October 5, 2010 – The Israeli government is giving Intel hundreds of millions of dollars to infuse its 300mm/45nm semiconductor fab in Kiryat Gat — but it’s a lot less than Intel had been hoping for.

The Ministers of Finance and of Industry, Trade, and Labor reportedly have approved an eight-year, up to 678M shekel ($187M) grant to help upgrade Intel’s Fab 28, which opened in the southern city of Kiryat Gat two years ago, from 45nm to 22nm process technologies (plus another 63M shekels/$17M for R&D expansion or local research). The deal also stipulates that Intel must increase its Kiryat Gat workforce by about 22% (570 workers) to 3100 total, and add another 50 workers to its development center in Jerusalem. (The company currently employs about 6300 workers in Israel across two plants and four R&D centers.) The deal still needs signoff from Israel’s Knesset Finance Committee.

The ministries statement called the move "a significant step in the state supporting industry," and representing the government’s view of "great importance in the cooperation between Intel and Israel."

It’s something less of a step, though, than Intel had wanted — the company originally lobbied for a $400M grant to bolster its planned $2.7B upgrade of Kiryat Gat, with 400 new hires. (Note the Ministry’s Investment Center has a 500M shekel/$151M annual budget.) Nevertheless, Intel reportedly has pledged to "make every effort to see that Intel’s next investment in upgrading technology will be implemented in Israel." That statement begs a question: what are Intel’s near-term plans for other possible 22nm fab investments? One hopeful candidate is its facilities in Hillsboro, Oregon; Intel’s site in Leixlip, Ireland, has also been in the running for a 22nm upgrade. Some clarity is expected later this month with Intel’s quarterly results announcement.

by James Montgomery, news editor

October 4, 2010 – Overall semiconductor sales are still in positive growth territory but the numbers slowed a bit in August for all but one region, according to the latest data from the Semiconductor Industry Association.

Inside the numbers:

• Global semiconductor sales rose 1.8% to $25.7B, an improvement from July’s 1.2% increase and a sixth straight month of growth. Y/Y numbers continue to come down as the 12-month trailing period pulls further from the early 2009 trough.

  In a statement, SIA president Brian Toohey cited PC and wireless-related products and infrastructure expansion in emerging markets, particularly in China and India. Asia-Pacific overall was up 1.4% vs. 0% in July, and Japan 4.1% vs. 3.1%. "Concerns about economic conditions in the US and Europe, coupled with seasonal patterns, bear close monitoring," he added. The US and Europe showed declines, from 3.6% to 2% and 0.8% to 0.1%, respectively.

  

• Top industry sector performances, as reported by Credit Suisse’s John Pitzer: DRAM memory (100% Y/Y) and discretes (39%), with most others in the 20%-30% range, trailed by DSPs (16%) and microprocessors (18%). Hottest application areas are industrials (50%) and automotives; less sparkly are comm/wireless (7%) and consumer (16%). He credits higher seasonal ASPs (excluding memory) as helping drive growth, offsetting some below-seasonal unit shipments. "Ex-memory, IC unit shipments remain 2.8% below long-term trends," he notes.

• The moving three-month average shows a slight slowdown in the past few months. Chip sales were up 3.6% in the August-ended period, vs. 6.0% in the July-ending period. All regions still showed some slowing of growth, but are still in the black or on the line. The three-month moving average shows the Americas went from ~15% growth down to 10%, Asia-Pacific from 4.3% to 1.0%. Japan actually gained ground in August, improving from 5% to 8%+.

• For the year through August, chip sales tallied $194.6B, up 44.4% from the same period in 2009. The SIA "remains confident" in its 28.4% growth forecast for 2010 (to $290.5B), which it plans to update on Nov.4. Given August’s numbers, the chip industry would need to add $95.6B over the next four months, averaging just shy of $24B…meaning flattish growth through year’s end. (Or slight growth and seasonal slowness in the final holiday-saturated months).

  Pitzer, though, suggests if the rest of the year follows historical trends, then revenues would pull in at about 26.6% growth, below current estimates from both the SIA (28.4%) and Wall Street analysts (28.7%). Those historical seasonality trends would peg September IC (ex-memory) sales at ~24% and 3Q sales at ~10%. "While bears continue to be concerned that semis have outgrown end demand on a q/q basis over the past several quarters, we would highlight that IC unit shipments (ex-memory) remain 2.8% below long-term shipment trends and historically we have not seen SOX correction until IC unit shipments exceed trend," he writes in a research note.

August 30, 2010 – Another month, another record — and more signs that the chip industry might be softening a bit.

Summary of the July data is as follows:

• Growth picked up slightly in all regions vs. June, notably in Japan (3.1% vs. 1.1%) and Europe (0.8% vs. -1.2%). Asia-Pacific was flat, vs. -0.5% in the prior month.

• Year/year comparisons continue to narrow, as trailing figures pull further away from the bottom of the downturn in 2009. They’re still well into double-digits, though, led by the Americas (>50%).

• The three-month moving average lost a little more steam, 6.0% growth in the rolling three months May-July, solely because of softness in the Asia Pacific region (4.3% growth, down from 6.6% in the previous three-month period). That’s down from ~12% growth in the 3-mo. period ended in May.

• For the year through July, global semiconductor sales tallied $169.2B, an increase of 46.7% from the first seven months of 2009 ($115.3B).

Newly appointed SIA president Brian Toohey acknowledged indications of slower growth as the economy sputters, but pointed out in a statement that within such periods of slow economic growth can be found opportunities to proliferate semiconductors into a broad range of products.

And despite the vocal concerns about near-term softness (e.g. PC demand out of Asian subcons), Toohey said the SIA is sticking by its 2010 forecast of 28.4% growth, to roughly $290B. With ~$145B of that already in the bank through June, that would suggest the industry will slow to roughly flat growth through 2H10. (Or, perhaps single-digit growth continues in 3Q closing the holiday build season, followed by a decline in 4Q.)

(August 30, 2010 – BUSINESS WIRE) — Infineon Technologies AG and Intel Corporation have entered into a definitive agreement to transfer Infineon’s Wireless Solutions (WLS) business to Intel in a cash transaction valued at approximately $1.4 billion.

WLS, cellular platforms provider to global phone makers, will operate as a standalone business serving its existing customers. WLS will also contribute to Intel’s strategy to make connected computing ubiquitous from smartphones to laptops to embedded computing. 

“The global demand for wireless solutions continues to grow at an extraordinary rate,” said Paul Otellini, Intel president and CEO. “The acquisition of Infineon’s WLS business strengthens the second pillar of our computing strategy — Internet connectivity — and enables us to offer a portfolio of products that covers the full range of wireless options from Wi-Fi and 3G to WiMAX and LTE.” How will this purchase affect recent research that finds Samsung ready to unseat Intel in chip sales in four years?

“The sale of WLS is a strategic decision to enhance Infineon’s value. We can now fully concentrate our resources towards strong growth in our core segments Automotive (ATV), Industrial & Multimarket (IMM) and Chip Card & Security (CCS),” said Peter Bauer, CEO of Infineon Technologies AG. 

The WLS transaction is a strategic decision for Intel and Infineon. WLS complements Intel’s existing assets and enables growth in mobile computing, smartphones and embedded computing. Infineon will benefit from this by stronger addressing three central challenges to modern society – energy efficiency, mobility and security.

Intel’s goal is to expand its mobile and embedded product offerings to support additional customers and market segments, including smartphones, tablets, netbooks, notebooks and embedded computing devices. Through this effort, Intel will pair WLS’ best-in-class cellular technology with its core strengths to enable the delivery of low-power, Intel-based platforms that combine its applications processor with an expanded portfolio of wireless options — bringing together Intel’s leadership in Wi-Fi and WiMAX with WLS’ leadership in 2G and 3G, and a combined path to accelerate 4G LTE.

WLS today holds leading positions in the field of wireless mobility and cellular platforms for smart phones and ultra-low-cost, entry phones. WLS provides baseband processors, RF transceivers, power management integrated circuits (ICs), additional connectivity features, single-chip solutions as well as the corresponding system software. This helps to enable the smooth transmission of voice and high-speed data from the backbone of the telecommunication network to the end user’s device. With annual revenue of Euro 917 million, WLS was approximately 30% of Infineon’s total annual revenue of Euro 3.03 billion in the past financial year.

The board of directors of Intel and the supervisory board and the management board of Infineon have approved the transaction. It is expected to close in the first quarter of 2011, subject to certain regulatory approvals and other customary closing conditions specified in the definitive agreement.

Infineon Technologies AG offers semiconductor and system solutions addressing three central challenges to modern society: energy efficiency, mobility, and security. Frankfurt Stock Exchange (ticker symbol: IFX) and USA over-the-counter market OTCQX International Premier (ticker symbol: IFNNY). More information is available at www.infineon.com

Intel (NASDAQ: INTC) develops technologies, products and initiatives to continually advance how people work and live. Additional information about Intel is available at www.intel.com/pressroom and http://blogs.intel.com

(July 1, 2010) — Munich, Germany-based Wacker Chemie AG has successfully concluded its acquisition of the silicon-metal production site in Holla, Norway, from FESIL Group (Norway). The transaction announced early last month has now been cleared by the relevant antitrust authorities and approved by WACKER’s and FESIL’s supervisory bodies.

Under the terms of the transaction, WACKER takes over for a purchase price of around €65 million all of FESIL’s production facilities in Holla, Norway, including the related real estate. The strategic acquisition is a key step in securing WACKER’s long-term supply of silicon metal.

Acquiring Holla makes the Munich-based chemical company more independent of raw-material price fluctuations and increases its supply security during peak-demand periods.

Silicon metal is one of WACKER’s most important raw materials and is needed for the production of silicones and hyperpure polysilicon. Holla Metall’s production capacity is around 50,000 metric tons of silicon metal per year, which corresponds to about one third of WACKER’s current annual needs.

WACKER is a globally active chemical company with some 15,600 employees and annual sales of around €3.7 billion (2009). WACKER has 26 production sites and over 100 sales offices worldwide. For more information, visit www.wacker.com

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June 29, 2010 – After creeping up in 1Q10, semiconductor inventories should pick up the pace a little bit in 2Q10 — but the numbers are "misleadingly elevated" and in reality stockpiles are quite lean, according to an iSuppli analyst.

Global semiconductor inventory rose just 1.0% in 1Q10 to $25.73B, and are expected to rise a little faster in 2Q10 (3.3% to $26.60B). Days-of-inventory (DOI) rose about 3% to 69 days, but behind that figure is not so much restocking as soaring gross margins, notes Carlo Ciriello, summarizing a new research report. Adjusting revenue & inventories for cost-of-goods-sold via long-term margins, DOI measures closer to 20% lower than seasonal average, he notes — actual inventories aren’t 20% lean, but the calculation illustrates that the widely reported DOI levels are "misleadingly elevated" and that suppliers "are shorter on supply than is widely perceived."

Ciriello points out that as the industry has recovered, inventory dollars have consistently declined (since 3Q09) — and without a sizeable replenishment in 1Q10, device manufacturers are forced to continue operating "hand-to-mouth" with just-in-time fulfillment.

With inventories low and capacity straining to meet downstream demand, lead-times are going up all through the supply chain, and some shortages are occurring for some commodity components. "Double-ordering appears common, "especially among upstream suppliers," he notes, and many companies are reporting book-to-bill (B:B) ratios "dangerously in excess of 1:1" which suggests inflated demand. Whether those double-orders actually make it through the chain to production or even inventory remains to be seen, but Ciriello says the industry’s continued bullish tone suggests suppliers aren’t too worried, and are confident they will keep inventories under control to not "buy themselves into an oversupply situation."

June 15, 2010 – What a difference six months makes — especially if you’re in the business of semiconductor industry prognostication.

With the industry roaring back to life in the past few months, the WSTS and SIA are rewriting their semiannual forecasts since their last updates in November, with a lot of upside in 2010. The WSTS now offers "a materially more optimistic outlook" for 2010, nearly tripling its prior estimates to almost 29%, topping $290B, thanks to "revived enterprise and consumer spending." That ~30% is right where other analysts have been resizing their estimates for 2010. After 2010’s surge, the industry should slide back to around mid single-digits in 2011-2012, settling into a 12.3% growth rate for the three-year period and topping $320B.

Every product category and geography saw its growth outlook double, or nearly so (or even more — e.g., memory and discretes), what was expected just six months ago. Even the final 2009 numbers, which had just a month or so to go in the WSTS’ year-end 2009 forecast, had to be bumped up a little bit (about 2.8% higher overall, and nearly 5% for memory).

Similarly, the SIA, which bases its forecasts on the WSTS numbers, has hiked its global chip sales outlook to 28.4%/290.5B in 2010, followed by 6.5%/$308.7B in 2011, and 2.9%/$317.8B in 2012. The first half of 2010 has welcomed "healthy demand in all major product sectors and in all geographic markets," inventories still in balance and no excess buildup at the moment, noted SIA president George Scalise, in a statement. Emerging economies such as China and India are fueling demand for IT products, and projected 4.6% and 4.4% worldwide economic growth rates in 2010 and 2011, respectively, he added.

June 1, 2010 – Confident in its place at the IC foundry table yet hungry for more, Globalfoundries says it will invest another $3B in new capacity expansions in the US and Europe.

In a nutshell the investments are two-pronged:

• In Europe: Build another wafer facility at Fab 12 in Dresden, targeting 45nm down to 28nm manufacturing and 22nm development. Add 110,000 sq. ft of cleanroom space, boosting overall output to 80,000 wafers/month. Groundbreaking will start immediately (subject to approval of a state & European Commission aid package), with first production slated for 2011.

  A Globalfoundries spokesperson pegged the Dresden investment at about $1.4B-$1.5B.

• In the US: Expand its cleanroom shell currently under construction at the Luther Forest site in upstate New York — aka "Fab 8" — for more work at 28nm, 22nm, and 20nm. Add ~90,000 sq. ft of cleanroom space (to a total of 300,000 sq. ft), hiking overall site output to 60,000 wafers/month when fully ramped. Shell expansion would begin later this month (pending similar approval of support from state authorities), expected to come online in 2012 and volume production in 2013.

  A Globalfoundries spokesperson pegged the NY investment at about $75M for the expanded cleanroom shell; if fully build out and tooled, the total investment in expanded Fab 8 capacity would amount to $2B.

Globalfoundries already in the midst of a 50% expansion at its Fab 7 in Singapore (i.e. recent acquiree Chartered Semiconductor) to 50,000 wafers/month output, focusing on 65nm-40nm process technologies.

In addition, Globalfoundries’ majority shareholder, Advanced Technology Investment Company (ATIC), has announced plans to create a tech cluster in Abu Dhabi, a 3km project adjacent to the Abu Dhabi airport. The site is aimed to be "the Middle Eastern hub of a global technology and manufacturing network to support the long-term deployment of capital for ATIC portfolio companies, in capital-intensive advanced technologies," the company said in a statement.

Analyst’s take

Fab capacity investments make for great press and hype, but it’s important to take a longer-term view. Given that groundbreaking is only tentatively slated to begin in the current year (pending aid approval). GF’s capacity expansion won’t really affect equipment/materials suppliers until 2011 (except that given ever-longer lead-times, some may start getting their ducks in a row sooner). Gartner research VP Bob Johnson expects that the investment won’t really impact the chipmaker’s 2010 spending plans — current-year capex is around $2.6B-$2.7B, he says, and that these new capacity increases will be financed by "shuffling things around." (Expanding the US operation now is also a much more economically savvy move than doing it later after the building’s completed, he added.) Look for a higher capex in 2011, he says.

Still, there’s no question that GF is making its mark in the foundry sector. Even if unchanged, the company’s 2010 capex would be four times what it spend in 2009, though still well behind sector leader TSMC. We are here, we are serious and we are a player," CEO Doug Grose told Bloomberg. "This foundry segment only has a couple of players who are serious — and we are one of them."

Lode Lauwers, senior business development director at IMEC, describes the drivers of new collaboration between systems companies and technology companies, and where platforms such as IMEC fit in.