BUSINESS TRENDS

05/01/2007

Chartered reclaims No. 3 foundry spot

Total worldwide foundry sales rose 16.7% in 2006 to $21.5 billion, shrugging off a slowdown in business and an industrywide inventory buildup to represent nearly 24% of total semiconductor sales, according to data from Gartner Dataquest.

Chartered Semiconductor regained the No. 3 spot behind foundry stalwarts TSMC and UMC after losing the spot to SMIC a year ago. No. 6 Dongbu Electronics also achieved >33% growth to move up the ranks in 2006. The only others to outpace the industry average were SMIC (25.1%) and TSMC (18.1%). Those falling under the foundry market’s overall growth curve included UMC (13.1%), Vanguard International (12.8%), X-Fab/1st Silicon (11.4%), and MagnaChip/Hynix (2.0%).

Two firms on the list actually saw revenues decline during 2006: IBM Microelectronics (-15.1%) and HHNEC (-1.6%). Both held onto their respective spots, but just barely-Dongbu had less than half of IBM’s sales in 2005 but has narrowed the gap significantly, and HHNEC is now nearly in a tie with X-Fab for 10th place.

WORLDWIDE HIGHLIGHTS

Citing a sluggish start to 2007 caused by soft end markets and an inventory surplus weighing down chip sales, Gartner Dataquest has revised its full-year outlook for chip sales to 6.4% growth, vs. estimates of 9.2% just two months ago. The firm also has slightly lowered its outlook for 2008, seen as the next cyclical peak, to 8% from a projected 11.6% in previous forecasts.

Global sales of semiconductor manufacturing equipment rose 23% in 2006 to $40.47 billion, according to SEMI-a level second only to the boom year of 2000, thanks to a “robust” memorychip market and continued transition to 300mm wafers.

Actual wafer starts slowed behind rising capacity additions in 4Q06, causing utilization rates to decelerate further below the 90% threshold that has historically signaled new capacity investments, according to data from Semiconductor International Capacity Statistics (SICAS). Total IC capacity was 1.88 million wafer starts/week (WSPW, 200mm equivalent), 4.2% higher than 3Q06 and 15.2% higher than 4Q05. Actual wafer starts inched up just 1.8% Q-Q and 8.5% Y-Y to 1.63 million WSPW.

Private equity firm CCMP Capital has agreed to purchase BOC Edwards from global gases company The Linde Group for just over $900 million, about a year after Linde acquired its parent company, The BOC Group. Linde announced in September that it intended to focus on its global gases operations, and would pursue strategic options for divesting the BOC Edwards unit.

USA

Intel Corp. says it will spend $1.0-$1.5 billion to retool its 300mm Fab 11X facility in Rio Rancho, NM, for production of chips using 45nm process technologies, making it the company’s fourth factory to produce the 45nm chips by 2H08. Fab 11X, which currently encompasses 90nm/300mm production, was Intel’s first high-volume factory to produce 300mm wafers, starting in October 2002.

Staking their claim to the mantle of tops in “electrical DFM,” Blaze DFM and Aprio Technologies have announced a merger essentially of equals, though the combined company will retain the Blaze name and be headquartered at Blaze’s location in Sunnyvale, CA, United States.

Mosaid Technologies Inc. has sold assets and IP related to its high-performance memory tester platform to Teradyne Inc. for about $17 million. Teradyne will take on the company’s systems division new product development team and receive an exclusive license to certain IP associated with Mosaid’s current ATE product lines. Mosaid aims to wind down its remaining automatic test equipment (ATE) business during 2Q07.

SEMATECH is welcoming one old-time member back to its roster, and saying goodbye to another. Micron Technology Inc., one of the establishing members of SEMATECH, will be joining the International SEMATECH Manufacturing Initiative (ISMI) program this time around to participate in projects involving manufacturing efficiency, equipment improvement and productivity, e-manufacturing, metric benchmarking, environmental/safety/health, metrology, and SEMATECH’s 300mm Prime program. Meanwhile, Freescale Semiconductor, which carried over membership from SEMATECH founding member Motorola, says its decision to leave the group was part of internal R&D evaluations that also led to pursuing advanced chipmaking R&D (post-45nm) with IBM’s Common Platform Alliance instead of the Crolles2 Alliance.

AmberWave Systems Corp., a strained silicon IP developer, and Intel Corp. have ended two years of litigation with a multiyear licensing deal. Financial terms of the transaction were not disclosed, but Intel gains a license to all AmberWave patents, including existing patent applications and any patents that are filed over the next 10 years, with no explanation whether that IP includes local strain vs. global strain or includes future chip technology nodes.

ASIAFOCUS

NEC Electronics Corp. has unveiled a wide-ranging restructuring plan to improve profitability over the next few years by consolidating its facilities in Japan from nine to four (involving several 5-in. and 6-in. facilities as well as an 8-in. site); moving a variety of backend manufacturing overseas to other units in Asia; and cutting back capex levels by 30% starting in 2008 once it finishes the bulk of its 300mm manufacturing investments.

Singapore Technologies Semiconductors Pte. Ltd. (STS), a subsidiary of state-owned holding firm Temasek Holdings Ltd., has filed a $1.6 billion cash offer to acquire full ownership in backend services firm STATS ChipPAC. STS already holds a 36.5% share in STATS ChipPAC, and is one of the largest shareholders in Singapore foundry Chartered Semiconductor Manufacturing.

Taiwan foundry United Microelectronics Corp. (UMC) will be the first external foundry chosen by Cypress Semiconductor Corp. to contract to make its flagship SRAM products, with 65nm tapeouts expected later this year. Cypress Semiconductor also will utilize UMC for its S8 0.13µm embedded flash technology as well as two future generations of embedded flash technology to produce devices including PSoC programmable mixed-signal arrays and USB devices.

Japanese DRAM firm Elpida Memory Inc. said it has agreed to sell 200mm wafer processing equipment from its Hiroshima facility to China’s Cension Semiconductor Manufacturing Corp. in order to narrow its focus to 300mm chipmaking operations. The toolset will be transferred to Cension in Chengdu, where it will be operated by domestic chipmaker Semiconductor Manufacturing International Corp. (SMIC).

Taiwan Semiconductor Manufacturing Corp. (TSMC) has received Taiwan government approval to upgrade from 0.25µm to 0.18µm process technologies at its 200mm operations in Shanghai, which could triple capacity to 90,000 wafers/month in order to meet strong interest from customers including Broadcom, Spreadtrum, CSR and OmniVision, according to the Taiwan Economic News. The paper speculated that TSMC would likely seek to acquire up to $800-$1000 million worth of used equipment-possibly from NXP Semiconductor, citing unnamed chip-equipment suppliers and analyzing the field of European chipmakers currently running 200mm operations.

The Dongbu group plans to merge its foundry business, Dongbu Electronics, with Dongbu Hannong Chemicals to create a “biosemiconductor enterprise” to provide foundry services along with advanced materials targeting bioengineering, nanotechnology, and semiconductor processing. The merger is expected to achieve unspecified “technological synergies and operational efficiencies.”

Taiwan supplier Hiwin Technologies Corp. and WIN Semiconductors Corp. have developed the island’s first wafer take-off robots that are already rolling off the company’s production lines, and plan to develop automated production equipment for them, reports the Taiwan Economic News. Wafer take-off robots are typically imported and cost ~US$200,000 each, but the domestically produced Hiwin products cost a fourth of that, according to the paper.

Intel reportedly has committed to add another 50 employees to the R&D side of its business in Jerusalem, but still plans to close its Fab 8 production facility there, according to the Jerusalem Post. The site was the company’s first production facility built outside of the US roughly 22 years ago, but its legacy products had become obsolete and phased out of the company’s strategic plans, along with a global edict to deemphasize 150mm technology activities.

EUROFOCUS

NanoIdent Technologies AG says it has opened the world’s first manufacturing facility for printing semiconductor-based optoelectronic sensors in Linz, Austria. The NanoIdent Organic Fab (OFAB) GmbH is capable of producing printed electronic devices quickly and at a fraction of the cost of a traditional silicon-based semiconductor fab, the company claims.

Elpida has entered into a multiyear partnership with European nanoelectronics research center IMEC to perform R&D for sub-50nm DRAM process generations, giving IMEC four of the top five DRAM suppliers along with other logic IDMs and foundries.

Independent nanotechnology research center IMEC has signed a new frame agreement with the Government of Flanders for the period 2007-2011. As part of the agreement, IMEC’s annual research grant will increase 11% to €38.909 million. The grant will increase by another €4.375 million on January 1, 2008, resulting in a total increase of 20% compared to 2006.

Photonics developer Avanex Corp. says it has agreed to sell a 90% interest in its French subsidiary, including indium phosphide and gallium arsenide fabs, to limited liability firm Global Research Co. and current management. The business, Avanex France SA, includes the III-V fabs as well as laser, terrestrial pump, submarine pump and fiber bragg grating (FBG) product lines. Avanex will keep a core development group of about 20 people focusing on transmission products. To help fund the divestiture, Avanex has agreed to a $20 million private placement.