Week In Review: Manufacturing, Test

Fab tool shipping costs
The coronavirus is impacting semiconductor equipment companies. Many have withdrawn their previous forecasts. “It has also led to a rise in shipping costs,” said Krish Sankar, an analyst with Cowen, in a research note.

Most semiconductor equipment and components are shipped via air, according to Sankar. The exception is flat-panel display equipment and other systems, which are typically shipped via sea.

“Currently, air cargo rates are tracking around $10/kg compared to around $3/kg over a month ago,” Sankar said. “Typically, shipping and handling costs are less than 5% of COGS for semicap companies. If we assume typical shipping costs for semicaps were around 3% of COGS, with the current price increase it could add over 600bps to COGS. But the reality is that while the rise in shipping costs does crimp gross profit $, the top-line plays a much bigger role in determining gross margins. Net-net, the rise in cargo rates is probably a manageable risk for semi equipment companies.”

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ASML has lowered its forecast for the first quarter of 2020. “Until now the COVID-19 outbreak has had limited impact on ASML’s manufacturing capability. Also, from a customer point of view, we have not seen a reduction in the demand for our systems this year,” ASML President and CEO Peter Wennink said. “However, three COVID-19 related effects have impacted our Q1 financial results.” Click here for more information.

ValueAct Capital, a U.S.-based hedge fund, has become a shareholder in JSR, according to Reuters. The group has taken a 7% stake in JSR.

SUSS MicroTec has closed the acquisition of PiXDRO, the inkjet printing division of Meyer Burger.

Chipmakers
Cree has expanded its product portfolio with the release of some new 650V silicon carbide (SiC) MOSFETs.

The new 15 mΩ and 60 mΩ 650V devices are based on Cree’s third-generation C3M MOSFET technology. They deliver up to 20% lower switching losses than competing SiC MOSFETs and provide the lowest on-state resistances.

“The 650V MOSFETs deliver power efficiencies that help today’s biggest technology leaders create the next generation of onboard EV charging, data centers, and energy storage solutions to reshape our cloud and renewable energy infrastructures,” said Cengiz Balkas, senior vice president and general manager of Wolfspeed, part of Cree.

Separately, Cree has provided a business update in light of the COVID-19 outbreak for the third quarter. “The health and well-being of our employees, customers and partners remains our top priority during this unprecedented time,” Cree CEO Gregg Lowe said. “We are closely monitoring the rapidly evolving COVID-19 situation, as well as guidelines from federal, state and local officials. Our manufacturing facilities in the U.S. are operating as essential businesses in states that have issued ‘shelter-in-place’ orders and we have instituted strict measures that balance employee safety with meeting the needs of our customers.”

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MagnaChip has entered into a definitive agreement to sell its foundry business to a company in South Korea established by Alchemist Capital Partners Korea, Credian Partners and others. SK Hynix is part of the group.

Market research
Amid the coronavirus outbreak, there are mixed signals in the semiconductor market. “Overall broad-based demand trends were negatively impacted in 1Q, but China demand has now recovered to 60-80% of capacity; while 2Q backlog remains stable, there are widespread concerns weakening demand in ROW excluding China. (This) is expected to result in pushouts/cancellations,” according to KeyBanc analysts Weston Twigg and John Vinh.

“Server and PC demand has ramped sharply to support work/school from home and online applications, with supply chain disruptions limiting shipments. Memory demand and pricing trends are strong, led by high demand from server and PC customers, partly offset by weakness in consumer, smartphone, and auto,” they said. “Semiconductor equipment demand remains high, with no meaningful reductions in fab capacity plans yet, though supply chain disruption is impacting shipments in 1H. 5G infrastructure demand in China is recovering with expectations of 550K BTS in 2020; however, 5G handset expectations are tempering at Apple, Huawei, and Samsung.”

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