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Week In Review: Manufacturing, Test

5nm export controls; NAND fab; Intel-Leti chiplet deal; financials–Amkor, ASE, FormFactor, KLA, TEL, UMC.

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Trade and government
The U.S. continues to tighten its export controls for hi-tech, including a move to restrict fab technologies that enable 5nm chip production. The U.S. Department of Commerce has imposed controls on six more technologies, bringing the total to 37. They include: hybrid additive manufacturing/computer controlled tools; computational lithography software designed for EUV masks; technology for finishing wafers for 5nm integrated circuit production; digital forensics tools that circumvent authentication or authorization controls on a computer and extract raw data; software for monitoring and analysis of communications and metadata acquired from a telecommunications service provider via a handover interface; and sub-orbital spacecraft. Recently, the U.S. imposed restrictions on exports to China’s biggest chip maker SMIC, which is impacting fab tool sales.

The U.S. Semiconductor Industry Association (SIA) and the Semiconductor Research Corp. (SRC) have released a report outlining chip research and funding priorities over the next decade. The SIA calls for an annual $3.4 billion federal investment over the next decade to fund semiconductor R&D across five areas.

Chipmakers and OEMs
Kioxia, the NAND flash memory spin-off from Toshiba, will begin construction of a new wafer fab (Fab7) at Yokkaichi Plant in Mie Prefecture, Japan. The company plans to expand the production of its proprietary 3D NAND. The construction of Fab7 is expected to commence in the spring of 2021.

Samsung posted mixed results for the quarter. Samsung also announced its capital expenditure plan of approximately KRW 35.2 trillion. Of that, KRW 28.9 trillion is targeted for its semiconductor business.

Memory startup Floadia has raised 1.2 billion yen in a Series C round of financing. Using this fund, Floadia will expand its existing embedded memory business and develop a new memory technology. Teijin, TEL, Miyako Capital, Marubeni, NEC and IDATEN led the funding round. Previous investors include INCJ, UMC and Faraday Technology. The total amount of funds raised up to now is 3.6 billion yen.

UMC has reported its results for the third quarter of 2020. Third-quarter consolidated revenue was up 18.9% year-over-year. “During the third quarter, consolidated operating margin reached 15.9%, while utilization rate remained firm at 97%. Wafer shipments reached 2.25 million 8-inch equivalent wafers. During Q3, work-from-home and home schooling trends continued to contribute to stable end market demand for applications in wireless connectivity, power management ICs used in smartphones as well as high speed interface I/O controllers found in computing devices. In addition to demand stability across various end markets, our 28nm revenue grew QoQ as customer product tape outs continued throughout the quarter,” said Jason Wang, co-president of UMC. In addition, UMC and the U.S. Department of Justice have reached a plea agreement on a trade secret case.

EvoNexus, a non-profit technology incubator, and GlobalFoundries have announced their collaboration to accelerate the growth of semiconductor startups developing products in wireless and the Internet of Things (IoT). EvoNexus has a long history of incubating startups across the wireless ecosystem.

Marvell has announced a definitive agreement to acquire Inphi in a cash and stock transaction. The deal is valued at $8.2 billion.

Apple posted record September quarter revenue of $64.7 billion. International sales accounted for 59% of the quarter’s revenue.

Fab tools
TEL has raised its forecast for its fiscal year ending March 31, 2021 (April 1, 2020 – March 31, 2021). “Net sales for the first half of the current fiscal year of our main-product semiconductor production equipment have exceeded initial projections due to earlier than anticipated recovery in customer demand,” according to TEL.

KLA has reported its results for its first quarter of fiscal year 2021, which ended on Sept. 30. The company reported net income of $421 million, or $2.69 per share, on revenue of $1.54 billion. “In the September quarter we saw broad, diversified strength across each of our segments. Semiconductor process control was solidly above plan, and our service business is on track to deliver double-digit growth in 2020,” said Rick Wallace, president and chief executive of KLA.

“September quarter strength came from the semiconductor process control segment with the foundry/logic vertical growing sequentially. In the December quarter, memory is expected to grow Q/Q while foundry moderates. Overall, we model KLAC’s semiconductor process control revenues growing 14% Y/Y in CY20 and 6% Y/Y in CY21,” said Krish Sankar, an analyst at Cowen, in a research note.

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Edwards, a supplier of vacuum and abatement products for the semiconductor industry, has announced the appointment of Kate Wilson as the president of its Semiconductor Division. Wilson will take up the role on Jan. 1, succeeding Paul Rawlings, who will retire after more than 23 years with Edwards. Wilson was most recently serving as vice president of marketing for Edwards’ Semiconductor Division.

Packaging and test
CEA-Leti has announced a new collaboration with Intel on advanced 3D and packaging technologies for processors to advance chip design. “The research will focus on assembly of smaller chiplets, optimizing interconnection technologies between the different elements of microprocessors, and on new bonding and stacking technologies for3D ICs, especially for making high performance computing (HPC) applications,” according to Leti. Recently, Intel was also awarded a packaging contract with the U.S. Department of Defense.

FormFactor has completed the acquisition of High Precision Devices, a supplier of cryogenic instruments. HPD’s systems are capable of measurements in extreme low temperatures. In addition, FormFactor has announced its financial results for the third quarter of fiscal 2020 ended Sept. 26. Quarterly revenues were $178.0 million, an increase of 12.8% compared to $157.8 million in the second quarter of fiscal 2020, an increase of 26.6% from $140.6 million in the third quarter of fiscal 2019.

ASE participated in an inauguration ceremony at the National Kaohsiung University of Science and Technology (NKUST) to launch the onsite campus semiconductor assembly and test (SAT) talent development facility. The initiative is part of the Ministry of Education’s efforts to implement real environment training in technical and vocational schools. MOE aims to establish an industry-based training mechanism and practical environment as the core to strengthen Taiwan’s competitive edge in the semiconductor industry. In addition, ASE also reported its results for the quarter. Sales were up by 5% year-over-year and up by 15% sequentially.

Amkor has reported third-quarter net sales of $1.35 billion, up 25% year-on-year and 15% sequentially. The company reported net income of $92 million, or earnings per diluted share of $0.38. “Stronger than expected demand in the communications and automotive and industrial end markets drove revenue above the high end of our guidance,” said Giel Rutten, Amkor’s president and chief executive.

National Instruments (NI) has reported third-quarter sales of $308 million, up 2% sequentially. “We delivered third quarter revenue above the midpoint of guidance despite the current economic environment. While we have seen positive signs in our business, we remain cautious to the uncertainty that lies ahead,” said Karen Rapp, NI’s CFO.

Market research
IC Insights projects modest DRAM price erosion through the end of this year. “Although DRAM demand from the computing segment remains healthy, it has stabilized and is not expected to show a marked increase through December,” according to the firm. “A substantial jump in DRAM demand (and prices) that often takes place in the third and fourth quarters of each year and that coincides with the introduction of new smartphone models, is not likely to be as strong this year due to Covid-19 disrupting typical seasonal buying patterns and consumers being more cautious with their discretionary spending. Several phone makers have already introduced their 5G-capable handsets. Other OEMs are expected to follow suit by the end of December. While total 5G smartphone shipments are expected to reach 200 million units this year, IC Insights does not believe that sales of these leading edge handsets will be enough to catch DRAM suppliers off-guard and create a DRAM supply shortage.”

The worldwide smartphone market showed signs of improvement in the third quarter of 2020 with shipments declining just 1.3% year over year, according to IDC. In the smartphone market, Samsung reclaimed the top position in 3Q20 with a market share of 22.7%, surpassing Huawei. Xiaomi shipped 46.5 million devices to grab the number 3 position globally, beating Apple for the first time.



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