The Week In Review: Manufacturing

For years, China has been trying to get a domestic IC equipment industry off the ground, but it has experienced modest success in the arena. Now, China may take a new strategy—acquire fab tool makers. In what could be a sign of things to come, China’s Beijing E-Town Dragon Semiconductor Industry Investment Center has entered into a definitive agreement to acquire U.S.-based fab tool vendor Mattson Technology for $300 million.

TSMC held its 15th annual supply chain management forum to show appreciation for the support and contributions of its suppliers in 2015, and to recognize eight outstanding equipment and materials suppliers. Applied Materials is one of the vendors on the list.

At the Credit Suisse Annual Technology Conference, executives from Applied Materials, Lam Research and others presented their respective outlooks for the coming year. Applied can be heard here, while Lam is here.

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JK Shin, co-chief executive of Samsung Electronics, has been replaced as the company’s mobile chief, according to a report from The Wall Street Journal. Shin was replaced by Dong Jin Koh, head of Samsung’s mobile R&D. “Samsung has reshuffled management at its handset business in a move that has nothing to do with performance and everything to do with an orderly transfer of power. When one looks at Samsung’s financials on an annualized basis it is easy to assume that JK Shin has been replaced due to the fact that 2015 will be the second year where company earnings have declined,” said Richard Windsor, an analyst at Edison Investment Research, in a research note.

“However, when looking at the business on a quarterly basis things look very different as the last two quarters have seen a steady recovery based on quick and decisive action. Furthermore, Q4 15E is likely to see a continuation of the recovery that was experienced in Q3 15A and the outlook for 2016E is also one of steady growth,” Windsor said. “It was in Q2 14A and Q3 15A where earnings were hammered due to declines in handset market share and margins. If JK Shin was to be replaced due to bad performance, it would have happened then and keeping him on has actually turned out to be a good move.

“Every other handset company that has faced a similar situation to this has on gone to rack up huge losses and to lose almost all of their business. However, to JK Shin’s credit, Samsung acted quickly to cut the fat out of its operation and focused on what it knew it could do well: commodity products in huge volumes,” he said. “In Q3 15A, Samsung recorded a steady market share gain after several quarters of losses and has managed to hold margins steady at 9-11% for the last three quarters. This is far better than any of its Android brethren are doing and this position is sustainable as long as Samsung can out-ship its nearest rival by at least 2 to 1.”

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According to Bloomberg, Mubadala Development has held discussions with potential acquirers to sell GlobalFoundries in a transaction worth $15 billion to $20 billion. The most likely suitors are Samsung, TSMC and Qualcomm, although Samsung is the top candidate, according to Srini Sundararajan, an analyst with W.R. Hambrecht + Co./Summit Research. ”Samsung is already working with GlobalFoundries’ Fab 8 in N.Y., and in preparation for Apple, the two companies worked together on 14nm development and production. Samsung has fabs in Korea and in Austin, Texas. Where even Samsung might find GlobalFoundries useful is in exploiting 10nm and 7nm chips IP and expertise that came with the IBM semiconductor inlay. Samsung, in fact, worked with IBM, Global Foundries and SUNY Poly on a 7nm project that developed the world’s first working 7nm chip with working transistors. In addition to all this, Samsung System LSI increases in size and likely becomes a ‘more favored’ vendor to Apple given its potential stateside manufacturing oomph, should the sale go-through,” Sundararajan said.

China’s Tsinghua Unigroup wanted to buy Micron, but the deal was rejected by the U.S. memory maker. Now, Korea’s SK Hynix received a collaboration proposal from Tsinghua. That was rejected too, according to Reuters.

Infineon and Tsinghua are separately kicking Renesas’ tires. Meanwhile, Renesas has sold its Tsuruoka fab to TDK. With the fab, TDK hopes to meet demand for its thin-film components.

Breithorn Capital Management, a private investment manager, owns 1.2% of the shares at Kulicke & Soffa Industries. In a letter, the investment firm wants changes at K&S, including a possible sale of the company.

China Integrated Circuit Industry Investment Fund Co. Ltd., together with Advanced Micro-Fabrication Equipment (AMEC) and Suzhou Juyuan Dongfang Investment Fund have collectively invested 270 million RMB (US$42 million) in Piotech. Headquartered in Shenyang, China, Piotech makes chemical vapor deposition (CVD) equipment used to manufacture semiconductors. The combined investment gives the new investors a majority ownership stake in Piotech.

SEMI Foundation, created by global industry association SEMI to support education and career awareness in the field of high-tech, has announced the appointment of Leslie Tugman as its executive director.

A quarter after Apple debuted as the number two wearables vendor worldwide, Chinese vendor Xiaomi finished the third quarter of 2015 as a strong contender for this position, according to International Data Corp. (IDC). In the wearables arena, total shipment volume for the quarter came to 21.0 million units, up 197.6% from the 7.1 million units shipped in 3Q14.