World News

03/01/2010

BUSINESS TRENDS

Inventory management: Key to 2009 re-emergence, 2010 surge

Despite reported warnings of inventory bloat at electronic distributors, nearly all segments of the chip supply chain remain lean, with inventory levels at distributors "well below the historical average," according to a report from iSuppli.

Distributors' days-of-inventory (DOI) at the end of 3Q09 was actually down 15% from the same time a year ago; in dollar terms that equaled $4.8B worth of chips, which was down 22% from 3Q08. That distributor DOI was 17% less than the trailing three-year average, according to iSuppli analyst Carlo Ciriello. With final numbers not yet available at press time, DOI was expected to have continued to decline in 4Q09 (to 18.7% below the three-year average), vs. a slight incline in inventory dollars. The decline in stockpiles parallels that among chipmakers, which saw DOI shrink to 66.4 in 3Q09, down 11% from the same period a year ago.

Quarterly days-of-inventory among distributors and semiconductor suppliers. (Source: iSuppli)

"Semiconductor suppliers have been maintaining tight control over inventories," preferring just-in-time fulfillment instead of "capital-constraining shelf stocking," according to Ciriello. The result: "lower inventories throughout the electronics supply chain, including at distributors." Makers of PCs, storage devices including hard-disk drives, and cell phones also saw semiconductor DOI in 4Q09 lower than historical levels. Any increase in demand for those end products likely will translate directly into new chip sales.

The recovery of the chip industry in 2H09 can be directly attributed to just this "deft management of semiconductor inventories," Ciriello notes. And as demand recovers, these lean inventory levels will continue to drive the market's return to growth in 2010: 15.4% growth in revenues, vs. a -12.4% decline in 2009, the firm predicts.

WORLDWIDE HIGHLIGHTS

Healthy end-market demand in consumer electronics, and now signs of recovery in the corporate IT sector as well, bode well for chip sales, according to the Semiconductor Industry Association (SIA).

Comments from TSMC and Samsung, as well as many equipment suppliers, suggest that a capital spending peak in 1H10 is unlikely, and capex could instead become heavier in 2H10 and spill into 2011.

TowerJazz and the Soitec Group will develop high-end backside illuminated CMOS image sensors for industrial, medical, and automotive applications.

Süss MicroTec has sold its semiconductor test systems business to Cascade Microtech for €4.5M. The two firms also will pursue collaborative work on "emerging semiconductor technologies" including 3D through-silicon vias (TSV) and test.

The Printable Electronics Technology Center (PETEC) has joined the Flexible Display Center at Arizona State U., to collaborate on process requirements for OTFT backplane fabrication.

Origin Energy Ltd. and Micron Technology have formed a 50/50 joint venture targeting photovoltaic technology.

MEMC and Conergy have amended their supply agreement to "significantly" reduce the amount of wafers to be purchased, and modify pricing terms. MEMC also gets an undisclosed payment.

USA

Freescale and EPIC Technologies have ceased litigation over semiconductor packaging technology, instead licensing each other's patents and offer combined patent licensing approach to packaging subcons.

By this fall, Intel plans to install 2.5MW of solar generating capacity at eight locations in AZ, CA, NM, and OR.

Applied Materials has joined ISMI's ESH Technology Center to help work on projects targeting sustainable manufacturing, industry environmental standards, and green practices in chip-making.

CyberOptics says it has received a $550K order from an OEM to use its CWA30 solar wafer alignment camera for a solar metallization platform.

ASIAFOCUS

A second window of opportunity to sell a controlling stake in Hynix Semiconductor has come and gone with no bidders; investors are looking at other ways to slough off their interest, according to multiple reports.

Applied Materials and Advanced Micro-Fabrication Equipment Inc. (AMEC) have resolved litigation thusly: joint ownership of certain patent families, an undisclosed payment to Applied, and commitment for future collaborations.

Unisem Advanced Technologies (UAT) says it has developed a methodology for creating a stress buffer, with a polymer layer and metal stack, to protect delicate features from external stress.

Samsung has agreed to pay $900M over five years to Rambus to end as many years of litigation; the two also plan to jointly develop chip technology and review possibilities in servers and NAND flash chips.

TSMC has "topped off" its Fab 12/Phase 5 and plans to "rapidly move in equipment" eyeing 28nm volume production in 3Q10 (the site also will serve as the foundry's 22nm R&D base). Groundbreaking for Fab 14/
Phase 4 was to begin after the Chinese New Year (early February) with equipment move-in by year's end.

AU Optronics has increased its cash investment in Japanese mono/polysilicon wafer manufacturer M.Setek to ¥15B ($166M).

Update on the NEC-Renesas merger: executives are now in place, domestic sales will be consolidated into Renesas, and foreign sales and manufacturing names have been changed.

Samsung says it has completed customer evals of its 3Xnm-class "green" 2Gb DDR3 DRAM, which it says reduces power consumption by up to 30% vs. 5Xnm DRAM and doubles production cost-efficiencies vs. 5X-6Xnm technology.

Qualcomm plans to invest $4M in a Korean venture company to benefit Pulsus Technologies, a fabless developer of chips for audio applications, and perhaps two or three other domestic firms. The firm also will build a R&D center in Korea.

EUROFOCUS

A new European Union project, EuroPIC, aims to facilitate access by small companies to cost-effective photonic integrated circuit (PIC) manufacturing in Europe, encouraging research on manufacturing methods to develop foundry production capabilities.

Weeks after agreeing to sell its ASIC fab in Rousset, France to LFoundry, Atmel is now seeking to sell its "smart card" IC businesses in Rousset and East Kilbride, UK.

Global research center Leti will use R3Logic's EDA tools to build 3D IC designs and methodologies targeting chip-package codesign, for consumer and wireless applications.

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