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Week In Review: Manufacturing, Test

More U.S. fabs?; export controls; KLA, Veeco, PDF, FormFactor post Q1 gains.

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Chipmakers
The Trump administration has held talks with Intel and TSMC to build more leading-edge fabs in the U.S., according to the Wall Street Journal and other news outlets.

IC Insights has released its rankings of the top-10 chip vendors in terms of sales for the first quarter. Intel remains in first place, followed by Samsung and TSMC. The big surprise is China-based fabless IC supplier HiSilicon, which “jumped up five spots in the ranking to 10th place, making it the first China-based semiconductor supplier to be ranked in the worldwide top-10 listing,” according to IC Insights. “HiSilicon is the semiconductor design division of China-based telecommunications giant Huawei and over 90% of HiSilicon’s sales go to its parent company.”

UMC has been ranked in the top 5% of companies for the sixth consecutive year in the Corporate Governance Evaluation conducted by the Taiwan Stock Exchange and Taipei Exchange.

SMIC is planning a share sale that could garner billions of dollars for the foundry vendor, according to a report from the South China Morning Post.

Intel has acquired Moovit, a mobility-as-a-service (MaaS) solutions company, for approximately $900 million.

Fab tools
The U.S. recently announced new export control actions to prevent China, Russia, and Venezuela from obtaining U.S. technology for military purposes. This expands the “Military End Use/User Controls (MEU)” license requirement controls on China, Russia, and Venezuela, covering military, semiconductor equipment, sensors and other technologies.

“The current rule only requires licenses for selling to Chinese military entities,” according to Cowen analysts Paul Gallant, Roman Schweizer and Chris Krueger in a research note. “The new rule expands this in three ways: A) A civilian company that does only incidental military work is now likely to be deemed a ‘military end user’ requiring a license to buy US products; B) Adds numerous additional products considered ‘non-sensitive’ today–such as most semiconductor chips, chip equipment, and related production software–that will need a license; and C) Items that merely ‘support’ (e.g. perform installation, maintenance, repair) Chinese military items will now require a license.”

There is another rule–the elimination of the civilian exception. “This exception currently lets a US company avoid licensing for certain dual-use items to civilian end users for civilian end uses. While we are uncertain, our sense is that this is not a particularly widespread exception, and that some companies have obtained licenses for these customers,” according to the analysts.

Joe Pasetti, vice president of global public policy & advocacy at SEMI, said: “Two semiconductor equipment ECCNs (3B991 and 3B992) were added to the new China military end user controls. If U.S. exporters are sending such tools to customers that may be considered China military end users, a license would be required.”

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For its third quarter of fiscal year 2020, which ended on March 31, KLA reported a GAAP net income of $78 million, or $0.50 per share, on revenues of $1.42 billion. “KLA delivered solid results in the March quarter, demonstrating strong demand for KLA’s products and services coupled with exceptional execution across our global operations, while facing the unprecedented challenges associated with COVID-19,” said Rick Wallace, president and chief executive of KLA.

For the first quarter ended March 31, Veeco reported sales of $104.5 million, compared to $99.4 million a year ago. “Our semiconductor technologies enable a variety of important megatrends that are expected to perform well, such as cloud and high-performance computing, AI and 5G RF,” said William J. Miller, chief executive of Veeco. “In the first quarter, sales were strong in our data storage market driven by demand in cloud computing.”

Separately, John Peeler, chairman and former chief executive of Veeco, is retiring from the board. Richard D’Amore, general partner of North Bridge Venture Partners and lead independent director of Veeco, has been appointed to the position of chairman of Veeco. In addition, Mary Jane Raymond, chief financial officer and treasurer of II-VI, has been appointed to the audit committee of Veeco’s board.

For the first quarter of 2020, PDF Solutions has reported sales of $21.2 million, compared to $20.5 million for the first quarter of 2019. Analytics revenues were $13.2 million, up 16% over last year’s comparable quarter

Axcelis has reported first quarter revenue of $119 million, compared to $107.7 million for the fourth quarter of 2019. “While there is limited visibility to near-term macroeconomic conditions, customer demand for our Purion platform remains strong,” said Axcelis President and CEO Mary Puma.

Packaging and test
ASE recently announced the recipients of the 2019 Supplier Awards. ASE has selected a total of 24 companies to receive the “Sustainability Excellence Award” (3), “Sustainability Partnership Award” (6) and “Outstanding Supplier Award” (15).

FormFactor has reported its results for the first quarter of fiscal 2020 ended March 28. Quarterly revenues were $160.8 million, up 21.6% from $132.2 million in the first quarter of fiscal 2019. “Although our visibility is even more limited than usual, demand for FormFactor’s products remains strong,” said Mike Slessor, chief executive of FormFactor.

Market research
Global fab equipment spending for power and compound devices is expected to rebound in the second half of 2020 and jump 59% to a segment record $6.9 billion in 2021, according to SEMI’s Power & Compound Fab Report. The 2020 rally will help blunt a drop in annual spending, now projected at 8%, according to SEMI.

Worldwide silicon wafer area shipments rose 2.7% to 2,920 million square inches in the first quarter of 2020, compared with fourth-quarter 2019 shipments of 2,844 million square inches, but dropped 4.3% year-over-year, according to the SEMI Silicon Manufacturers Group (SMG).

2020 global material revenues in semiconductor manufacturing is forecasted to decline by 3.0% year-over-year despite growth in the first quarter, according to TECHCET. “By 2021 the global economy and all chip fabs should return to healthier growth, with materials markets for all IC devices expected to increase at a CAGR of 3.5% through 2025,” according to the firm.

The emergence of COVID-19 will drive another contraction in the overall semiconductor market. In 2020, IDC expects the overall semiconductor market to decline 4.2%. Excluding the DRAM and flash markets, semiconductors are expected to decline by 7.2%. However, not all sectors will be affected equally.

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