Week In Review: Manufacturing, Test

Chipmakers and OEMs
As reported, Intel this week reorganized its operations following delays with its 7nm technology. Intel is behind TSMC and Samsung in technology. As a result, TSMC’s foundry customers, such as AMD, Nvidia and others, are also pulling ahead of Intel. In addition, reports have surfaced that Intel will outsource some of its leading-edge chip production to TSMC.

To solve the problem, Intel will not only need to reorganize its operations, but it needs better execution within its manufacturing unit. The company’s 10nm process was several years late and now 7nm is 6 to 12 months behind.

Intel, meanwhile, believes that the U.S. government needs to step up and help jumpstart the U.S. chip industry with various block grant proposals. In a new editorial, Jeff Rittener, chief government affairs officer at Intel, said the chip giant is encouraged by recent government proposals to bolster the U.S. semiconductor industry.

“Ensuring that U.S. semiconductor R&D related to manufacturing stays in the U.S. should be an important consideration as the authorization and appropriations debate continue,” Rittener said. “An important amendment added to the National Defense Authorization Act (NDAA) for Fiscal Year 2021 shows that Congressional leaders understand and recognize that the foundation of U.S. technological leadership is in peril. This bicameral, bipartisan amendment would create important federal incentives to reverse the serious erosion of U.S. semiconductor manufacturing by authorizing a Commerce Department grant program to promote semiconductor manufacturing, and a Defense Department partnership program to encourage development of advanced and secure microelectronics. It would also increase federal semiconductor research and development (R&D).”

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UMC has reported its results for the second quarter of 2020. Sales were up 5% from the previous quarter and up 23.2% from the like period a year ago. Fab utilization rates were 98% during the quarter with an increase in wafer shipments. “The increase in wafer shipments mainly reflected computing segment demand for connectivity, display driver and flash controller as well as inventory replenishment in computing markets,” said Jason Wang, co-president of UMC. “Looking into the third quarter, current market demand remains strong. We have experienced a surge in 28nm tape outs during the first half of 2020 compared to a year ago, and expect additional 28nm and 22nm product tape outs in the third quarter. We are also moving new 28nm products into volume production for wireless applications such as 4G and 5G smartphones, which will enhance our business traction and diversify UMC’s customer exposure across different 28nm market segments.”

Here’s the latest from Bloomberg: “Samsung Electronics Co. beat earnings estimates and gave a cautiously optimistic outlook, predicting that new smartphones and gaming consoles will boost demand for memory chips in the second half of the year.”

Analog Devices has acquired the High Definition Multimedia Interface (HDMI) business of INVECAS. ADI is also in the process of acquiring Maxim.

Apple posted quarterly revenue of $59.7 billion, an increase of 11% from the year-ago quarter, and quarterly earnings per diluted share of $2.58, up 18%. International sales accounted for 60% of the quarter’s revenue. “AAPL reported much better than expected June quarter results that were well above the highest consensus forecasts in a period of significant demand uncertainty,” said Krish Sankar, an analyst at Cowen, in a research note. “iPhone revenues ($26B) came in above consensus and was +2% Y/Y. We estimate AAPL shipped 35M units in the June quarter and are modeling 40M units in the Sep Q, leading to iPhone revenues of $28.8B. Sep Q typically sees seasonality from the ramp of a new iPhone product cycle. However, the upcoming ’12’ product family will likely ramp in early Dec Q and ongoing movement restrictions likely also moderate the C3Q sequential uptick.”

Packaging and test
FormFactor has completed the acquisition of the probe card assets of Advantest. This acquisition expands its efforts in the memory probe card business. It also adds a complementary 3D NAND probe card product to its portfolio.

FormFactor also reported its results for the second quarter. The results were in line with those achieved in the first quarter. In response to strong demand, the company is expanding probe card manufacturing capacity at its Livermore campus. Commenting on the outlook, Mike Slessor, CEO of FormFactor, said: “In addition to continued demand from major foundry and logic customers, we anticipate strengthening in DRAM, as key customers begin to ramp new server and mobile designs on the one-Y and one-Z nanometer nodes.”

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Advantest and PDF Solutions have established a major business and product partnership. As part of the plan, Advantest has taken a stake in PDF. Under the terms, Advantest has purchased 3,306,924 in newly issued shares of PDF’s common stock for approximately $65.2 million. The deal also includes PDF’s assistance in the development of a cloud-based software solution for Advantest and its customers. The technology is based on PDF’s Exensio software analytics platform. By combining the PDF’s technology with Advantest’s ATE, Advantest can provide its customers with the ability to connect, test, measure and analyze at any point in the semiconductor value chain, helping customers increase yield and reduce testing costs.

ASE reported net revenues of NT$107,549 million for the quarter, up by 19% year-over-year and up by 11% sequentially. Net income for the quarter totaled NT$6,937 million, up from a net income of NT$2,690 million in 2Q19 and up from a net income of NT$3,899 million in 1Q20.

Amkor posted mixed results for the second quarter ended June 30. Second quarter net sales were $1.17 billion, up 31% year-on-year.

Fab tools
For the June 2020 quarter, Lam Research posted sales of $2.792 billion and net income of $697 million, or $4.73 per diluted share on a U.S. GAAP basis. This compares to revenue of $2.504 billion and net income of $575 million, or $3.88 per diluted share, for the quarter ended March 29. “Lam delivered strong financial results in the June quarter despite tremendous global health, macroeconomic, and geopolitical uncertainty,” said Tim Archer, Lam’ president and chief executive.

For the first quarter of its current fiscal year, TEL reported net sales of 314,823 million yen (year-on-year growth of 45.5%) and net income of 56,452 million yen (year-on-year growth of 77.0%). “DRAM and NAND flash memory markets began to recover from the previous fiscal year, due to improvements in the balance between supply and demand. Furthermore, capital investment in logic and foundry semiconductors has also continued, resulting in a solid market for semiconductor production equipment,” according to TEL.

Nova has announced two new integrated optical CD metrology systems. The new platforms, Nova i570 HP and Nova ASTERA, support both advanced memory and logic. Meanwhile, Thermo Fisher Scientific has released the nProber IV nanoprober platform, a fault isolation system used by fabs to locate and characterize nm-scale electrical faults that impact device performance and reliability. The nProber IV enables automation and precision for yield engineers as they perform leading-edge logic and memory failure analysis.

Market research
Prior to the COVID-19 outbreak expectations were for combined DRAM and NAND capex of $38.8 billion in 2020, down 15% year-over-year, including both WFE and infrastructure spend. This decrease was a result of the memory market downturn that plagued 2019—and much of 2018 for NAND—as well as the timing of infrastructure build outs and technology transitions. “The current forecast assumes a much steeper 2020 capex drop-off, with combined DRAM and NAND capex of $33.8 billion, down 26% from 2019 and 13% lower than the prior outlook,” said Mike Howard, an analyst at Yole Développement. “It is expected that the memory suppliers will be more cautious with investments this year due to the uncertainty around second half demand and longer-term economic ramifications. The memory suppliers are likely to err on the side of caution and push spend into 2021 or potentially further depending on market conditions.”

IC Insights has ranked the 33 largest IC product categories based on their expected sales and unit shipment volumes in 2020. DRAM and NAND flash are expected to repeat as the two largest IC segments again in 2020 after holding the same positions in 2019.

Worldwide silicon wafer area shipments rose 8% to 3,152 million square inches in the second quarter of 2020, compared to the 2,920 million square inches shipped in the first quarter of the year, according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry.

The global semiconductor packaging materials market will track chip industry growth to expand from $17.6 billion in revenue logged in 2019 to $20.8 billion in 2024, a 3.4% growth rate, according to SEMI and TechSearch International.

There are supply chain challenges ahead for rare earth elements for semiconductor device manufacturing, due to the ongoing global pandemic and trade wars, according to TECHCET.

Worldwide smartphone shipments decreased 16.0% year-over-year in the second quarter of 2020, according to IDC. In market share, Huawei for the first time reached the number 1 position, surpassing Samsung, according to IDC. Apple was in third.