 10+kwspm 3D NAND wafer capacity in 2015, leading up to the 70kwspm total capacity suggested by Lam Research,” according to Sundararajan.

NuFlare and D2S have developed a resist heating correction system, which enables better CD control and higher throughputs for e-beams. “Resist heating effect has been present since the beginning of e-beam lithography, but its correction has been finally realized by the power of GPU cluster(s). We will introduce this new correction for (the) EBM-9500 and EBM-9000 upgrade,” according to NuFlure.

SEMI reported that for the quarter ended Dec. 31, 2014, worldwide photovoltaic manufacturing equipment book-to-bill ratio remained below parity, at 0.68.

Some are building fabs. Others are unloading them. United Microelectronics Corp. (UMC) held a groundbreaking ceremony in Xiamen, China to kick-off the construction of its new 300mm fab project. Meanwhile, Infineon plans to sell one of IR’s fabs, according to reports. In addition, Renesas has transferred the 200mm tools at its Shiga Factory to Rohm.

Thermco Systems, a Division of Tetreon Technologies, announced the acquisition of ProTemp Products’ subsidiary, ProTemp Electronic Equipment, located in Wuxi, China.

Aixtron has acquired PlasmaSi. The purchase price may reach up to $16 million and will be paid in cash. PlasmaSi enables the encapsulation of organic thin-films by depositing ultra-thin and flexible barrier films.

MEMS supplier Knowles has entered into a definitive agreement to acquire Audience. Meanwhile, OmniVision Technologies has entered into a definitive agreement to be acquired by a consortium from China. OmniVision stockholders will receive $29.75 per share in cash, or a total of approximately $1.9 billion.