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Week In Review: Manufacturing, Test

Updated: Auto chip shortages; EUV DRAMs; ASE, FormFactor, KLA, Onto results.

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OEMs and chipmakers
In recent times, automotive companies have been impacted by chip shortages, forcing vendors to temporarily shutter their plants. OEMs are experiencing manufacturing disruptions due to semiconductor shortages as some semiconductor foundries allocate production, according to IDC. “Semiconductor content growth in vehicles continues to outpace vehicle unit sales growth, with growth in semiconductors that enable electrification, infotainment and connectivity, and ADAS,” said Nina Turner, research manager at IDC.

Meanwhile, GM will idle various plants due to the IC shortage. “Semiconductor supply for the global auto industry remains very fluid. Our supply chain organization is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM. Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021. We are currently assessing the overall impact, but our focus is to keep producing our most in-demand products — including full-size trucks and SUVs and Corvettes — for our customers,” according to GM.

Rival Ford said the global semiconductor shortage will impact its 2021 operating results. “The semiconductor situation is changing constantly, so it’s premature to try to size what availability will mean for our full-year performance,” said Ford President and CEO Jim Farley. “Right now, estimates from suppliers could suggest losing 10% to 20% of our planned first-quarter production.”

According to Lawler, “production losses in that range projected across the entire first half of the year — along with assumptions for some cost offsets and volume make-ups in the second half — could imply that the shortages will lower Ford’s 2021 adjusted EBIT by $1.0 billion to $2.5 billion.”

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SK Hynix recently held a completion ceremony for its new fab, M16, located in Icheon, Gyeonggi-do, South Korea. M16 will produce DRAMs. The company will insert extreme ultraviolet (EUV) lithography tools in the fab. Since the initiation of the M16 construction in 2018, SK Hynix has invested a total of KRW 3.5 trillion and construction manpower of 3.34 million workers.

SMIC has posted sales of $981.1 million in the fourth quarter, compared to $1.082 billion in the third quarter and $839.4 million in the like period a year ago. “At present, the foundry industry capacity is tight, the demand for non-finFET processes remain strong, and our capacity for non-finFET will continue to be fully loaded. In order to meet customer needs, the company expects capital expenditures this year to be $4.3 billion, in which majority is for non-finFET capacity expansion, and remaining for finFET, the infrastructure of the new Beijing joint-venture project, and etc. In terms of capacity expansion, we increase monthly non-finFET capacity by 10,000 for 12-inch, and not less than 45,000 for 8-inch this year,” said Haijun Zhao and Liang Mong Song, co-CEOs of SMIC. “Given the impact of being added to the Entity List, we will consider strengthening the development and deployment of our first and second generation finFET multi-platforms and expand the reliability and competitiveness of our platforms.”

Renesas has an agreement to acquire Dialog for 67.50 euros per share, representing a total equity value of approximately 4.9 billion euros or approximately $5.9 billion. “Renesas announced the intent to acquire Dialog Semi for a 20% premium to Friday’s market close. This follows Renesas acquisitions of Intersil and IDT over the prior four years. Like those two prior acquisitions, Renesas picks up another analog/mixed-signal IC specialist in Dialog. In addition, Renesas picks up some well respective BT/Wi-Fi connectivity IC families,” said Gary Mobley, a senior equity analyst at Wells Fargo Securities. “It is important to point out the Renesas/Dialog tie-up is typical of the types of deals we’ve seen over the past few years. That is, Dialog is yet another SMID-cap analog/mixed-signal IC company to be acquired by a larger chip company, with the idea sales and expense synergies make the deal accretive for the buyer. Also, this is another example of a company with IoT connectivity assets being acquired by a large MCU company.” [This item was updated on Feb. 8]

Fab tools and analytics
KLA has posted its results for its second quarter of fiscal year 2021, which ended on Dec. 31. KLA reported GAAP net income of $457 million, or $2.94 per share, on revenue of $1.65 billion. “Our results for the December quarter and calendar 2020 demonstrate continued strong demand from customers,” said Rick Wallace, president and chief executive of KLA. For the third quarter, KLA expects revenue to be between $1.665 billion to $1.815 billion.

Onto Innovation announced its financial results for the fourth quarter and full year for 2020. Fourth quarter revenue totaled $155.1 million, an increase of 23% compared with $126.5 million for the third quarter of 2020. For the full year, revenue totaled $556.5 million compared to $305.9 million in the prior year. “The strong revenue growth in the fourth quarter was a combination of market strength in memory and RF communications in support of the initial 5G handset ramp as well as the acceptance of several of our new product releases,” said Michael Plisinski, chief executive of Onto Innovation.

Data analytics specialist proteanTecs has announced the appointment of former Optimal+ (acquired by National Instruments) executive, Uzi Baruch, as chief strategy officer. Previously, Baruch was the general manager of Optimal+’s new growth business. In addition, proteanTecs announced that Raanan Gewirtzman will be joining its advisory board, after serving as the chief business officer.

Packaging and test
ASE reported its results for the quarter. Sales were up 28% year-over-year and up by 21% sequentially. Net revenue contribution from packaging operations, testing, EMS and others, each represented approximately 39%, 7%, 53% and 1%, respectively, of total net revenues for the quarter, according to ASE (Go to press release).

FormFactor has announced its financial results for the fourth quarter of fiscal 2020 ended Dec. 26, 2020. Quarterly revenues were $197.0 million, an increase of 10.7% compared to $178.0 million in the third quarter of fiscal 2020, an increase of 10.3% from $178.6 million in the fourth quarter of fiscal 2019. For 2020, FormFactor posted revenues of $693.6 million, up 17.7% from $589.5 million in 2019. “FormFactor delivered strong results in the fourth quarter of 2020, setting all-time quarterly and annual company records for revenue, as well as non-GAAP operating profit and net profit,” said Mike Slessor, chief executive of FormFactor.

Kulicke and Soffa Industries has acquired a 100% equity stake in Uniqarta. Prior to closing the acquisition, Kulicke & Soffa worked with Uniqarta to commercialize its LED die transfer technology.

Materials
Lynas Rare Earths, the largest rare earth element mining and processing company outside of China, has been awarded a Defense Production Act (DPA) Title III technology investment agreement to establish U.S.-based processing capabilities for light rare earth elements (LREE). “LREEs are critical to numerous defense and commercial applications, including petroleum refining, glass additives, and magnets used in electric vehicle drivetrain motors and precision-guided munitions. Upon completion of this project, if successful, Lynas will produce approximately 25% of the worlds’ supply of rare earth element oxides,” according to the Department of Defense (DoD).

Market research
Worldwide semiconductor revenue grew to $442 billion in 2020, an increase of 5.4% compared to 2019, according to IDC. IDC forecasts the semiconductor market will reach $476 billion in 2021, a 7.7% year-over-year growth rate as the various COVID-19 vaccines are disseminated and economies begin to open and gradually recover. “There are specific markets that remain on an upward trajectory and are essential to the recovery this year, including 5G, cloud, intelligent edge, and the dedicated foundry industry. The first half of the year will also see some inventory digestion in the enterprise, cloud, and telco equipment market, but we do not expect it to derail the growth for the year,” said Mario Morales, program vice president of enabling technologies and semiconductors at IDC.

IC Insights has released its rankings of IC categories based on sales growth rate in 2021. The listing projects the market growth rate for each of the 33 IC product categories defined by the World Semiconductor Trade Statistics (WSTS) organization.

NAND flash demand continues to rise, but the migration to the next nodes is moving slower than expected, according to TrendForce. “TrendForce indicates that the migration to the 1XX-L processes has not been proceeding as smoothly and rapidly as expected for notebook SSDs during 1Q21. The testing and approval of 1XX-L products by PC OEMs has actually fallen behind schedule, so the bulk of demand is staying with the 92/96L processes rather than shifting toward the more advanced stacking processes,” according to the firm. As reported, 3D NAND suppliers are accelerating their efforts to move to the next technology nodes in a race against growing competition, but all of these vendors are facing an assortment of new business, manufacturing, and cost challenges.

Worldwide silicon wafer area shipments in 2020 increased while revenue remained unchanged, according to the SEMI Silicon Manufacturers Group (SMG). “2020 silicon wafer shipment growth was driven by healthy 300mm demand and a strong second half of 2020 despite disruptions to the semiconductor industry caused by COVID-19,” said Neil Weaver, chairman SEMI SMG and vice president of product development and applications engineering at Shin Etsu Handotai America.



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