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Week In Review: Manufacturing, Test

Intel’s chip roadmap; IC shortages; phone shakeup; earnings.

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Chipmakers
Intel has outlined its new process technology roadmap with plans to regain the leadership position in the market. As part of the move, Intel has changed the way it designates the nodes, revealed its new gate-all-around (GAA) transistor, and disclosed a customer for the GAA technology–Qualcomm. And not to be outdone, Intel has broadened its packaging portfolio.

Intel is changing its node name designations, which is now somewhat aligned with Samsung and TSMC. Click here to get a full explanation of Intel’s new node names.

On the technology front, Intel plans to push its current finFET transistor to the newly designated 3nm node. Then, as expected, Intel plans to migrate to GAA field-effect transistors (GAA FETs). Intel refers to this as a RibbonFET. Others call it a nanosheet FET. Intel plans to introduce the RibbonFET at the 20A node, which is expected to ramp in 2024. At 20A, Intel also plans to introduce PowerVia, a backside power delivery module for the RibbonFET.

Intel is in the process of reshaping the company. “We are leveraging our unparalleled pipeline of innovation to deliver technology advances from the transistor up to the system level,” said Pat Gelsinger, CEO of Intel.

It’s an ambitious plan. “In contrast to its Tick-Tock (every 2 years) or its recent Process Architecture Optimization (PAO, every 3 years), where major node migrations are done every 2-3 years, Intel announced a new roadmap where it plans to achieve performance parity with TSMC by 2024 with its Intel 20A node, and to take performance leadership beginning in 2025 with its Intel 18A node,” said John Vinh, an analyst at KeyBanc, in a research note. “With its new roadmap, INTC expects to achieve 10-15% performance/watt improvement at Intel 7 (node) in 2H21, 20% performance/watt improvement at Intel 4 (node) in 2H22, 18% performance/watt improvement at Intel 3 (node) in 2H23. INTC did not quantify the performance improvement on 20A and 18A, but expects a significant improvement in performance. Beginning with 20A (expected 2H24), there is a new transistor architecture introduced (RibbonFET) and new implementation of backside power delivery (PowerVia).”

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Rival AMD reported sales of $3.85 billion, up 99% year-over-year and 12% quarter-over-quarter driven by higher revenue in the computing and graphics segments. For the third quarter of 2021, AMD expects revenue to be approximately $4.1 billion, plus or minus $100 million, an increase of approximately 46% year-over-year and about 6% quarter-over-quarter.

UMC’s second quarter sales increased 8.1% over the previous period and up 14.7% from a year ago. UMC’s capital spending is budgeted at $2.3 billion, which includes its recently-announced Fab 12A P6 expansion plan. “Strong demand fueled by 5G adoption and digital transformation underpinned our strong performance in the second quarter. Our manufacturing facilities exceeded 100% utilization while overall wafer shipments rose 3.0% quarter-over-quarter to 2.44 million 8-inch equivalents. Revenue from 28nm technologies continued to grow sequentially, fueled by applications incorporated into 4G/5G smartphones, solid state drive, and digital TV,” said Jason Wang, co-president of UMC. “Looking ahead, we anticipate demand to stay robust in the third quarter driven by megatrends such as 5G and EV. Supply tightness is expected to continue across 8- and 12-inch facilities. In addition, we expect the adoption rate of our 22nm technologies will continue to gain traction, reflected by a pickup in customers’ 22nm product tape outs in connectivity and display applications.”

Samsung’s profit jumped by more than 70% in the second quarter amid higher memory prices, according to a report. “Samsung outgrew bit supply expectations (again) on strong demand for servers, PCs and gaming consoles that helped offset capacity constraints on smartphone production. Looking into the 2H, the company expects to fortify its technology leadership by deploying 176L (double-stacked) 3D NAND in high-density SSDs slated for enterprise PCs and servers, as well as introduce DDR5 DRAM for new server CPUs on its 14nm process node (i.e., 1a) that includes 5 layers of EUV,” said Karl Ackerman, an analyst at Cowen, in a research note.

Taiwan’s Macronix, the world’s largest supplier of NOR flash memory chips, plans to allocate NT$41.5 billion ($1.48 billion) to expand its fab capacity, according to the Taipei Times.

SkyWater has approved $56 million in capital investments to expand its fab. The company plans to enter the 200mm gallium-nitride (GaN) market.

STMicroelectronics has manufactured the first 200mm silicon carbide (SiC) bulk wafers for prototyping next-generation power devices from its facility in Norrköping, Sweden. STMicroelectronics also posted its results.

Packaging
ASE’s second quarter sales were up by 18% year-over-year and up by 6% sequentially. Net income was also up. ASE is looking at revenue growth of 20% for this year, according to a report from the Taipei Times. “We’re seeing very strong ATM (assembly, testing, and material) demand than our previous target or next, or last guidance. We estimated semiconductor would grow 10% and we will do better than twice of that. Right now, our sentiment is better than our previous guidance. The momentum will last into 2022,” said Tien Wu, COO of ASE, in a conference call.

Amkor has posted record net sales of $1.41 billion, up 20% year-on-year. The company also had net income of $126 million, or earnings per diluted share of $0.51. “Second quarter revenue grew 6% sequentially to a new all-time record of $1.41 billion. Strong demand for advanced SiP in the communications and consumer end markets drove revenue above the high end of expectations,” said Giel Rutten, Amkor’s president and chief executive. “Our automotive and industrial business grew 33% year-on-year to a record $300 million, overcoming several supply chain challenges.”

Semiconductor equipment
For the June 2021 quarter, Lam Research reported sales of $4.145 billion and net income of $1.145 billion, or $7.98 per diluted share on a U.S. GAAP basis. This compares to revenue of $3.848 billion and net income of $1.071 billion, or $7.41 per diluted share, for the quarter ended March 28. “The combination of strong semiconductor demand and rising device complexity is driving higher levels of wafer fabrication equipment investment,” said Tim Archer, Lam Research’s president and chief executive.

KLA has reported GAAP net income of $633 million, or $4.10 per share, on revenues of $1.93 billion for the fourth quarter of fiscal year 2021. For the fiscal year ended June 30, KLA reported net income of $2.08 billion, or $13.37 per share, on revenues of $6.92 billion.

CyberOptics has reported record sales of $25.2 million for the second quarter ended June 30, an increase of 58% from $16.0 million in the same period a year ago. Net income for the second quarter of 2021 was $3.1 million or $0.41 per diluted share, up from earnings of $1.6 million or $0.22 per diluted share in the year-earlier quarter. “CyberOptics’ second quarter sales, which exceeded our guidance for this period, were driven by strong, double-digit sales growth from each of our product lines,” said Subodh Kulkarni, president and chief executive of CyberOptics.

Advantest posted sales of 97.1 billion yen in the quarter, up 45% over the same period a year ago. The ATE giant also increased its forecast for the year amid strong demand for test equipment.

FormFactor reported quarterly revenues of $188.1 million, an increase of 0.8% compared to $186.6 million in the first quarter of fiscal 2021, and an increase of 19.2% from $157.8 million in the second quarter of fiscal 2020. “FormFactor performed well during Q2, with revenue surpassing Q1 to reach levels second only to Q4‘20,” said Mike Slessor, chief executive of FormFactor.

OEMs
Car makers, smartphone vendors and even vacuum cleaner suppliers are seeing huge demand, but they are still hampered by chip shortages.

Apple posted strong results for the quarter, but the company expects chip shortages to impact its sales in future quarters. “Apple’s record June quarter results were well above consensus forecasts driven by hardware demand and double-digit percent growth in all geographies, especially emerging markets,” said Krish Sankar, an analyst with Cowen in a research note. “While our iPhone unit forecasts edge slightly higher (iPhone CY21/22 units: new estimates of 233M/235M vs prior 230M/232M), we think blended pricing and margins are trending better. We think iPad and Mac demand could grow again in CY22 due to pent-up demand and expanding enterprise adoption. For the September quarter, Apple expects shortages could impact iPhone and iPad revenues by over $3B.”

Ford delivered better-than-expected results in the second quarter of 2021. Ford has been hampered due to chip shortages.

VW posted record results despite challenging conditions in the first half of 2021. “The Volkswagen Group’s financial performance in the first half of the year impressively proves the robustness of our company. We have successfully contained the impacts of the semiconductor bottlenecks to date, although we anticipate somewhat more pronounced effects in the third quarter,” said Arno Antlitz, CFO of VW.

iRobot, a supplier of robot vacuum cleaners and other products, has posted its results. The company’s sales were impacted by chip shortages. “Overall, retailer demand trends and consumer interest in our products remain favorable,” said Colin Angle, chairman and chief executive of iRobot. “However, the semiconductor chip shortage, which continues to disrupt a wide range of industries, is constraining our ability to fulfill anticipated second-half orders.”

Market research
There is another shakeup in the smartphone market. Recently, Huawei and LG fell by the wayside in the smartphone market. In the second quarter of 2021, Samsung is still the leader in the smartphone market in terms of share. But Xiaomi moved into the second position for the first time, moving Apple to third, according to IDC. Meanwhile, the rebound from 2020 continued for smartphones in the second quarter of 2021 as overall shipment volumes grew 13.2% year-over-year, slightly beating IDC’s forecast of 12.5% growth.

According to IDC, 79.0 million smartphones were shipped in China in the second quarter, down 10.0%. “The decline was the result of the weaker-than-expected demand and a lack of flagship products that could trigger consumer interest,” according to the firm.

North America-based semiconductor equipment manufacturers posted $3.67 billion in billings worldwide in June, according to SEMI. The billings figure is 2.3% higher than final May 2021 billings of $3.59 billion and 58.4% higher than June 2020 billings of $2.32 billion. “The semiconductor equipment market demonstrated extraordinary growth in the first half of 2021,” said Ajit Manocha, SEMI president and CEO. “We are witnessing a structural shift in the industry marked by higher capital investments as demand for the semiconductors needed to power technologies unleashed by innovation and the digitization of economies continues to grow.”

Worldwide silicon wafer area shipments increased 6% to 3,534 million square inches in the second quarter of 2021, surpassing the historical high set in the first quarter, according to the SEMI Silicon Manufacturers Group (SMG). “Demand for silicon continues to see strong growth driven by multiple end-applications,” said Neil Weaver, chairman of SEMI SMG and vice president of product development and applications engineering at Shin Etsu Handotai America. “The supply of silicon for both 300mm and 200mm applications is tightening as demand continues to outstrip supply.”

With the resurgence of COVID-19 cases in Southeast Asia, SEMI has announced that Semicon Southeast Asia will be held as a virtual platform to ensure the safety of exhibitors, partners and guests. Registration is open.



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