World News
06/01/2006
BUSINESS TRENDS
Gartner hikes equipment spending outlook
After hitting a low point at the end of 2005, capital equipment investments by semiconductor firms are expected to pick up again in 2006 with 14% growth, nearly twice that of earlier predictions, according to new forecasts from Gartner Inc. The brighter outlook is due largely to aggressive spending in the memory segment, especially from second-tier DRAM producers. Since December, nearly two-thirds of the $6.3 billion added to the top 20 semiconductor manufacturers’ capex budgets is attributable to DRAM and NAND flash memory manufacturers, the analyst firm noted.
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The outlook also has brightened for total chipmaker capital spending outlays, not just equipment tooling. Gartner now expects 8.8% total capex growth in 2006 to $51.72 billion, vs. roughly flat projections in December. Total capex in 2007 is seen slowing to 1.2% growth ($52.34 billion), but rebounding strongly in 2008 with a 33.9% increase to $70.01 billion. That will be followed by two years of decline: -7.5% to $64.85 billion in 2009, and -8.2% to $59.53 billion in 2010.
WORLDWIDE HIGHLIGHTS
Optimistic over what it sees are improving conditions in the DRAM segment, iSuppli has slightly raised its outlook for 2006 and 2007 chip sales, although noting that end-use application markets won’t fare as well as they did in 2005. Meanwhile, in the analog IC segment, early returns suggest a “very strong” 2006 after nearly flat growth in 2005, led by cell phone ASSP devices, noted IC Insights, although the segment’s fast pace likely will give way to more typical seasonal growth patterns by midyear.
Strong sales of cell phones, attributed to shorter replacement cycles and robust demand in China, drove a 7.3% increase in overall semiconductor sales in 1Q06 from a year ago, according to the Semiconductor Industry Association. Worldwide chip sales totaled $59.1 billion, vs. $55.1 billion in 1Q05, but down 1.3% from 4Q05, following normal seasonal patterns. Microprocessor sales rose 6.8% year-on-year to $8.83 billion, thanks to a 13% hike in PC unit sales.
A California court has awarded $306.5 million in damages to Rambus Inc., Los Altos, CA, in its litigation against Hynix Semiconductor, regarding patent claims relating to SDRAM, DDR SDRAM, and DDR2 memory technology. Rambus has similar patent cases pending against Micron, Samsung, and Nanya Technology, and has signed licensing deals with AMD, NEC, and Infineon.
USA
LSI Logic has sold its 200mm, 18,000 wafers/month fabrication facility in Gresham, OR, to analog semiconductor maker ON Semiconductor for $105 million in cash, and signed a two-year, $200 million wafer supply and test services pact.
Intel Corp. says it will have production samples ready by 4Q06 for its 1Gbit NOR multilevel cell (MLC) flash memory chips utilizing 65nm process technology already in production with its microprocessors, with an “aggressive ramp” of the technology in 2007.
Applied Materials Inc., Santa Clara, CA, has agreed to acquire Longmont, CO-based Applied Films Corp. for approximately $464 million in stock, giving the semiconductor equipment giant complementary thin-film deposition technologies for its flat-panel display systems, as well as inroads into the fast-growing solar market.
Alliance Semiconductor Corp. is selling its analog and mixed-signal business unit to a group of investors for $9.25 million in cash, in an effort to end “years of losses” from its semiconductor operations. The deal comes just weeks after the company sold its systems solution business unit to Tundra Semiconductor Corp. for $5.8 million in cash. The analog/mixed-signal business was Alliance’s largest unit, making up about 48% of total sales in fiscal 3Q06; the systems and solutions unit accounted for 24% of sales in 3Q06. The company said it is still exploring a possible sale of its remaining memory chip operations, which accounted for about 27% of total revenues.
Cadence Design Systems Inc., San Jose, CA, and networking startup Teranetics Inc., Santa Clara, CA, have implemented Teranetics’ 10Gbit Ethernet (10GBase-T) chips using the X-Architecture design layout, which utilizes diagonal interconnects instead of the traditional right-angle layout. Cadence reportedly claimed that using X-Architecture layouts with 0.13µm process technologies to make 30mm2, 3-million-gate microprocessor cores, increased net die/wafer by 13% on 200mm wafers, and by 12% on 300mm wafers.
ASIAFOCUS
■ China
Hynix Semiconductor Inc. and STMicroelectronics’s JV chipmaking facility in Wuxi, reportedly has begun test operations a year after breaking ground, and will begin mass production of 20,000 200mm wafers/month by this summer.
PSi Technologies Holdings Inc., a provider of assembly and test services, said it will close its facility in Chengdu, as part of a move to consolidate operations. Work performed at the site will be partially shifted to the company’s facility in Laguna, Philippines.
■ Japan
Toshiba Corp. and SanDisk Corp. plan to build another 300mm wafer fab at Toshiba’s operations in Yokkaichi to produce NAND flash memory starting in 4Q07. The new facility will be similar in size to Fab 3, also at Yokkaichi, which opened last summer and is projected to produce nearly 49,000 wafers/month by 2H06.
Despite some losses caused by price wars, Japan’s top seven semiconductor manufacturers are set to spend a record combined ¥1.01 trillion (almost US $9 billion) on facilities and equipment in fiscal 2006, to try and capitalize on the growing popularity of digital consumer electronics, according to the Nihon Keizai Shimbun. Toshiba, Sony, Fujitsu, NEC, Elpida, Renesas, and Matsushita Electric, which account for nearly 90% of total projected capex outlays for Japan’s semiconductor industry, will increase aggregate spending by 7% from last year, following a 10% hike in fiscal 2005 and a big 31% jump in FY04.
Elpida Memory Inc. plans to raise production capacity at its 300mm site in Hiroshima by about 24% from current levels to 67,000 wafers/month by April 2007, according to local media reports. The company aims to more than double overall DRAM capacity in terms of storage amounts, at a cost of about ¥100 billion (about US $871 million). Elpida expects to have 70nm-based DRAM products ready by calendar 4Q06.
Ibiden Co. plans to invest ¥8.5 billion (about US $72 million) to build a new semiconductor packaging facility in Ogaki, Gifu Prefecture, according to the Asia Pulse Businesswire. The site, to be completed by January 2007, will complement other production operations in Gifu Prefecture as well as The Philippines.
■ Malaysia
Wafer fab Silterra Malaysia Sdn. Bhd. has increased production capacity by 20% to 33,500 wafer starts/month, part of an expansion plan to achieve 40,000 wafer starts/month by the end of this year. Some of the capacity is dedicated to 0.13µm copper processes, with the rest for 0.18 and 0.16µm processes.
■ Singapore
Chartered Semiconductor Manufacturing Ltd. is migrating production of CPUs built with silicon-on-insulator (SOI) technology for Microsoft’s Xbox gaming console to 65nm process technologies, and is expanding its license of IBM Corp.’s 90nm-based SOI for use with its own customer base. Production of 65nm-based Xbox MPUs is expected to begin in 1Q07.
Backend services provider United Test and Assembly Center (UTAC) has opened a second production facility in Singapore, consolidating its test and total backend services for mixed-signal and logic products, and announced a five-year, $313 million investment plan to further expand capacity.
■ South Korea
Toppan Photomasks Inc., Round Rock, TX, has begun customer qualifications for 90nm and 65nm prototype development at its expanded site in Ichon. The expansion, announced in June 2005, follows similar upgrades to the company’s Singapore facility, which boosted that site’s capacity by 25%.
■ Taiwan
United Microelectronics Corp. (UMC) has a new partner for leading-edge process development: Sematech’s R&D fab subsidiary Advanced Technology Development Facility. Joint work will focus on three custom technology development projects over the next year, involving mobility enhancement, dual work function metal gates, and multiple gate FET.
Taiwan Semiconductor Manufacturing Co. (TSMC) reportedly will provide 0.13µm manufacturing services to top domestic fabless house MediaTek Inc. for its LCD TV chips, noted the Taiwan Economic News. MediaTek was formerly a design house of UMC, spun off a few years ago. UMC has gradually reduced its stake in the firm from 20% to less than 6%, and recently gave up its seat on the company’s board. The paper noted sources claiming MediaTek has been verifying handset chips using TSMC’s 90nm process technology since early this year, in an effort to spread business between Taiwan’s top two foundries and lower costs and exposure.
ChipMOS Technologies Inc., Oracle Corp., and Taiwan’s Institute for Information Industry are developing an information system for semiconductor supply chains based on radio-frequency identification (RFID) technology. The goals of the project, according to a ChipMOS official, are to decrease machine idle time while changing production lots in order, and provide real time process/progress info during wafer sort manufacturing for customers.
EUROFOCUS
Facing increasing pressure particularly from Asian competition, Altis Semiconductor, the chipmaking JV of Infineon Technologies AG and IBM Corp., said it will reduce output by nearly 30% to about 30,500 wafers/month and lay off about 15% of its workforce. The company also plans to invest €15 million (US $18.1 million) in more advanced process technologies.
The European Union reportedly will lower its countervailing tariff on memory chips from South Korea’s Hynix Semiconductor to 32.9% from 34.8%, following a ruling from the World Trade Organization (WTO) last year that the EU’s tariff did not represent the harm done to European chipmakers.
Advanced Micro Devices Inc. (AMD) said it is has begun revenue shipments of AMD64 processors based on 90nm process technologies from its Fab 36 300mm facility in Dresden. AMD is now producing 65nm development test chips in parallel with the 90nm output in preparation for a volume production ramp in 2H06, and have Fab 36 “substantially” converted to 65nm production by mid-2007.