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The demise of Qualcomm’s pending $44 billion purchase of NXP Semiconductors in late July along with growing regulatory reviews of chip merger agreements, efforts by countries to protect domestic technology, and the escalation of global trade friction all suggest semiconductor acquisitions are hitting a ceiling in the size of doable deals.  It is becoming less likely that semiconductor acquisitions over $40 billion can be completed or even attempted in the current geopolitical environment and brewing battles over global trade.

IC Insights believes a combination of factors—including the growing high dollar value of major chip merger agreements, complexities in combining large businesses together, and greater scrutiny of governments protecting their domestic base of suppliers—will stifle ever-larger mega-transactions in the semiconductor industry in the foreseeable future.  Figure 1 ranks the 10 largest semiconductor merger and acquisition announcements and underscores the growth in size of these M&A transactions.  Eight of the 10 largest announcements occurred in the last three years with only the biggest deal (Qualcomm buying NXP) failing to be completed.

Figure 1

It is important to note that IC Insights’ M&A list only covers semiconductor suppliers, chipmakers, and providers of integrated circuit intellectual property (IP) and excludes acquisitions of software and system-level businesses by IC companies  (such as Intel’s $15.3 billion purchase of Mobileye, an Israeli-based developer of digital imaging technology for autonomous vehicles, in August 2017).  This M&A list also excludes transactions involving semiconductor capital equipment suppliers, material producers, chip packaging and testing companies, and design automation software firms.

Qualcomm’s $44 billion cash purchase of NXP would have been the largest semiconductor acquisition ever if it was completed, but the deal—originally announced in October 2016 at nearly $39 billion and raised to $44 billion in February 2018—was canceled in the last week of July because China had not cleared the transaction.  China was the last country needed for an approval of the merger, and it was believed to be close to clearing the purchase in 2Q18, but growing threats of tariffs in a brewing trade war with the U.S. and moves to block Chinese acquisitions of American IC companies caused China to taken no action on the $44 billion acquisition in time for a deadline set by Qualcomm and NXP.  U.S.-based Qualcomm canceled the acquisition on July 26 and quickly paid NXP in the Netherlands a $2 billion breakup fee so the two companies could move on separately.

Prior to Qualcomm’s failed $44 billion offer for NXP, the largest semiconductor acquisition was Avago Technologies’ $37 billion cash and stock purchase of Broadcom in early 2016.  Avago renamed itself Broadcom Limited after the purchase and launched a failed $121 billion hostile takeover bid for Qualcomm at the end of 2017.  It lowered the unsolicited bid to $117 billion in February 2018 after Qualcomm raised its offer for NXP to $44 billion.  In March 2018, U.S. President Donald Trump blocked Broadcom’s $117 billion takeover bid for Qualcomm after concerns were raised in the U.S. government about the potential loss of cellular technology leadership to Chinese companies, if the hostile acquisition was completed. After the presidential order, Broadcom executives said the company was considering other acquisition targets, with cash, that would be smaller and more focused.

The global semiconductor industry has been reshaped by a historic wave of mergers and acquisitions during the past three years, with about 100 M&A agreements being reached between 2015 and the middle of 2018 with the combined value of these transactions being more than $245 billion, based on data collected by IC Insights and contained within its Strategic Reviews database subscription service and in The 2018 McClean Report on the IC Industry.  A record-high $107.3 billion in semiconductor acquisition agreements were announced in 2015.  The second highest total for semiconductor M&A agreements was then reached in 2016 at $99.8 billion.   Semiconductor acquisition announcements reached a total value of $28.3 billion in 2017, which was twice the industry’s annual average of about $12.6 billion in the first half of this decade but significantly less than 2015 and 2016, when M&A was sweeping through the chip industry at historic levels.  In the first six months of 2018, semiconductor acquisition announcements had a total value of about $9.6 billion, based on IC Insights’ running tally of announced M&A deals.

By Walt Custer

2Q’18 Electronic Supply Chain Growth Update

  • Chart 1 is a preliminary estimate of global growth of the electronic supply chain by sector for 2Q’18 vs 2Q’17. Note the strong performance of semiconductors, SEMI capital equipment and passive components.
  • Chart 2 gives preliminary 2Q’18 world electronic equipment growth by type. Global electronic equipment sales rose an estimated 9%+ when consolidated into US dollars in the second quarter of this year compared to the same quarter in 2017.
  • Based on this, data global electronic equipment sales growth appears to have now peaked on a 3/12 growth basis for this present business cycle (Chart 3).

As a caution these charts are based on a combination of actual company financial reports and estimates for companies that have not yet reported their calendar second quarter financial results. A number of large companies have yet to report but these early estimates have historically been close to final growth values.  We will update Chart 1 next month.

Semiconductor Capital Equipment Business Cycle

  • Semiconductor capital equipment sales are historically very volatile, with their growth fluctuating MUCH MORE than electronic equipment (Chart 4). However, both series appear to have peaked on a 3/12 basis for this current cycle.

  • Semiconductors, SEMI capital equipment and Taiwan chip foundry sales all are seeing slower growth. 3/12 values >1 still indicate an expansion but slower growth is indicated.

Supply chain performance in the second half of this year bears careful watching!

Walt Custer of Custer Consulting Group is an analyst focused on the global electronics industry.

Originally published on the SEMI blog.

According to a new market research report “Optoelectronics Market for Automotive by Devices (LED, Image Sensor, Infrared, Laser Diode, Optocoupler), Application (Position Sensor, Convenience & Climate, Safety, Lighting), Vehicle (PC, CV), EV Type, Aftermarket, and Region – Global Forecast to 2025”, published by MarketsandMarkets, the market is estimated to be USD 3.88 billion in 2018 and is projected to reach a market size of USD 9.80 billion by 2025, growing at a CAGR of 14.13% during the forecast period. The major factors driving the growth of the global Automotive Optoelectronics Market are the increase in sales of luxury and ultra-luxury vehicles and high demand for LEDs lighting and safety application.

The safety application segment is estimated to be the fastest growing market in the Automotive Optoelectronics Market during the forecast period, by application.

The safety segment is estimated to witness the highest growth because of the rising demand for safety features by consumers to enhance the vehicle safety performance. Also, OEMs are offering vehicles equipped with safety features, which in turn would drive the optoelectronics market.

The LED segment is estimated to be the fastest growing market in the Automotive Optoelectronics Market during the forecast period, by devices.

The LED segment is estimated to be the fastest growing segment, by value, of the Automotive Optoelectronics Market during the forecast period. The high demand for aesthetic lighting to improve the comfort and safety inside the vehicle for the occupants is governing the growth of LED segment devices.

Asia Pacific is estimated to be the fastest growing regional market for Automotive Optoelectronics Market.

The Asia Pacific region is projected to be the fastest growing market for automotive optoelectronics during the forecast period. The market growth in the region can be attributed to the rapid growth of the automotive sector in countries such as China, Japan, India, and South Korea. Moreover, the improved lifestyle of consumers and rapid urbanization have boosted the demand for passenger cars and commercial vehicles, thus, driving growth of the Automotive Optoelectronics Market in the region.

The key players in the Automotive Optoelectronics Market are Osram (Germany), Texas (US), Vishay (US), Broadcom (US), Hella (Germany), and Magneti Marelli (Italy).

The Mid-Year Update to the 2018 McClean Report revises IC Insights’ worldwide economic and IC industry forecasts through 2022 that were originally presented in The 2018 McClean Report issued in January.

The Figure shows that IC Insights forecasts that China-headquartered companies will spend $11.0 billion in semiconductor industry capex in 2018, which would represent 10.6% of the expected worldwide outlays of $103.5 billion.  Not only would this amount be 5x what the Chinese companies spent only three years earlier in 2015, but it would also exceed the combined semiconductor industry capital spending of Japan- and Europe-headquartered companies this year.

Since adopting the fab-lite business model, the three major European producers have represented a very small share of total semiconductor industry capital expenditures and are forecast to account for only 4% of global spending in 2018 after representing 8% of worldwide capex in 2005.  Although there may be an occasional spike in capital spending from European companies (e.g., the surge in spending from ST and AMS in 2017), IC Insights believes that Europe-headquartered companies will represent only 3% of worldwide semiconductor capital expenditures in 2022.

It should be noted that several Japanese semiconductor companies have also transitioned to a fab-lite business model (e.g., Renesas, Sony, etc.).  With strong competition reducing the number and strength of Japanese semiconductor manufacturers, the loss of its vertically integrated businesses and thus missing out on supplying devices for several high-volume end-use applications, and its collective shift toward fab-lite business models, Japanese companies have greatly reduced their investment in new wafer fabs and equipment. In fact, Japanese companies are forecast to represent only 6% of total semiconductor industry capital expenditures in 2018, a big decline from the 22% share they held in 2005 and an even more precipitous drop from the 51% share they held in 1990.

Although China-headquartered pure-play foundry SMIC has been part of the list of major semiconductor industry capital spenders for quite some time, there are four additional Chinese companies that are forecast to become significant semiconductor industry spenders this year and next—memory suppliers XMC/YMTC, Innotron, JHICC, and pure-play foundry Shanghai Huali.  Each of these companies is expected to spend a considerable amount of money equipping and ramping up their new fabs in 2018 and 2019.

Due to the increased spending by startup China-based memory manufacturers, IC Insights believes that the Asia-Pac/Others share of semiconductor industry capital spending will remain over 60% for at least the next couple of years.

By Shannon Davis

Steve Jobs. Benjamin Franklin. Albert Einstein. Marie Curie. What do these world-changers all have in common? Where did their drive to innovate come from? Melissa Schilling, PhD, had to find out.

“Innovation and creativity has been a hot area of research for a long time, but we don’t tend to study outliers and in part that’s because there’s methodological challenges with that,” she explained to the audience during her keynote address on Tuesday at SEMICON West 2018.

Melissa Schilling, PhD, New York University

So, the New York University professor created a multiple case study research project to tackle these questions, which are addressed at length in her latest book, “Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators Who Changed the World.” Her book invites us into the lives of eight world-famous game-changers — Albert Einstein, Benjamin Franklin, Elon Musk, Dean Kamen, Nikola Tesla, Marie Curie, Thomas Edison, and Steve Jobs – and identifies the common traits and experiences that drove them to make spectacular breakthroughs, again and again. Schilling believed that once we understand what makes someone a serial innovator; we can also understand the breakthrough innovation potential in all of us.

The first common trait Schilling identified in her research was a sense of separateness – a discovery that she found remarkable.

“I thought most people would be super connected with lots of diverse connections,” she said. “I was wrong about that. Every single person I studied, with the exception of Benjamin Franklin, had this…feeling of detachment.”

Einstein, said Schilling, even went so far as to say he didn’t need direct contact with individual humans, even his own family. Marie Curie and her husband eventually sent both of their daughters to be raised by their grandparents, so that they could devote more time to their research. Dean Kamen’s feelings of separateness helped to shield him when his peers didn’t believe it was possible to create a two-wheeled wheelchair (which we now know as the Segway).

What can we learn from this? “First thing we have to learn is that we need norms that permit people to be unorthodox,” said Schilling. “We need to be able to embrace weirdness.”

Schilling pushed back against the idea of brainstorming teams in the tech world, a practice she says has potential innovators stuck putting out ideas that are more likely to get consensus from the rest of their team. She instead suggested to allow employees to work alone first, to commit to an idea and elaborate on it before sharing it with a team.

“Brainstorming teams cause people to come to mediocre compromises,” she said.

The second shared trait of serial innovators Schilling discussed was self-efficacy.

“Self-efficacy is that faith you have that you can overcome obstacles to achieve your goals and it makes you take on bigger projects,” Schilling explained.

She pointed to Elon Musks’ persistence in developing reusable rockets, in spite of NASA’s claims that it couldn’t be done, and Nikola Tesla’s dream of harnessing the power of Niagara Falls to provide electricity, despite having only seen a picture of Niagara on a postcard when he was a child in Croatia.

“Encourage people to try even if they fail,” she said, and warned against rescuing people who could benefit from learning things on their own.

The third trait Schilling outlined was one she said seven of the eight innovators possessed, which was having an intensely idealistic goal that mattered more to them than just about anything else.

“When you have an idealistic goal that people in your company can identify with, they’re going to work harder, they’re going to work longer, they’re going to think bigger, and they’re going to love it more,” she said.

And while timing and luck often did play an undeniable role in many of the serial innovators lives, Schilling was most surprised to learn that access to capital didn’t affect her research subjects’ abilities to innovate.

“Every single one of these people… started out flat broke,” she said. “They did not become innovators because they had access to capital.”

What was more important, she said, was their access to other people who had resources.

“One of the most valuable things you can do is help connect people to the other people they need,” she concluded.

By Pete Singer

The importance of data gathered and analysed in the subfab – the place where vacuum pumps, abatements systems and other supporting equipment operates – is growing. Increasingly, manufacturers are finding that these systems have a direct impact on yield, safety, cost-of-ownership and ultimately capacity and cycle time.

“The subfab is getting recognized evermore as a contributor to the overall fab effectiveness, particularly when the fab is looking to get last fractions of a percentage of performance efficiencies,” notes Alan Ifould, Global Market Sector Manager at Edwards.

There’s also keen interest in tying this data with process data from the fab, the MES (manufacturing execution software) system and ultimately the ERP (enterprise resource planning) system as part of today’s efforts to understand and control the entire data ecosystem.

Subfab data systems provide a volume of data related not only to vacuum and abatement equipment, but also upstream, to the foreline, gate valve and chamber. Of special interest is the monitoring of vacuum faults, which can negatively impact quality, cost and safety. “A vacuum fault is anything that results in a loss of a degradation in vacuum,” said Ifould.

Ideally, faults – and the overall quality of the vacuum system — are proactively managed. Potential faults are detected days or even weeks before they occur and addressed during regularly scheduled tool maintenance, for example. “We’re finding that our ability to detect vacuum faults in the wider vacuum system comes very much to the fore,” Ifould said.

Data seen at the pump or abatement can help determine the size and location of vacuum system leaks. Algorithms based around vacuum science and thermodynamics can lead engineers to problematic leaks that, over time, can have a significant impact on yield.

Often, the first reaction to a loss in chamber pressure is to blame the vaccum pump, Ifould said. Vacuum pumps can be swapped out in about 4 hours, but if the process tool goes down while in operation, it could be in excess of 48 hours to get everything back up and running. Even then, it might be something other than the pump that caused the initial problem, such as a leak in a gate valve or in the foreline. It’s essential to accurately diagnose the problem(s) at the onset, but that can be a challenge: “You only need a small leak in a gate valve, and you immediately have problems with maintaining the base pressure in the chamber. The pump may become overloaded because of the additional gas load caused by leaks,” he said.

Edwards has developed a verity of new data collection and analysis strategies aimed at improving such decision making. The SMA (Site Management Application) is latest addition to data analytics portfolio, focused on subfab. As shown in Figure, SMA is designed to provide insight into maintenance activities, equipment performance and fault resolution. It is implemented in parallel with the company’s VTPS (Vacuum Technique Production System), which drives standard work and behaviors based on LEAN principles and best known methods.

Edwards is also working on what it calls “sensorization” where, for example, the use of vibration analytics can detect anomalies otherwise missed by traditional monitoring techniques.

Ifould said the SMA and sensorization helps improve the stability of fab operations by bringing veracity to the data. “It’s one thing to have a volume of data, but the data itself is of little value unless it’s of good quality,” he said. “When we’re looking at equipment operations and the way you have operators involved, being able to bring discipline to the behaviors of those operators to the task that they perform brings discipline to the data and improves the veracity of the data,” he said.

He said Edwards has been using this approach to “great effect” over the last year. “We can help our customers see where some of their maintenance practices need to be improved to eliminate some of the sources of error that cause some of those vacuum faults,” he said.

More recently, Edwards is looking to move beyond a simple predictive maintenance model (PdM) to a model that include quality (PdMQ). The model includesnot only the condition of the subfab equipment, but of the quality of the vacuum it provides, and therefore the process it supports. “We’re not just considering the condition of the subfab equipment and being able to predict when that may fail, but considering the quality of the vacuum that system actually provides.”

Harnessing data from all parts of the fab ecosystem is essential, Ifould notes, but has its challenges, especially when it comes to IP. “In an ideal world, we would like to receive contextualized data which allows us to relate what’s happening in the vacuum pump into the process itself. That becomes challenging because of the IP sensitivity,” he said.

Site Management Application, the latest addition to Edwards’ data analytics portfolio, is designed to provide insight into maintenance activities, equipment performance and fault resolution.

Solid State Technology and SEMI today announced the recipient of the 2017 “Best of West” Award – BISTel for its Dynamic Fault Detection (DFD®) system. The award recognizes important product and technology developments in the electronics manufacturing supply chain. Held in conjunction with SEMICON West, the largest and most influential electronics manufacturing exposition in North America, the Best of West finalists were selected based on their financial impact on the industry, engineering or scientific achievement, and/or societal impact.

BISTel’s Dynamic Fault Detection (DFD®) system offers full trace data coverage and eliminating the need for timely and costly modeling and set up. DFD® is also a bridge to smart factory manufacturing because it integrates seamlessly to legacy FDC systems meaning customers can access the most comprehensive, and accurate fault detection system on the market. (South Hall Booth 1811).

“There’s a big emphasis in smart manufacturing at this year’s SEMICON West,” said Pete Singer, Editor-in-Chief of Solid State Technology. “The BISTel dynamic fault detection system is a great example of a fantastic smart tool now available to semiconductor manufacturers.”

About SEMI

SEMI® connects over 2,000 member companies and 1.3 million professionals worldwide to advance the technology and business of electronics manufacturing. SEMI members are responsible for the innovations in materials, design, equipment, software, devices, and services that enable smarter, faster, more powerful, and more affordable electronic products. FlexTech, the Fab Owners Alliance (FOA) and the MEMS & Sensors Industry Group (MSIG) are SEMI Strategic Association Partners, defined communities within SEMI focused on specific technologies. Since 1970, SEMI has built connections that have helped its members prosper, create new markets, and address common industry challenges together. SEMI maintains offices in Bangalore, Berlin, Brussels, Grenoble, Hsinchu, Seoul, Shanghai, Silicon Valley (Milpitas, Calif.), Singapore, Tokyo, and Washington, D.C.  For more information, visit www.semi.org and follow SEMI on LinkedIn and Twitter.

About Extension Media

Extension Media is a publisher of over 20 business-to-business magazines (including Solid State Technology), resource catalogs, newsletters and web sites that address high-technology industry platforms and emerging technologies such as chip design, embedded systems, software and infrastructure, intellectual property, architectures, operating systems and industry standards. Extension Media publications serve several markets including Electronics, Software/IT and Mobile/Wireless. Extension Media is a privately held company based in San Francisco, Calif. For more information, visit www.extensionmedia.com.

BY PETE SINGER

There’s an old proverb that the shoemaker’s children always go barefoot, indicating how some professionals don’t apply their skills for themselves. Until lately, that has seemed the case with the semiconductor manufacturing industry which has been good at collecting massive amounts of data, but no so good at analyzing that data and using it to improve efficiency, boost yield and reduce costs. In short, the industry could be making better use of the technology it has developed.

That’s now changing, thanks to a worldwide focus on Industry 4.0–more commonly known as “smart manufacturing” in the U.S. – which represents a new approach to automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the Internet of things, cloud computing, cognitive computing and the use of artificial intelligence/deep learning.

At SEMICON West this year, these trends will be showcased in a new Smart Manufacturing Pavilion where you’ll be able to see – and experience – data-sharing breakthroughs that are creating smarter manufacturing processes, increasing yields and profits, and spurring innovation across the industry. Each machine along the Pavilion’s multi-step line is displayed, virtually or with actual equipment on the floor – from design and materials through front-end patterning, to packaging and test to final board and system assembly.

In preparation for the show, I had the opportunity to talk to Mike Plisinski, CEO of Rudolph Technologies, the sponsor of the Smart Pavilion about smart manufacturing. He said in the past “the industry got very good at collecting a lot of data. We sensors on all kinds of tools and equipment and we’d track it with the idea of being able to do predictive maintenance or predictive analytics. That I think had minimal success,” he said.

What’s different now? “With the industry consolidating and the supply chains and products getting more complex that’s created the need to go beyond what existed. What was inhibiting that in the past was really the ability to align this huge volume of data,” he said. The next evolution is driven by the need to improve the processes. “As we’ve gone down into sub-20 nanometer, the interactions between the process steps are more complex, there’s more interaction, so understanding that interaction requires aligning digital threads and data streams.” If a process chamber changed temperature by 0.1°C, for example, what impact did it have on lithography process by x, y, z CD control. That’s the level of detail that’s required.

“That has been a significant challenge and that’s one of the areas that we’ve focused on over the last four, five years — to provide that kind of data alignment across the systems,” Plisinski said.

Every company is different, of course, and some have been managing this more effectively than others, but the cobbler’s children are finally getting new shoes.

AMD (NASDAQ:AMD) today announced awards for key suppliers that contributed to the successful launch of 10 new high-performance computing and graphics product families in 2017. The companies honored demonstrated commitment to AMD through excellence in delivery of material, services and technology.

“Our multi-year strategy to design and deliver high-performance products requires a team effort across our global supply chain. Our deep collaboration with our ecosystem of suppliers enables AMD to focus on bringing innovation and choice to the market,” said Keivan Keshvari, senior vice president of Global Operations for AMD. “We look forward to continuing this shared success with our suppliers as market momentum continues to grow for our Ryzen™, Radeon™ and EPYC™ products. Beyond these acknowledgements, AMD extends thanks and appreciation to its entire global network of suppliers for their role supporting our joint success.”

2017 was a successful year for AMD fueled by a record number of innovative product launches delivered to the market. The following suppliers are being recognized as those who played a leading role in enabling these results:

The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, this week released the following statement regarding the Trump Administration’s announcement on tariffs on products imported from China.

“While the U.S. semiconductor industry shares the Trump Administration’s concerns about China’s forced technology transfer and intellectual property (IP) practices, the proposed imposition of tariffs on semiconductors from China, most of which are actually researched, designed, and manufactured in the U.S., is counterproductive and fails to address the serious IP and industrial policy issues in China. We look forward to working with the Administration to explain why imposing tariffs on our products would be harmful to our competitiveness and does not address our challenges with China.”

SIA seeks to strengthen U.S. leadership of semiconductor manufacturing, design, and research by working with Congress, the Administration and other key industry stakeholders to encourage policies and regulations that fuel innovation, propel business and drive international competition. Learn more at www.semiconductors.org.