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Week In Review: Manufacturing, Test

Trade wars; EUV breakthroughs; dwindling iPhone share.

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Trade wars
Talks between the United States and China continue to stall and the two nations are still embroiled in a trade war. So this week, U.S. President Donald Trump would like to impose a 10% tariff on the remaining $300 billion list of China-based imports starting Sept. 1, according to a report from Reuters.

This in turn will impact the electronics and IC industries. In response to the move, Gary Shapiro, president and chief executive of the U.S. Consumer Technology Association (CTA), said: “Retaliatory tariffs, whether 10% or 25%, are bad policy. The Trump administration is again taxing the American people in the form of new tariffs on their favorite technology products. Tariffs are taxes paid for by U.S. consumers, not China’s government. These retaliatory tariffs are not an effective trade policy and may violate U.S. law.

“Over 300 companies and business associations came to Washington this summer to plead with the administration to stop tariffs. And over 600 businesses of all sizes across the country sent a letter to President Trump opposing tariffs. President Trump should stop ignoring America’s job creators and workers and remove tariffs to prevent higher costs to American families and businesses,” he said. “The U.S. technology industry paid $1.3 billion in Section 301 tariffs imported on Chinese products in May, according to the latest available data, an amount that will likely rise in the coming months as a result of the last tariff hike to 25% on List 3 products.”

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As reported, Japan plans to tighten restrictions on various electronic materials to South Korea amid political issues. The materials involve resists, fluorinated polyimide, and high-purity hydrogen fluoride. Here is more information on the subject.

Both Samsung and SK Hynix appear to be in trouble. “South Korean chipmakers are hitting a dead end in their quest to find alternatives for key Japanese materials that have been slapped with export restrictions, raising the prospect of major disruption to their operations in the coming months,” according to a report from Reuters.

In response, SEMI has urged restraint by Japan and Korea. “We informed both governments of potential impacts of an escalation to SEMI members, their economies and the global supply chain and are encouraging them to resolve their differences. SEMI’s focus is to ensure the global microelectronics supply chain remains strong and intact,” said SEMI President and Chief Executive Ajit Manocha, in a blog.

Fab tools
The 2019 EUVL workshop was held mid-June in Berkeley, Calif. In a blog, Vivek Bakshi of EUV Litho, listed some of the highlights of the event. For example, Lasertec’s actinic mask inspection system apparently works. “In her keynote, Brit Turcot of Intel summarized EUVL status and challenges. The most important item I noted was that the actinic patterned mask inspection system (APMI) from Lasertec is now operational and meeting Intel’s requirements for use in the fab. Intel also showed examples of mask defects observed using this tool,” Bakshi said.

At the EUV event, Veeco also provided some new results. “Sandeep Kohli of Veeco showed data that their current ion-beam deposition (IBD) platforms have been qualified for the 5nm node. They will have a new IBD platform for the 3nm node and beyond. They also have solutions for deposition and etch of materials for high-k mask absorber layers and phase shift masks,” Bakshi said.

In addition, Applied Materials, which is developing EUV mask blanks, had some good results at the event. “Vibhu Jindal of Applied Materials said several materials exist that can give <2% reflectivity for <45nm thickness to meet the requirements for high-k absorber materials for masks,” he said.

As reported, ASML will license its EUV pellicle assembly technology to Mitsui Chemicals. Mitsui will assemble and sell pellicles in high-volume to lithography customers. In parallel, ASML will continue to develop next-generation pellicle membranes with its partners. Elaborating on the deal, a spokeswoman from ASML said: “Mitsui will take full production responsibility after a transition phase. Teledyne will continue to supply membranes, which is not affected by the Mitsui detail. ASML will continue to develop pellicle technology in-house.”

CyberOptics has announced that its inspection system is being used for Rohinni’s micro LED-based technology. CyberOptics’ SQ3000 multi-function system is used for six critical in-line production process locations, including incoming quality inspection of the flexible circuits, solder paste inspection, pre- and post-reflow AOI, coordinate measurements post-placement of the LED die and final test.

For the June quarter, Lam Research reported revenue of $2.361 billion and net income of $542 million, or $3.51 per diluted share on a U.S. GAAP basis. This compares to revenue of $2.439 billion and net income of $547 million, or $3.47 per diluted share, for the quarter ended March 31. “LRCX posted good F4Q results but issued soft F1Q guidance as near-term demand from memory customers remained weak. Still, recent NAND trends are positive, and our conviction in a 2020 demand recovery has increased,” said Weston Twigg, an analyst at KeyBanc, in a research note. “Given strong recent NAND trends, including NAND monthly contract pricing increasing for the first time since 2017, comments from both Samsung and WDC (Western Digital) that NAND inventory should clear soon, and indications of improving demand from hyperscale, mobile, and client SSD customers, we expect NAND pricing to improve and capex to begin to recover in 2020, a significant positive for LRCX, which is highly leveraged to 3D NAND.”

PDF Solutions reported revenues of $20.6 million for the second fiscal quarter of 2019, compared to $20.5 million for the first fiscal quarter of 2019 and $21.1 million for the second fiscal quarter of 2018. PDF also announced that Shuo Zhang has joined the board.

Silvaco has appointed Babak Taheri as chief executive. He will also join Silvaco’s board. Taheri has served as Silvaco’s chief technical officer and executive vice president of products. He succeeds David Dutton who has been CEO since 2015. Dutton remains at Silvaco in the position of vice chairman.

Packaging and test
For the second quarter, ASE Technology Holding’s sales were up 2% on a quarterly basis and 7% year-over-year. ASE reported a net income of NT$2,690 million, down from a net income of NT$11,463 million in 2Q18 and up from a net income attributable to shareholders of the parent of NT$2,043 million in 1Q19. Here’s what ASE said during its conference call.  

Jiangsu Changjiang Electronics Technology (JCET) has moved into production in its new 12-inch wafer bumping line. The line is located in a Class 100 and Class 1000 cleanroom space in its assembly and test facility in Incheon, South Korea. Production volumes are already being shipped to customers.

National Instruments has announced Q2 2019 revenue of $334 million, down 2% year over year and up 7% sequentially from Q1 2019. National Instruments has also announced the appointment of Ritu Favre as senior vice president and general manager of the semiconductor business. Most recently, Favre was chief executive of NEXT Biometrics and served on the Cohu’s board. “I believe NI is well positioned to capture the tremendous opportunity that is occurring with the commercialization of 5G and today’s software-centric smart devices,” Favre said.

Market research
Western Digital posted mixed results, but that wasn’t the big story. “WDC called the bottom in NAND and noted it is seeing a more stable pricing environment. It expects to largely mitigate any revenue impact to Sep/Dec quarters from its power outage with its own excess inventory. WDC expects overall industry NAND inventory to be at normal levels by the end of the year, somewhat mirroring Samsung’s expectation that its NAND inventory will be at normal levels by the end of September,” KeyBanc’s Twigg said.

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According to Strategy Analytics, global smartphone shipments fell 3% annually to reach 341 million units in the second quarter of 2019. Samsung maintained first position with 22% global smartphone share, Huawei surprised with 17%, while Apple held 11% market share in third place, according to the firm.

Neil Mawston, executive director at Strategy Analytics, said: “Samsung shipped 76.3 million smartphones worldwide in Q2 2019, jumping 7% annually from 71.5 million units in Q2 2018. Samsung has lifted its global smartphone market share from 20% to 22% in the past year. Strong sales in midrange and entry segments increased Samsung’s shipments, but its profit margin declined due to fierce price competition. Huawei surprised everyone and grew its global smartphone shipments by 8% annually from 54.2 million during Q2 2018 to 58.7 million in Q2 2019. Huawei captured a healthy 17% global smartphone market share in Q2 2019, up from 15% a year ago. Huawei surged at home in China during the quarter.”

Woody Oh, a director at Strategy Analytics, added, “Apple iPhone shipped 38.0 million units to capture 11% global smartphone market share in Q2 2019, dipping from 12% market share a year ago. Apple iPhone shipments fell 8% annually, making it the worst performer among the world’s big-five smartphone players. Apple is stabilizing in China due to price adjustments and buoyant trade-ins, but other major markets such as India and Europe remain challenging for the expensive iPhone.”

Events:
Find upcoming semiconductor industry events here, including the upcoming Flash Memory Summit and the Hot Chips Conference.



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