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April 30, 2012 – BUSINESS WIRE — Worldwide semiconductor revenues increased more than 3.7% year over year (Y/Y) to $301 billion in 2011, according to the International Data Corporation (IDC) Worldwide Semiconductor Applications Forecaster (SAF). IDC estimated 2010 semiconductor revenues at $295 billion, and 2009 at $225 billion.

“There is a trend underway toward more integration,” said Mali Venkatesan, research manager, Semiconductors at IDC, who led the study and compiled the SAF results. Companies are roadmapping increasingly intelligent devices with high-level operating systems, connectivity, and application processing capabilities. Expect mergers and acquisitions in the semiconductor supplier space, as “large companies with strong cash balances vie for competitive positions,” added Venkatesan.

Smartphones, tablets, e-readers, automotive infotainment, notebook PCs, datacenter servers, and wireless and wired communication infrastructure drove robust semiconductor consumption in 2011.

Microprocessors registered strong growth due to high demand and increased average selling prices (ASPs) for Intel chips. NAND revenues also increased. However, DRAM saw revenue decline more than 25% due to supply glut and falling ASPs. Pure-play DRAM vendor Elpida Memory saw revenue declines of 40% in 2011, ultimately leading to its bankruptcy in 2012. Semiconductor revenues for the computing segment declined year over year due to the DRAM price collapse.

Top 10 chip suppliers:

1 Intel

2 Samsung

3 Texas Instruments

4 Toshiba

5 Renesas Electronics

6 Qualcomm

7 Hynix

8 STMicro

9 Micron

10 Broadcom

Together, the top 10 vendors represented 53% of total worldwide semiconductor revenues, up 3% over 2010. The top 25 vendors held 72% of overall semiconductor revenues.

Also see: IC Insights’ top 25 chip companies of 2011 IC Insights measured semiconductor growth in 2011 at 2%.

Intel, with total semiconductor revenues of $51.8 billion in 2011, once again led the market. Intel had strong revenue growth and increased its share of the semiconductor market by 3%. Samsung brought in semiconductor revenues of $29 billion.

IDC’s SAF tracks more than 100 semiconductor companies. More than 40 of these companies experienced Y/Y revenue growth greater than 5%, while about the same number of companies saw their revenue decline by more than 5%.

Many companies grew revenues substantially over the industry average. For example, Apple enjoyed 140% Y/Y semiconductor revenue growth, followed by Qualcomm, ON Semiconductor, Intel, and Renesas Electronics as well as small- to medium-sized companies Spreadtrum Communications, CoreLogic, Microsemi, Sequans, Icera, MegaChips, Nichia Chemical, Osram, RobertBosch, Skyworks, and Cavium. They all benefited from exposure to the wired and wireless communications, consumer, automotive, and industrial market segments. The consumer segment was essentially flat, while wireless communication and automotive registered 10+% Y/Y semiconductor revenue growth.

The Asia/Pacific and Americas regions grew above the industry average, while Japan and Europe showed negative growth.

A number of mergers and acquisitions came to fruition in 2011, most notably Qualcomm and Atheros, Texas Instruments and National Semiconductor, SMSC and Conexant, Broadcom and NetLogic, CSR and Zoran, and Microsemi and Zarlink. This trend is expected to continue in 2012.

The chip industry weathered macroeconomic uncertainties in the US and Europe, the 3/11 earthquake and tsunami in Japan, China’s slow down in H2, and floods in Thailand in 2011. “The current semiconductor cycle, which started mid-2011, will bottom out in the second quarter of 2012 and fab utilization rates will pick up and accelerate in the second half of this year. Overall, IDC expects 2012 semiconductor revenue growth to be in the 6-7% range," said Venkatesan.

IDC’s Worldwide Semiconductor Applications Forecaster database contains revenue data collected from more than 100 semiconductor companies and forecasts the markets to 2016. Revenue for over 12 semiconductor device areas, 4 geographic regions, 6 major vertical markets, and over 90 system devices markets are also part of the SAF coverage. International Data Corporation (IDC) provides market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. Learn more at www.idc.com.

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April 26, 2012 — TSMC (NYSE:TSM) announced Q1 consolidated revenue of NT$105.51 billion, net income of NT$33.47 billion, and diluted earnings per share of NT$1.29 (US$0.22 per ADR unit) for the first quarter ended March 31, 2012.

28nm process technology accounted for 5% of total wafer revenues, 40nm was 32%, and 65nm was 26%. These advanced technologies accounted for 63% of total wafer revenues.

Due to stronger demand for TSMC’s 28nm technology and the pull-in of a 20nm R&D process line, the foundry raised its estimate for 2012 capital expenditures from $6 billion to $8-8.5 billion. $1.3-1.5 billion of the new capex budget will be spent on 28nm; $0.7 billion on the 20nm rollout; $200 million on sub-component such as embedded flash; and $100M for back-end capacity. TSMC also announced that it will ramp Fab 15 28nm capacity to 50k wafer starts per month (wspm) by year-end, vs. 40k wspm in its previous plan, with overall 300mm capacity +17% over 2011, reports Citi. “While the increase has been well telegraphed, the magnitude is higher than consensus of $7.5 billion,” said analysts at Citi.

TSMC CEO Dr. Morris Chang confirmed that the expansion is to meet higher demand, not to compensate for yield issues, reports Barclays Capital. Mobile customers are a greater percent of the mix than anticipated, Chang said.

With the worst of the supply shortage behind them, TSMC expects to have supply and demand close to balanced by Q4 2012, and completely caught up by the following quarter. TSMC’s 2012 capex plans are H2 loaded, with any further increases likely to turn over to Q1 2013.

In March, Citi’s Terence Whalen reported widespread concern over conservative 28nm capacity plans at TSMC: TSMC could meet only 60% of Qualcomm’s demand for 28nm capacity; Nvidia could not get its desired 28nm allocation; smaller customers saw their 28nm plans unmet by the foundry.

In light of the increase, Barclays Capital is maintaining its official view of flat capex spending in 2012, but with the potential for up to 5% growth over 2011.

For Samsung, Intel (NASDAQ:INTC), and TSMC, the time has come to "put the hammer down" and position themselves as the strongest and most dominant IC suppliers in the industry, IC Insights said earlier this year. Citi expects Samsung to increase its capex soon from $13 billion to around $16 billion. The disparity is getting so large that these three are likely to become completely dominant in their areas of specialization, if they are not already there. These 3 companies will account for about half of the total semiconductor capex spending in 2012.

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April 25, 2012 — The overall semiconductor industry will grow 4.3% in 2012, according to IHS, which raised its forecast 1 percentage point based on consumer demand for wireless products like smartphones and tablets. Global semiconductor revenue will reach $324.6 billion in 2012.

In 2011, the semiconductor industry as a whole grew only 1%, shows the IHS iSuppli Global Manufacturing Market Tracker report. The Semiconductor Industry Association (SIA) shows 2011 worldwide semiconductor sales hit $299.5 billion, a 0.4% increase.

With the global economy stabilized, semiconductors could see 2012 start a revenue climb to approximately $412.8 billion in 2016. Also read: Semiconductor sales flat through February 2012

Consumer faith in economic recovery is a key element in semiconductor growth, noted Len Jelinek, director and chief analyst of semiconductor manufacturing at IHS. Semiconductor suppliers should expect a robust Q3 — traditionally a strong quarter thanks to pre-holiday production.

Consumer electronics, particularly wireless devices, will be the biggest demand drivers this year, Jelinek said, listing Apple’s iPhone and iPad, as well as “a swarm of competing products.” Long term, the ultrabook PC platform will see strong growth, but its impact on 2012 semiconductor revenues will be minimal. Ultrabooks could become a key market revenue driver as early as 2013.

NAND Flash memory, logic application-specific integrated circuits (ASIC), and microprocessors (MPU) will be the top device architectures in 2012, thanks to tablets and smartphones (NAND, logic ASICs) and notebooks/ultrabooks (MPUs).

Although semiconductor suppliers have reduced their inventory by 7.5% over the last 6 months, total inventory remains at high levels both in terms of aggregate dollar value as well as in days of inventory. Further reductions, expected through H1 2012, are necessary for chip makers to experience sustained demand. Sustainable growth will not occur until the industry reduces total inventory by at least another 5%, IHS asserts.

The largest portion of chip inventory is held by integrated device manufacturers (IDMs), which typically do not reduce inventory as aggressively as the rest of the semiconductor industry because they have larger product portfolios, and more control over inventory levels in demand scenarios. Since Q2 2011, IDMs have reduced their inventory by only 5.4%. IDMs on average hold between 77 and 79% of finished goods inventory.

IHS (NYSE: IHS) provides information, insight and analytics in critical areas that shape today’s business landscape. For more information, visit www.ihs.com.

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April 25, 2012 — Touch sensors for displays grew to 66% to 9.6 million square meters in 2011, according to the NPD DisplaySearch Touch Sensor Manufacturing Capacity report. This includes resistive, projected capacitive, sensor-on-cover (SOC), and on-cell touch sensors. Touch sensors will continue growing, with 13.0 million square meters in 2012, and 16.4 million in 2014, says NPD DisplaySearch.

Figure. Touch sensor supply and demand. SOURCE: NPD DisplaySearch, April 2012.

By revenues, the touch panel industry grew from $4 billion in 2009 to over $13 billion in 2011. The market for touchscreen displays is strong, driven by mobile devices such as smartphones and tablet PCs, as well as PCs and point-of-information applications.

New display and color filter manufacturers, among other companies, are grabbing up market share in this rapidly growing display sector.

With rapid growth in resistive, projected capacitive, sensor-on-cover, and on-cell touch sensors, the industry’s development is under scrutiny, including the balance of supply and demand, how quickly sensor-on-cover projected capacitive touch can take share from conventional projected capacitive, and how on-cell and in-cell touch will impact add-on type touch screens, NPD DisplaySearch reports.

“Capacity in 2010 and 2011 was slightly higher — 13% — than demand, but this level of oversupply is healthy, given the rapid pace of growth in the touch industry,” said Jennifer Colegrove, Ph.D., VP, emerging display technologies for NPD DisplaySearch. “However, the glut is expected to more than double in 2012, to 27%, causing touch sensor prices to reduce rapidly. The oversupply will also force touch suppliers to move to larger size applications to utilize capacity, such as notebook and all-in-one PCs, ATM/finance and point of information,” Dr. Colegrove noted.

Resistive touch sensors were in oversupply in 2010. In 2011, most resistive touch manufacturers dramatically reduced their capacity; some converted their lines to projected capacitive touch. In 2012, resistive touch manufacturers continue to minimize capacity, leading to a balanced supply/demand outlook. While resistive continues to be strong in applications such as automotive, education/training, and industrial, it will slowly decline.

Projected capacitive touch manufacturing has increased dramatically, from 27 companies in 2009 to over 80 companies in 2011. Many projected capacitive suppliers are also establishing sensor-on-cover fabs.

SOC is forecast to grow fivefold (by area) in 2012. Due to its light weight and thinness, SOC is likely to be adopted in tablet and notebook PCs, including form factors such as sliding and convertible devices. Many leading touch module makers increased their cover glass capacity in 2011 in preparation for SOC production. NPD DisplaySearch forecasts SOC will capture an 8.6% share in 2012.

On-cell touch sensors are mainly used in AMOLED displays. In 2013, as large AMOLED fabs enter full production, there will be a significant oversupply (52%) of on-cell.

In-cell touch has been researched and demonstrated for many years, and in 2012, mass production will begin. Sony announced it is producing 4.3” in-cell LCDs. Synaptics is producing controller ICs for in-cell touch designs. As yield rates improve and tier one smartphone brands adopt the technology in 2013-2014, in-cell will experience strong growth.

Production of transparent conductive substrates (mostly ITO) for the four types of touch covered in the report will grow from 20.8 million square meters in 2011 to 30.9 million in 2014.

The Touch Sensor Manufacturing Capacity report includes information on nearly 100 fabs, including glass substrate generation, substrate size, substrate allocation, substrate input, yield rate, and yielded touch sensor area (in square meters). Transparent conductive substrate (ITO and ITO replacements) input information is also provided, and supply and demand for each of the four types of touch sensor is analyzed. NPD DisplaySearch surveyed over 60 suppliers of projected capacitive, sensor-on-cover, on-cell, and resistive touch sensors. The Touch Sensor Manufacturing Capacity report is a companion to the NPD DisplaySearch Touch Panel Market Analysis report, which profiles over 190 touch screen suppliers and analyzes each touch technology. NPD DisplaySearch is a leading global market research and consulting firm specializing in the display supply chain, as well as the emerging photovoltaic/solar cell industries. The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. For more information on NPD DisplaySearch analysts, reports and industry events, visit http://www.displaysearch.com/.

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April 19, 2012 — Gallium arsenide (GaAs) substrate shipments faltered in 2011, owing to weak demand for RF circuits and optoelectronics. Growth slowed from 22% in 2010 to 4% in 2011, hitting $360 million for GaAs. In 2012, GaAs shipments will recover, says Yole Développement, thanks to high-volume handset shipments and balance of capacity in the light-emitting diode (LED) industry.

Figure. GaAs wafer market (volume) by substrate type, and forecast. SOURCE: GaAs Wafer Market and Applications report, Yole, April 2012.

GaAs substrates should reach $650+ million by 2017, creating 11% compound annual growth rate (CAGR) in the forecast period, fuelled primarily by increasing GaAs content in handsets and increased penetration of LEDs in general lighting and automotive applications.

RF electronics (ie, power amplifiers, switches) were initially the main market for GaAs wafers, and will be the main market for GaAs in the near term, with the development of sophisticated smartphones, 3G/4G networks, and the increased demand for data communication. New GaAs-based devices are enlarging the material’s market with associated high-volume applications. LEDs and highly concentrated photovoltaics (HCPV) are two such markets for GaAs substrates.

Boosted by LEDs, semiconducting (SC) GaAs substrates will lead growth of the GaAs market. In 2011, semi-inductive (SI) GaAs substrates held ~56% (M$) of the overall GaAs substrate market (SC GaAs held ~44%), a trend that is likely to reverse in the short term, said Pars Mukish, technology & market analyst, LED & Compound Semiconductor at Yole Développement.

LEDs are penetrating TV, signs and displays, and other applications. The high-volume general lighting sector is a “killer application” for LEDs, boosting the SC GaAs substrate market by 2012-2013. Fundamental technology improvements are needed to improve LED efficiency and increase the total amount of light generated per package for LEDs to penetrate this market. Moreover, the automotive industry is also shifting from the use of traditional light sources to LEDs for products such as headlamps and interior lights.

SC GaAs substrate volumes are likely to equal SI GaAs substrate volumes by 2013 due to steady growth of the RF electronics market compared to booming growth of optoelectronic market.

The 2011 earthquake/tsunami in Japan damaged several Japanese manufacturing plants and strongly impacted production capacity of some key GaAs substrate suppliers who lost market shares to the profit of some competitors. Whether these companies will invest to recover operations, reduce operations or exit the business is still unclear. The GaAs wafer industry is evolving and some players have already announced plant expansion in order to gain market share and prepare future growth of the market.

Due to its lower labor cost, China has won all GaAs wafer manufacturing expansion plans, noted Brad Smith, senior analyst, Compound Semiconductor for Yole Développement.

The Yole Développement report, “GaAs Wafer Market & Applications,” presents all applications of GaAs wafer and associated market metrics. It also details GaAs wafer industry, including profile of main players & associated strategies, industrial value chain in 2011, revenues & market shares of key players.

Companies cited in the report: Anadigic, Avago, AWSC, AXT, CCT, Century Epitech, Dowa, Epiworks, Freiberger Compound Materials, GCS, Hitachi Cable, Hittite Microwave, IntelliEPI, Kopin, M/A-Com, Mimix Broadband, Mitsubishi Chemical, Mitsubishi Electric, NeoSemitech, OMMIC, QE, RFMD, Skyworks, Soitec, Sumika, Sumitomo, Electric Device Innovation, Sumitomo Electric Industries, TriQuint, UMS, VPEC, Win Semi, Xiamen Powerway.

Authors: Pars Mukish works at Yole Développement as a Market and Technology Analyst in the fields of LED and Compound Semiconductors to carry out technical, economic and marketing analysis. Brad Smith has 30 years industry experience in both optical and semiconductors in marketing, business development and market research.

Yole Développement is a group of companies providing market research, technology analysis, strategy consulting, media, and finance services. Internet: www.yole.fr.

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April 17, 2012 — Total worldwide semiconductor revenue reached $306.8 billion in 2011, up $5.4 billion, or 1.8% from 2010, according to Gartner Inc.

The top 25 semiconductor vendors’ revenues grew faster, at 3.1%, than the industry as a whole, accounting for a larger portion of the industry’s total revenue in 2011 (69.2%) than in 2010 (68.3%). However, about half of this growth was the result of mergers and acquisitions.

Table. Top 10 semiconductor vendors by revenue, worldwide, 2011 ($M). SOURCE: Gartner, April 2012.

Rank 2010

Rank 2011

Vendor

2010 Revenue

2011 Revenue

2010-2011 Growth (%)

2011 Market Share (%)

1

1

Intel1

41,988

50,669

20.7%

16.5%

2

2

Samsung Electronics

27,094

27,366

1.0%

8.9%

3

3

Toshiba

12,360

11,769

-4.8%

3.8%

4

4

Texas Instruments2

11,827

11,754

-0.6%

3.8%

6

5

Renesas Electronics3

10,204

10,650

4.4%

3.5%

9

6

Qualcomm4

7,204

9,998

38.8%

3.3%

5

7

STMicroelectronics

10,262

9,635

-6.1%

3.1%

7

8

Hynix Semiconductor

9,884

9,388

-5.0%

3.1%

8

9

Micron Technology

8,224

7,643

-7.1%

2.5%

10

10

Broadcom5

6,604

7,160

8.4%

2.3%

 

 

Others

155,807

150,811

-3.2%

49.1%

 

 

Total Market

301,458

306,843

1.8%

100.0%

1Infineon’s 2011 revenue excludes its wireless division, which was sold to Intel, effective in the first quarter of 2011.
2Texas Instruments acquired National Semiconductor in September 2011. The estimated calendar third and fourth quarters of National’s 2011 revenue are attributed to Texas Instruments in 2011.
3Renesas Electronics’ 2010 revenue excludes Renesas Technology’s first-quarter-of-2010 revenue.
4Qualcomm’s 2011 revenue includes three quarters of Atheros’ revenue.
5Broadcom acquired Provigent in the second quarter of 2011.

Also read: Top 25 fabless IC companies in 2011 and IC Insights’ Top 10 (which include foundries) list

Intel recorded a 20.7% revenue gain, easily retaining its #1 rank for the 20th consecutive year and increasing its market share to a record 16.5%.

Second-place Samsung was held back by DRAM weakness in 2011, so it was unable to close the gap with Intel. Toshiba and Texas Instruments retained their third- and fourth-place rankings respectively, while Renesas Electronics moved into the top five during its first full year as a combined company.

Sixth-placed Qualcomm’s semiconductor business increased 39% in 2011 and nearly reached $10 billion in revenue. Qualcomm continued to take share in the rapidly growing smartphone market, and it was one of the fastest-growing semiconductor companies in 2011.

At #10, Broadcom had a solid year, outperforming the overall semiconductor market, with particular strength in the mobile and wireless division, which recorded another year of double-digit growth.

Gartner’s Relative Industry Performance index measures the difference between industry-specific growth for a company and actual growth, showing which are transforming their businesses by growing share or moving into new markets and choosing their customers wisely. "Of the major device segments, microcomponents performed best in 2011 after a relative underperformance in 2010," said Peter Middleton, principal research analyst at Gartner. "Within microcomponents, the subcategory that really drove this performance was computing microprocessors, which grew 14.2 percent year over year as a result of strong average selling prices (ASPs). This was driven both by servers and PCs, with the PC microprocessor market strongly benefiting from graphics integration."

Market leaders in Gartner’s Relative Industry Performance index include Qualcomm (which grew 17% better than expected), Hynix (which grew 13% better than expected) and Infineon (which grew 12% better than expected). Disappointments in the Relative Industry Performance index include Panasonic, Elpida Memory (which declared bankruptcy early in 2012) and MediaTek.

Gartner’s annual semiconductor market share analysis examines and ranks the worldwide and regional revenue for more than 290 semiconductor suppliers in 62 separate product categories and 8 major market categories. Additional information is provided in the Gartner report "Market Share Analysis: Total Semiconductor Revenue, Worldwide, 2011." The report provides data and analysis for the top 25 vendors in 2011. The report is available on Gartner’s website at http://www.gartner.com/resId=1981515.

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April 16, 2012 — Positives in the light-emitting diode (LED) space — improving utilization levels at the Taiwanese LED makers, moderating LED average selling prices (ASP) declines, and gradual growth in LED lighting demand in the US — should materialize for global LED manufacturers, says Barclays Capital’s Olga Levinzon.

However, this won’t translate immediately into increased capital expenditures on LED manufacturing equipment. There is no significant consolidation yet among Chinese players, and utilization levels in Taiwan, though improved, are still not sufficient to require new capacity adds. Revenue at the top nine LED chip and packaging houses fell 3% Q/Q, notes Maxim Group, but growth improved each successive quarter with a 10% decline in January turning into 14% growth in February and 16% growth in March. While the Taiwanese producers are more exposed to backlighting than general lighting, Maxim asserts that they still serve as a general barometer of industry-wide utilization. Epistar, Everlight, and sapphire producer Sino American anticipate utilization rates >90% in Q2.

Figure. Revenues at Taiwan’s LED chip makers and packaging houses by quarter. SOURCE: Maxim Group equity research.

This unsteady environment could extend through at least mid-summer 2012, with limited forecasts for the timing/magnitude of a recovery. Barclays assumes a normalized metal organic chemical vapor deposition (MOCVD) tool market of ~525 tools annually; IMS Research puts the number closer to 342 in 2012.

Barclays predicts continued order weakness for AIXTRON. Also, AIXTRON’s full EUR 137M backlog exiting Q2 2011 will likely not be converted in H1 2012 due to continued push-outs from Chinese customers. AIXTRON will likely sell ~10 MOCVD tools in Q1, with additional revenue from tools for display, power electronics, and other fab markets; and from services. There will be modest growth ahead in MOCVD and power electronics manufacturing equipment sales. Barclays predicts AIXTRON will ship ~23 tools for LED fab in H1 2012 and ~80 in H2.

The other major MOCVD supplier for LED makers, Veeco (VECO), will see H1 MOCVD sales lag, though the company should be buoyed by orders from the data storage product fab sector until LED makers start ordering more aggressively in H2. Expect Veeco to ship ~29 MOCVD chambers in Q1 2012, vs. ~71 in Q4 2011.

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April 13, 2012 — Barclays Capital and FBR Capital Markets share their takes on earnings season for public semiconductor companies. Both predict a cycle of inventory replenishment in the semiconductor supply chain that will bode well for chip makers in 2012.

Also read: Top chip companies: 2011 rankings

Barclays Capital foresees “a gradual recovery combined with nearly full valuations” and “an inventory replenishment led uplift that would drive shares higher into 2H12.” Q1 2012 likely was the cyclical trough for many (though some semiconductor companies troughed in 4Q11), indicates FBR Capital Markets.

Q2 earnings guidance at most chip companies will be in-line with earlier predictions, Barclays anticipates. The most important takeaway is that semiconductors reached the bottom of a cycle, with very lean inventories in the supply chain to end Q1. Lead times may broadly expand in H2, driving some supply chain inventory replenishment and the start of a new up-cycle for chip firms, agree FBR Capital Markets analysts. Semiconductor growth should track above end markets, therefore, heading into H2 2012.

Semiconductor companies with exposure to smartphone and tablet designs — including the iPhone 5 — will get a boost this year. Handsets in general will see strong shipments with sales into emerging markets boosting numbers. Q2 will also benefit PC-component suppliers, thanks to easing HDD shortages and lean channel inventory ahead of Intel’s Ivy Bridge launch. Lagging, but not declining, end-use sectors include communications infrastructure, which had a slow start in 2012. The industrial sector is recovering and wireless communications semiconductors will see “choppiness” in the end market.

The chip sector is setting up for an H2 cyclical snapback that should be stronger and longer than originally predicted, said FBR Capital Markets, if macro conditions continue to slowly improve.

April 13, 2012 — Sony Corporation will implement a series of initiatives, under its new management team, to “revitalize and grow the electronics business to generate new value, while further strengthening the stable business foundations of the Entertainment and Financial Service businesses.” OLED and crystal LED TVs are on the agenda, as is a focus on mobile electronics.

Digital imaging, gaming and mobile electronics will get a boost, as will emerging market business. The television business is set for an overhaul, and resources will be “optimized” across Sony’s portfolio.

Headcount across the entire Sony Group will be reduced by approximately 10,000 in FY12. Sony is projecting restructuring costs of 75 billion yen in FY12. Sony will restructure its headquarters, subsidiaries and sales company organizations to enhance operational efficiencies.

Sony will target sales of 6 trillion yen and operating income margin of 5% in its electronics business, and sales of 8.5 trillion yen, operating income margin of more than 5%, and return on equity (ROE) of 10% for the Sony Group overall, in the fiscal year ending March 31, 2015 (FY14).

1. Strengthening core businesses (Digital Imaging, Game, Mobile)

Sony is positioning digital imaging, game and mobile as the three main focus areas of its electronics business and plans to concentrate investment and technology development resources in these areas. By growing these three businesses, Sony aims to generate approximately 70% of total sales and 85% of operating income for the entire electronics business from these categories by FY14.

Digital Imaging – Sony is reinforcing its development of image sensors, signal processing technologies, lenses and other key digital imaging technologies in which it excels, and plans to leverage these technologies in both its consumer products (such as compact digital still cameras, digital video cameras and interchangeable lens digital cameras) and broadcast and professional products (such as professional use cameras and security cameras) in order to further strengthen and differentiate Sony’ overall product line. The Company also plans to extend the use of these key technologies across a wide range of business applications, from security to medical, to further expand the scope of its digital imaging business. Sony will target total sales of 1.5 trillion yen and double-digit operating income margin from the consumer, professional and image sensor businesses by FY14.

Game – In the game business, Sony continues to deliver exhilarating entertainment experiences through PlayStation3, PlayStationVita, and its unique combination of hardware, software, PlayStationNetwork (PSN), and range of accessories and peripherals. These will form the foundations on which Sony will target further sales and profit expansion in the game business. The Company also aims to increase sales by enriching its catalog of downloadable game titles and subscription services available through the PSN platform, and also by expanding the lineup of PlayStationSuite compatible devices and content. Sony will target game business sales of one trillion yen and operating income margin of 8% by FY14.

Mobile – In the area of mobile, Sony is integrating the R&D, design engineering, and sales and marketing operations of its smartphone business (operated by Sony Mobile Communications, now a wholly-owned subsidiary of Sony), "Sony Tablet" and "VAIO" businesses in order to quickly develop and deliver compelling products to market. Sony also plans to aggressively leverage its many technologies in areas such as digital imaging and game, its rich content assets including pictures, music and game, its "Sony Entertainment Network" network service platform, as well as the communications technology expertise and knowhow accumulated through its experience in the mobile phone industry, to launch new mobile products and establish new business models. Additionally, by integrating operations across its entire mobile product lineup, Sony aims to achieve further efficiencies and optimization. As a result of these measures, Sony will target sales of 1.8 trillion yen in FY14 from the mobile business, and significant profitability improvement.

2. Turning around the television business

Sony is already engaged in a comprehensive television profitability improvement plan (announced November 2, 2011), which aims to return the television business to profitability in the fiscal year ending March 31, 2014 (FY13), and intends to accelerate these measures going forward. The sale of Sony’s share in its LCD panel manufacturing joint venture with Samsung Electronics has been completed, resulting in panel-related cost reductions. Additionally, Sony is taking further measures to change the business structure, for example by improving design engineering efficiency and reducing the number of product models (targeting a 40% reduction from the fiscal year ended March 31, 2012, FY11, to the fiscal year ending March 31, 2013, FY12), with the aim of reducing fixed business costs related to the television business by 60% and operating costs by 30% in FY13 compared to FY11.

Sony is additionally taking steps to enhance the image and audio quality of its "BRAVIA" range of LCD televisions that form the cornerstone of its current television lineup and to tailor its product offering to meet specific regional market needs. Going forward, Sony intends to advance the development and commercialization of next-generation display technologies such as OLED and "Crystal LED Display", as well as enhance the integration of televisions with Sony’s mobile products, with content such as movies and music, and with other assets across the Sony Group to improve product competitiveness, drive hardware differentiation and enhance the attractiveness of Sony’s product lineup.

3. Expanding business in emerging markets

Sony will continue to leverage its strong global operations and brand strength to drive sales growth in rapidly expanding emerging markets.

Sony has already established strong foundations in emerging markets. For instance, in India and Mexico, among others, Sony has secured the largest share of the consumer AV/IT market. Sony will continue to concentrate its sales and marketing resources in these markets, and expects to strengthen sales operations, introduce products tailored to local needs and leverage the Sony Group’s entertainment assets, including pictures, music and television networks, to further enhance its market presence.

Sony generated 1.8 trillion yen through sales of electronics products in emerging markets* in FY11, and aims to increase this figure to 2.6 trillion yen in FY14. The Company will also aim for consumer AV/IT sales in emerging markets to represent 60% of total anticipated global sales of these products by FY14.

*Regions other than Japan, North America and Europe.

4. Creating new businesses and accelerating innovation

Sony will continue to aggressively promote innovation intended to deliver mid- to long-term growth, as well as the development of differentiating technologies that enhance core product value.

Specific examples of business areas in which Sony will target mid- to long-term growth are medical and 4K-related technologies.

Sony is largely a new entrant to the medical industry. In the medical peripherals business Sony has already successfully launched a range of medical printers, monitors, cameras, recorders and other medical-use products, and will target sales of 50 billion yen in this market in FY14. Sony also plans to enter the market for medical equipment components, where its strengths in various core digital imaging technologies offer significant competitive advantages in applications such as endoscopes. Furthermore, Sony plans to enter the life science industry, where the Company can leverage its expertise in technologies such as semiconductor lasers, image sensors and microfabrication. In the life science industry, Sony has acquired iCyt, a manufacturer of cellular analysis equipment, and Micronics, which manufactures medical and diagnostics equipment. Sony plans to continue to aggressively pursue other M&A opportunities to expand its medical business consistently with Sony’s own strengths, with the aim of developing the business into a key pillar of Sony’s overall business portfolio.

Sony is also drawing on its comprehensive strengths in audio and visual technologies to aggressively promote the growth of "4K" technology, which delivers more than four times the resolution of Full HD. Incorporation of Sony-developed technologies, such as image sensors, image processing compression LSIs and high-speed optical transmission modules into its professional-use and high-end consumer products will pave the way for Sony to continue to expand and enrich its 4K-compatible product lineup.

5. Realigning the business portfolio and optimizing resources

Sony is accelerating its ongoing process of business selection and focus, and is concentrating its investments in core and new business areas. In terms of investment, core areas include the expansion of Sony’s image sensor manufacturing capacity, capital investment in mobile products and aggressive strategic investment in development or M&A relating to new business areas such as medical. Other existing business areas will be evaluated according to the following four criteria, so that Sony can determine the optimum strategy for these businesses, including proactive consideration of alliances and business transfers in order to optimize its overall business portfolio:

– Loss generating, negative operating cash flow or low revenue businesses

– Limited synergies with core businesses

– Businesses where commoditization is advanced and prospects for growth are limited

– Businesses where opportunities for revitalization and growth are enhanced through collaboration with partners rather than independent operation by Sony

For example, in the small- and medium-sized display business* and chemical products business**, Sony has already transferred or is in negotiations to transfer those businesses to external parties. Furthermore, Sony is also exploring possible alliances in the area of batteries for electronic vehicles and energy storage modules.

* "INCJ, Hitachi, Sony and Toshiba Sign Definitive Agreements Regarding Integration of Small- and Medium-Sized Display Businesses" announced on November 15, 2011

** "Development Bank of Japan and Sony Sign Non-Binding Memorandum of Understanding for Sale of Chemical Products Businesses" announced on March 22, 2012

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Blogger Mike Fury reports from the MRS Spring 2012 meeting in San Francisco. Highlights from the third day: leakage and TDDB in low- κ dielectrics, flexible energy storage and conversion, Mn capping layers and diffusion barriers, hard masks for Cu interconnects, nanogenerators, Cu in RF, flexible temperature sensors, NEMS and MEMS in HDD, ZnO nanostructures, and various aspects of CMP.

Day 3 of the MRS Spring 2012 meeting opened Wednesday at Moscone West in San Francisco under partly sunny skies after an air-cleansing pre-dawn sprinkle. The halls were much more quiet and subdued than yesterday morning, suggesting a busy Tuesday night for all of the science bars in town.

C3.1 TM Shaw of IBM Watson Research opened the day with a reliability talk on leakage and TDDB in low-κ dielectrics. Leakage was measured with comb structures (60-100nm spaces) using step-wise voltage ramps; data recording started one minute after each step to eliminate charging transients. Over time, the Poole-Frenkel barrier height decreases continuously. At longer test times (>200 hours) the leakage data is more indicative of tunneling between trap sites; overlapping trap sites provide the leakage path. The rate of decrease of the Poole-Frenkel barrier height in early life testing was found to correlate well with TDDB behavior in longer time testing, and may serve as an early screening proxy.  Both moisture and Cu ions have a significant impact on time dependent leakage, but the magnitude of the leakage currents does not correlate well with TDDB lifetime.

C3.2 Sean King of Intel PTD studied the band diagram of the low-κ/Cu  system with XPS and REELS to elucidate some fundamental understanding of interconnect leakage mechanisms. He focused on the interface between Cu, the SiCON:H low-κ etch stop and the SiOC:H. Leakage through the etch stop was shown to dominate over direct via-to-via leakage through the Ta barrier and the dielectric. Future work will expand on the defect trapping states in this materials system. The talk concluded with an announcement that resumes of new graduates are welcome, as Intel needs to staff a new R&D facility currently under construction in Oregon.

C3.3 Brad Bittel of Penn State described some magnetic resonance studies of BEOL dielectrics; this work is a collaboration with Intel’s Sean King (above). Defects observed with EPR are likely important to leakage current as well as related reliability phenomena. SDT provides a direct link between EPR defects and electrical transport because only the centers involved in leakage can show up in SDT.

K3.5 Daniel Steingart of City College NY told us about flexible storage and energy conversion. Their approach was to focus on making the binders and electrodes flexible by embedding the MnO2 and Zn electrodes in a Ag-impregnated nylon mesh (this is the work I reported on earlier this week). This battery represents a conventional material set, but the Zn/MnO2 couple degrades over time as its charge/discharge cycles drive it to a stable equilibrium that is not a useful energy source. The limit seems to be ~600 cycles. Efforts to develop alternate material systems found adhesion failure between Al electrodes and a polymer/nanoparticle composite electrolyte in early test capacitors. It was resolved by using a seed layer of the nanoparticle alone as a surface roughening treatment to promote adhesion of the composite.

C4.1 Roy Gordon of Harvard U spoke on Mn capping layers and diffusion barriers in copper interconnects for TSV and on-chip vias, including a unique void-free via fill process.  The Mn CVD precursor for capping is a metal amidinate that deposits at 300°-350°C at 5 torr selectively on the Cu surface after passivating the dielectric with BDDS or DTS. Mn is a fast diffuser in Cu that migrates to SiO2 and Si3N4 interfaces, leaving the Cu resistivity after 400°C anneal at the pre-Mn level. Adhesion strength to the dielectric increases with Mn at the interface. An 8nm MnSixOy layer was shown to prevent both oxygen and moisture diffusion into the copper. Iodine-catalyzed copper bottom-up fill requires a copper seed layer before the mechanism can initiate. This work found that a seed layer of CVD Mn4N (Mn amidinate with NH3 at 130°C) will also adsorb the iodine sub-monolayer to initiate the CVD Cu fill at 180°C. Seam-free Cu fill was shown for <20nm vias with 5:1 AR, with large Cu grains across the entire via diameter prior to anneal. The Cu resistivity is lower than EP Cu due to the greater purity of CVD Cu. TSV copper fill was also demonstrated with AR>25:1 and 460mΩ/square Cu which exceeds the current roadmap.

C5.1 George Antonelli  of Novellus provided some insights into the ideal hard mask for copper interconnects at 20nm and below. Carbon films are deposited at 275°C with ion bombardment, yielding the same density as conventional films deposited at 500°C. Surface roughness was RMS 0.5-1.1nm, which impacts line edge roughness (LER). Line bending with this system was tested over the range AR 3.2 to 5.7 and was found to peak at AR 4.5 rather than increasing monotonically as AR increases. This was due to the interplay of mechanical stress with other process parameters and material properties. A doped SiC material was designed as an alternative to TiN hard mask to facilitate chemical removal or CMP after etch. More recently, work is underway on an undoped carbide variant that can be removed with wet etch and does not require CMP.

N7.1 Sang-Woo Kim from Sungkyunkwan U (Korea) described a high performance, transparent, flexible, stretchable, foldable (whew!!) nanogenerator based on multi-dimensional ZnO structures. Harvesting electrical energy from mechanical motion and vibration is the common objective, but the scope can range from replacing pacemaker batteries (not recommended for avowed couch potatoes) to embedding large area arrays in roadbeds to use traffic to generate power. PVDF is a material of choice for generating high output voltage, while ZnO is preferred for generating high output current. Graphene sheets were transfer printed onto a PEN polymer substrate, and ZnO vertical nanorods (1D) were grown on the graphene. The material functioned well, but the PEN distorted above 250°C. For such harsh conditions, a cellulose paper with Au seed layer was substituted for the PEN, and performed well even under harsh conditions. A 2D alternative was fabricated using ZnO nanosheets aligned vertically between electrodes. The work function of the top electrode limits the current output, with Au > graphene > ITO > Al.

C5.4 Ed Cooney of IBM talked about the stress effects in Cu inductors for RF technologies. While many of us are focused on 20nm and below, these devices still operate in the 0.18-0.35µm regime and require copper layers >3µm thick for proper inductor performance. At these feature sizes, reliability failure mechanisms are driven more by CTE mismatches.  Raising the post-plating anneal temperature from 100°C to 250°C reduced the room temperature tensile stress in the Cu which in turn reduces the driving force for delamination of the Cu from the SiN cap layer.

K4.5 Gregory Whiting of PARC showed a viable path toward high volume printing of flexible temperature sensors sensitive to 0.1°C up to 50°C. InSn/V2O5 was the eutectic mixture chosen for this work, with the ink scaled up to 1kg batches. Devices are printed on PET with screen printed Ag electrodes with gap widths varying from 250 to 500µm. The device shows a sensitivity of 1% change in resistance per degree between 20°C and 70°C, though a sensitivity to moisture dictates the needs for encapsulation for field use.

B2.1 Toshiki Hirano of Hitachi Global Storage (now Western Digital) gave an overview of MEMS and NEMS technology applications in the HDD world. HDD recording density has increased 3×108 times since the first IBM RAMAC in 1957. The track width on a 95mm disk today is 68nm (about the same as a human hair in a baseball field), with 3nm clearance between the R/W head and the disk surface. The next generation of actuator may be a moving magnetic element, now in R&D, in place of the moving slider. Another variation is a R/W head with heating elements on either side of the active area. Precise positioning is achieved by thermal expansion of the heater element on either side. Similarly, head height control can be positioned vertically with a resistance heating element, allowing a fly height of 1-3nm in combination with a contact sensor feedback loop. Bit patterned recording disk media are extendible to 10 Tbit/in2 using a self assembled polymer to guide the definition of individual domains. Thermal assisted recording can be facilitated with a near field transducer that has a spot size of 50nm.

N7.6 Rusen Yang of U Minnesota described energy harvesting with ZnO nanowires. ZnO nanostructures are unique in that they have been fabricated into nanobelts, nanosprings, nanorings, nanohelixes, and nanotubes, but nanowires are the focus here. These transducers are adequate to power pH and UV sensors, and the power can be stored to power LEDs. Power delivery is still in the µW to mW range. While the piezoelectric properties of ZnO are of primary interest here, it has other important and useful properties such as biocompatibility that add to its attractiveness for further research.

C6.3 John Zhang of ST Micro talked about the challenges in Cu CMP at 20nm and below. Center-to-edge uniformity is affected by the radial change in via sidewall angle, which gives a larger via top diameter at the edge and therefore a non-uniform tendency for dishing. In shrinking from 1µm L/S to 32nm L/S, Cu dendrites become increasingly problematic but can be controlled with PCMP chemistry. Validation must be established by looking for long term dendrite growth >100 hours after processing, and its effects can show up in TDDB data. The process window is shrinking as uniformity and defectivity often have competing optimization schemes. It was suggested that uniformity and defectivity parameters may have a minimum constant value, but no Heisenberg CMP uncertainty principle was actually articulated.

C6.4 Jae-Young Bae of Hanyang U (Korea) described the correlation of pad conditioning and pad surface roughness with CMP step height reduction, leading to a new slurry concept for initial step height reduction. Picolinic acid was added to ceria slurry; the maximum amount adsorbed on the pad surface for monolayer coverage was 0.36mg/m2. The acid increased the adhesion strength of the ceria particles to the pad surface by ~3x, leading to a 5x increase in removal rate, and 3x increase in planarization rate (60s vs. 180s).

C6.5 Bahar Basim of Ozyegin U (Turkey) talked about a wafer level CMP model to predict the impact of pad conditioning on process performance. Higher wafer scratch levels are correlated with points on the pad at which the conditioner sweep changes direction. Sweeping the conditioner over the edge of the pad surface also creates additional wear when the conditioner transits back onto the pad. The resulting pad profile model enables tailoring the wafer surface to best match the incoming wafer profile.

Also see Mike Fury’s other reports from MRS Spring 2012:

MRS Spring 2012: Day 1

MRS Spring 2012: Day 2