Week In Review: Manufacturing, Test

Chipmakers and OEMs
Intel wants $9.7 billion in subsidies for use in building a leading-edge fab in Europe, according to a report from Reuters. As reported, in March, Intel re-entered the foundry business, positioning itself against Samsung and TSMC at the leading edge, and against a multitude of foundries working at older nodes.

Eighteen members of the European Union recently launched an initiative to boost the EU’s efforts in processors and semiconductor technologies. The EU wants to build a 2nm fab. Here’s the latest report from Reuters.

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Several foundry vendors are expanding their fab capacity. The latest is UMC, which announced plans to expand capacity at its 300mm Fab 12A Phase 6 (P6) in Taiwan’s Tainan Science Park.

UMC has operated in the Tainan Science Park since 1999, when Fab 12A was established as Taiwan’s first 300mm fab. Fab 12A is currently operating at a capacity of approximately 90,000 300mm wafers per month (wpm), with an additional 10,000 wpm being installed at P5 starting in 2021.

The P6 project will add 27,500 more wpm production capability when fully equipped. P6 will be equipped with fab tools, enabling 28nm processes with the flexibility to produce smaller nodes down to 14nm. The P6 expansion is scheduled for production in the second quarter of 2023, with total investment for the project earmarked at NT$100 billion (US$3.6 billion). In addition to UMC’s previously announced 2021 capital spending of $1.5 billion, the bulk of which is allocated towards equipment for the company’s Fab 12A P5 site adjacent to P6, total UMC investment in the Tainan Science Park will reach approximately NT$150 billion over the next three years.

UMC has also reported its results for the first quarter of 2021. First quarter consolidated revenue was up 4.0% quarter-over-quarter and up 11.4% from the like period a year ago. “Amid the semiconductor component shortage, we are working with our customers, suppliers and partners to alleviate the capacity tightness across the supply chain. In Q1, robust wafer demand led to full utilization in our manufacturing sites, bringing overall wafer shipments to 2.37 million 8-inch equivalents,” said Jason Wang, co-president of UMC. “During the first quarter, we continued to see an increase in 28nm wafer shipments driven by strong wafer demand associated with digital TV, set-top box and connectivity chips designed into smartphones. As a result, 28nm revenue grew 18% QoQ, representing 20% of our wafer business. Furthermore, we have started to ship 22nm products to fulfill consumer demand, leading to the recognition of 22nm wafer revenue in 1Q21. We foresee a significant pick up in 22nm product tape outs that will increase our 22nm/28nm product pipeline.”

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GlobalFoundries (GF) will relocate its headquarters from Santa Clara, Calif. to Malta, N.Y., the site of the company’s most advanced fab. GF will maintain a substantial presence in Santa Clara.

AMD posted revenues of $3.45 billion, up 93% year-over-year and 6% quarter-over-quarter. Demand was driven by higher revenues in the computing, graphics, enterprise, embedded and semi-custom segments.

Nearly every car maker has been impacted by shortages of semiconductors. BMW, Ford, GM, VW and others have been hit hard in the arena. Despite ongoing shortages of chips, Ford posted first-quarter revenue of $36.2 billion, producing net income of $3.3 billion, which was its best results since 2011. Ford said semiconductor availability, which was exacerbated by a fire at Renesas in March, “will get worse before it gets better.” Ford now expects to lose about 50% of its planned second-quarter production, up from 17% in the first quarter. All told, Ford now expects to lose about 1.1 million units of production this year to the semiconductor shortage.

Chinese electric vehicle maker NIO posted mixed results. The company is also suffering due to chip shortages. “NIO started the year of 2021 with a new quarterly delivery record of 20,060 vehicles in the first quarter, representing a strong growth of 422.7% year over year,” said William Bin Li, founder, chairman and chief executive of NIO. “The overall demand for our products continues to be quite strong, but the supply chain is still facing significant challenges due to the semiconductor shortage. In light of the strong momentum under a volatile macro environment, we expect to deliver 21,000 to 22,000 vehicles in the second quarter of 2021.”

Apple has reported sales of $89.6 billion in the quarter, up 54% year-over-year. In addition, Apple has accelerated its investments in the U.S. It plans to make new contributions of more than $430 billion and add 20,000 new jobs across the country over the next five years. As part of its investments, Apple plans to invest over $1 billion in North Carolina and will begin construction on a new campus and engineering hub in the Research Triangle area. The investment will create at least 3,000 new jobs in machine learning, artificial intelligence, software engineering, and other fields.

Packaging and test
ASE posted sales of NT$119.47 billion for the first quarter, up 23% year-over-year. For the year, ASE expects to increase its wire bond capacity by about 10% to 15%. ASE ended 2020 with slightly more than 26,000 wire bonders. In total, ASE expects its 2021 equipment capital expenditures to increase 10% to 15% as compared to last year. It will invest 65% of its CapEx on packaging equipment and 20% on testing equipment.

Amkor reported record first quarter net sales $1.33 billion, up 15% year-on-year. “Continued strength in advanced packaging and year-on-year growth of 13% in our mainstream business led to better than seasonal results in communications and to sequential growth in automotive and industrial, consumer, and computing end markets,” said Giel Rutten, Amkor’s president and chief executive.

With a strong recovery underway in the automotive market and an increased demand for deeper collaborative design within the industry supply chain, JCET announced the official opening of its Automotive Electronics Business Center and Design Services Business Center. JCET also reported fourth-quarter revenue of RMB 7.70 billion, up 17.6% year-on-year. Full-year revenue was RMB 26.46 billion, up 28.2% year-on-year.

Advantest’s sales jumped 16.1% quarter-over-quarter and up 32.8% year-over-year. The company expects demand to continue for logic testers, mainly driven by smartphones and other products. Memory tester demand should also remain strong.

FormFactor was again ranked as the world’s number one supplier of semiconductor probe cards by market research firm VLSI Research. In addition, FormFactor reported its financial results for the first quarter of fiscal 2021 ended March 27. Quarterly revenues were $186.6 million, a decrease of 5.3% compared to $197.0 million in the fourth quarter of fiscal 2020, and an increase of 16.1% from $160.8 million in the first quarter of fiscal 2020. “The underlying components of first quarter demand were similar to Q4’20, driven mostly by strong foundry and logic demand coupled with DRAM levels comparable to the previous quarter,” said Mike Slessor, CEO of FormFactor.

Fab equipment
Brooks Automation has entered a definitive agreement to acquire Precise Automation, a developer of collaborative robots and automation sub-systems. The total cash purchase price for the acquisition will be approximately $70 million.

TEL posted its results. “Tokyo Electron reported March ’21 sales of $4.0 billion, which was split between $3.78 billion semi equipment (+57% Q/Q; +34% Y/Y) and $216 million display (-13% Q/Q; +66% Y/Y),” said Krish Sankar, an analyst at Cowen. For 2021, TEL’s foundry/logic wafer fab equipment (WFE) growth outlook is +30%. TEL’s outlook for DRAM WFE is 45% growth. Non-volatile memory is 15%.

KLA reported its results for the third quarter of fiscal year 2021, which ended on March 31. GAAP net income was $567 million on sales of $1.80 billion. “KLA’s March quarter results demonstrate strong momentum in our business. We have seen a sharp increase in business levels in each of our major end markets, driven by secular demand trends across a broad range of semiconductor markets and applications,” said Rick Wallace, president and chief executive of KLA.

Onto Innovation reported its financial results for the first quarter of 2021. Quarterly revenue was $169.3 million, up 21% year-over-year and up 9% sequentially. “The demand for our front-end and back-end products continues to increase as global pressure for a variety of the semiconductor markets we serve climbs higher. The strong demand we see in the advanced nodes was driven by greater adoption of our optical metrology solutions for 5nm and 3nm process ramps,” said Michael Plisinski, chief executive at Onto. “Multiple secular drivers provided stronger than expected demand in advanced packaging. We saw expansions at foundry and OSAT customers to support high performance computing, specialty devices, particularly in 5G smartphones, and baseband RF.”

CyberOptics reported sales of $17.7 million for the first quarter of 2021 ended March 31, an increase of 8% from $16.4 million in the first quarter of 2020. Net income for the first quarter of 2021 was $1.4 million or $0.19 per diluted share, compared to earnings of $844,000 or $0.11 per diluted share in the year-earlier quarter. “CyberOptics’ first quarter sales exceeded our previously issued guidance for this period,” said Subodh Kulkarni, president and chief executive of CyberOptics.

Market research
North America-based semiconductor equipment manufacturers posted $3.27 billion in billings worldwide in March 2021, according to SEMI. The billings figure is 4.2% higher than final February 2021 billings of $3.14 billion and 48% higher than March 2020 billings of $2.21 billion. “Fueled by strong demand for leading-edge technologies, billings of North America-based semiconductor equipment manufacturers continued to edge up in March to set a new historical high,” said Ajit Manocha, SEMI president and CEO.

Here’s the latest from VLSI Research: “Memory tester sales soared 62% in 2020 fueled by strong demand from the work-at-home economy, cloud expansion, and increasing investment in China. In addition, transition to higher speed interfaces also drove the demand higher. SOC test had another strong year with sales hitting $3B while wafer probing sales rebounded to $1B. The companies that performed very well in these segments were Advantest, Beijing Huafeng Test (AccoTEST), Chroma ATE, Hangzhou Changchuan Technology, Teradyne, TEL and YIKC.”

Strong demand for flat panel displays (FPD) across a range of applications, combined with a dramatic increase in panel prices, will lead to a 28% increase to a record $151 billion in FPD revenues in 2021, according to DSCC.

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The pace of recovery for the smartphone market accelerated in the first quarter of 2021 with 25.5% year-over-year shipment growth, according to IDC.

There has also been a shakeup in the rankings. “As the smartphone market is recovering, a major shift is happening in the competitive landscape,” according to IDC. “Huawei is finally out of the Top 5 for the first time in many years, after suffering heavy declines under the increased weight of U.S. sanctions. Taking advantage of this are the Chinese vendors Xiaomi, OPPO, and vivo, which all grew share over last quarter landing them in 3rd, 4th, and 5th places globally during the quarter with 14.1%, 10.8%, and 10.1% share, respectively. All three vendors are increasing their focus in international markets where Huawei had grown its share in recent years. In the low- to mid-priced segment, it is these vendors that are gaining the most from Huawei’s decline, while most of the high-end share is going to Apple and Samsung.”

IDC added: “Samsung regained the top spot in 1Q21 with impressive shipments of 75.3 million and 21.8% share. The new S21 series did well for Samsung, mainly thanks to a successful pricing strategy shaving off $200 from last year’s flagship launch. Apple, with continued success of its iPhone 12 series, lost some share from their very strong holiday quarter but still shipped an impressive 55.2 million iPhones grabbing 16.0% share.”