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Atlas Copco Group has announced its agreement to acquire the cryogenic business of Brooks Automation, Inc through its wholly owned US entity Edwards Vacuum LLC. Once the deal is complete, which is expected to be in the first quarter of 2019, it will significantly expand Edwards’ offering to the global semiconductor industry.

Brooks Automation, headquartered in Chelmsford, USA is a market leader in the provision of advanced cryopumps and associated products for the semiconductor industry through its CTI-Cryogenics and Polycold brands.

The acquisition includes cryopump operations in Chelmsford, MA and Monterrey, Mexico as well as a worldwide network of sales and service centres. Brooks Automation’s 50% shareholding in Japan-based joint venture company Ulvac Cryogenics Inc is also part of the deal.

The acquired business will become part of the Semiconductor and Semiconductor Service divisions within Atlas Copco’s Vacuum Technique business area and will significantly expand Edwards’ chamber solutions offering to customers in the semiconductor industry.

Paul Rawlings, President of the Semiconductor division, said: “The acquisition of Brooks Automation’s cryogenic business will help us cement our position as a trusted partner to the world’s leading semiconductor OEMs by enabling the expansion of our current chamber solutions offering through the addition of new technologies and products.”  The planned acquisition is subject to regulatory approvals.

Further information about Edwards can be found at www.edwardsvacuum.com

GLOBALFOUNDRIES today announced an important step in its transformation, continuing the trajectory launched with the appointment of Tom Caulfield as CEO earlier this year. In line with the strategic direction Caulfield has articulated, GF is reshaping its technology portfolio to intensify its focus on delivering truly differentiated offerings for clients in high-growth markets.

GF is realigning its leading-edge FinFET roadmap to serve the next wave of clients that will adopt the technology in the coming years. The company will shift development resources to make its 14/12nm FinFET platform more relevant to these clients, delivering a range of innovative IP and features including RF, embedded memory, low power and more. To support this transition, GF is putting its 7nm FinFET program on hold indefinitely and restructuring its research and development teams to support its enhanced portfolio initiatives. This will require a workforce reduction, however a significant number of top technologists will be redeployed on 14/12nm FinFET derivatives and other differentiated offerings.

“Demand for semiconductors has never been higher, and clients are asking us to play an ever-increasing role in enabling tomorrow’s technology innovations,” Caulfield said. “The vast majority of today’s fabless customers are looking to get more value out of each technology generation to leverage the substantial investments required to design into each technology node. Essentially, these nodes are transitioning to design platforms serving multiple waves of applications, giving each node greater longevity. This industry dynamic has resulted in fewer fabless clients designing into the outer limits of Moore’s Law. We are shifting our resources and focus by doubling down on our investments in differentiated technologies across our entire portfolio that are most relevant to our clients in growing market segments.”

In addition, to better leverage GF’s strong heritage and significant investments in ASIC design and IP, the company is establishing its ASIC business as a wholly-owned subsidiary, independent from the foundry business. A relevant ASIC business requires continued access to leading-edge technology. This independent ASIC entity will provide clients with access to alternative foundry options at 7nm and beyond, while allowing the ASIC business to engage with a broader set of clients, especially the growing number of systems companies that need ASIC capabilities and more manufacturing scale than GF can provide alone.

GF is intensifying investment in areas where it has clear differentiation and adds true value for clients, with an emphasis on delivering feature-rich offerings across its portfolio. This includes continued focus on its FDXTM platform, leading RF offerings (including RF SOI and high-performance SiGe), analog/mixed signal, and other technologies designed for a growing number of applications that require low power, real-time connectivity, and on-board intelligence. GF is uniquely positioned to serve this burgeoning market for “connected intelligence,” with strong demand in new areas such as autonomous driving, IoT and the global transition to 5G.

“Lifting the burden of investing at the leading edge will allow GF to make more targeted investments in technologies that really matter to the majority of chip designers in fast-growing markets such as RF, IoT, 5G, industrial and automotive,” said Samuel Wang, research vice president at Gartner. “While the leading edge gets most of the headlines, fewer customers can afford the transition to 7nm and finer geometries.  14nm and above technologies will continue to be the important demand driver for the foundry business for many years to come. There is significant room for innovation on these nodes to fuel the next wave of technology.”

By Jay Chittooran

In testimony last week before a U.S. government interagency panel considering tariffs on $200 billion worth of Chinese goods, SEMI called for the removal of nearly 100 tariff lines, all of which cover items critical to the semiconductor manufacturing process, including materials and machines.

Jonathan Davis, global vice president of advocacy at SEMI, explained in his testimony that while SEMI strongly supports efforts to better protect valuable intellectual property (IP), tariffs will not help address Chinese trade practices, and will ultimately have significant and unintended consequences. SEMI asserts that these tariffs will harm companies in the semiconductor supply chain by increasing business costs, introducing uncertainty, and stifling innovation. Collectively, SEMI estimates that this round of tariffs will cost its 400 U.S. members more than tens of millions annually in additional duties. All told, SEMI estimates that all U.S. and Chinese retaliatory tariffs will cost members nearly $700 million in annual duties.

SEMI’s full written comments note that these tariffs, on top of those already in force and the retaliatory tariffs, will hamstring the industry. The tariffs seem to target U.S. firms for simply operating in China. Given that tools and materials are extremely complex, precise, and difficult to manufacture, it is unreasonable to believe that a constituent component can simply be replaced with a part from another source. Further, this U.S. government approach does not take into account that many items  subject to these tariffs are not available, at sufficient quality and cost, from domestic sources, or even non-Chinese sources. We stand steadfast in our belief that this trade action will raise prices, put thousands of high-paying and high skill jobs at risk, and curb growth.

Over the past four months, SEMI submitted written comments and offered testimony on the two previous rounds of tariffs, citing the damaging impact tariffs would have on the U.S. semiconductor industry. The first round of tariffs – on $34 billion worth of Chinese goods – took effect July 6, and the second round – targeting $16 billion in Chinese imports – will be imposed on August 23. The tariffs hit machines and tools central to the semiconductor industry, including equipment used to manufacture wafers, boules, and chips as well as test, inspection and sensing equipment.

We urge SEMI members to review the $200 billion U.S. tariff list to determine the level, if any, of impact. We also strongly encourage members to review Chinese retaliatory lists as well. Any SEMI members who have questions, should contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].

Originally published on the SEMI blog.

By Christopher Morales, Head of Security Analytics, Vectra

On August 3, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), the largest chip fabricator globally introduced a WannaCry Ransomware cryptowormvariant onto its information technology/operational technology (IT/OT) networks. A TSMC supplier installed infected software on a new fabrication tool and connected it to the network, facilitating the malware infestation.

The infection spread quickly, taking out 10,000+ unpatched Windows 7 machines that run the chip fab company’s tool automation interface. The crypto worm crashed and rebooted systems endlessly, forcing several plants in Taichung, Hsinchu andTainan to shut down through much of the weekend.

The infection crippled materials handling systems and production equipment as well as Windows 7 computers. Some of the plants were producing SoC chips for the AppleiPhone 8 and X models. The incident’s connection to Apple and the iPhone heightened its visibility in the news media.

According to TSMC CEO C.C. Wei, patching for the Windows 7 machines requires computer downtime and collaboration with equipment suppliers. The absence of currentpatches created an environment where WannaCry could easily propagate.

The 2018 Spotlight Report on Manufacturing published by Vectra a few weeks before the incident foretold TSMC’s infection, which could cost the company as much as $255 million.

Smart manufacturer cybersecurity risks are increasing

According to the TSMC website, the company had “introduced new applications such as IoT, intelligent mobile devices and mobile robots to consolidate data collection, yield traceability, workflow efficiency, and material transportation to continuously enhance fab operation efficiency.” Further, TSMC had “integrated automatic manufacturing systems,” according to its website.

These innovations are typical in the evolution of Industry 4.0, which has increased the risk of cyber attacks against manufacturers.

But as manufacturers moved from air-gapped industrial systems to cloud-connectedsystems as part of the IT/OT convergence – using unpartitioned networks and insufficient access controls for proliferating IIoT devices – they created a massive, vulnerable attack surface, according to the Vectra report.

While air-gapped systems such as industrial controls have no connections by design to guard against malicious tampering, IT/OT convergence has connected these systems to information technologynetworks with little accounting for security vulnerabilities.

Many factories connect IIoT devices to flat, unpartitioned networks that rely on communication with general computing devices and enterprise applications. Since IIoT devices support few if any native cybersecurity measures, connecting them to easily infected applications, computers and unsegregated IP networks only invites trouble.

In the past, manufacturers relied on more customized, proprietary protocols, which made mounting an attack more difficult for cybercriminals. The conversion from proprietary protocols to standard protocols makes it easier to infiltrate networks to spy, spread and steal.

Few if any cyberattackers know and understand the proprietary protocols those closed legacy systems used. But it’s easy for most criminal hackers and their exploits to access standard IP network protocols just as WannaCry abuses the SMB protocol where there is no patch.

Real-time network visibility is crucial 

Industry 4.0 brings with it a new operational risk for connected, smart manufacturers and digital supply networks. The interconnected nature of Industry 4.0-driven operations and the pace of digital transformation mean that cyber attacks can have far more damaging effects than ever before, and manufacturers and their supply networks may not be preparedfor the risks.

Wherever cyber attacks interfere business continuity for business and information processes, they can also disrupt operational technologies that render products and get them out the door.

For cyber-risk to be adequately addressedin the age of Industry 4.0, manufacturing organizations need to ensure that proper visibility and response capabilities are in place to detect and respond to events as they occur. As in the case of the TSMC ransomware debacle, anything less than real-time detection and response is too little, too late to avoid production downtime.

There is no visibility into these systems to enable real-time detection before cyber attacks spread. Visibility into these internal connected systems is necessary to curtail the extent of damage from a cyberattack.

Manufacturing security operations now require automated, real-time analysis of entire networks to proactively detect and respond to in-progress threats before they do damage.

The Vectra 2018 Spotlight Report on Manufacturing

The 2018 Spotlight Report on Manufacturing delineates the many attack types and behaviors that the Cognito platform captured. The Cognito threat-detection and hunting platform monitored traffic and collected rich metadata from more than 4million devices and workloads from customer cloud, data center, and enterprise environmentsto reveal the cyberattacker behaviors.

Cyber attacks on manufacturers increased in severity from January to June 2018 based on data that the Vectra Cognito platform collected. The Vectra report confirms that all manufacturing industries are at equal risk of cyberattacks.

To learn about other findings pertinent to your Industry 4.0 cybersecurity risk, download the 2018 Spotlight Report on Manufacturing.

Christopher Morales is the head of security analytics at Vectra, a San Jose, Calif. cybersecurity firm that detects hidden cyberattacks and helps threat hunters improve the efficiency of incident investigations.

The 35 must-watch technologies represented on the Gartner Inc. Hype Cycle for Emerging Technologies, 2018 revealed five distinct emerging technology trends that will blur the lines between humans and machines. Emerging technologies, such as artificial intelligence (AI), play a critical role in enabling companies to be ubiquitous, always available, and connected to business ecosystems to survive in the near future.

“Business and technology leaders will continue to face rapidly accelerating technology innovation that will profoundly impact the way they engage with their workforce, collaborate with their partners, and create products and services for their customers,” said Mike J. Walker, research vice president at Gartner. “CIOs and technology leaders should always be scanning the market along with assessing and piloting emerging technologies to identify new business opportunities with high impact potential and strategic relevance for their business.”

The Hype Cycle for Emerging Technologies report is the longest-running annual Gartner Hype Cycle, providing a cross-industry perspective on the technologies and trends that business strategists, chief innovation officers, R&D leaders, entrepreneurs, global market developers and emerging-technology teams should consider in developing emerging-technology portfolios.

The Hype Cycle for Emerging Technologies is unique among most Gartner Hype Cycles because it garners insights from more than 2,000 technologies into a succinct set of 35 emerging technologies and trends. This Hype Cycle specifically focuses on the set of technologies that is showing promise in delivering a high degree of competitive advantage over the next five to 10 years (see Figure 1).

Source: Gartner (August 2018)

Five Emerging Technology Trends

Democratized AI

AI technologies will be virtually everywhere over the next 10 years. While these technologies enable early adopters to adapt to new situations and solve problems that have not been encountered previously, these technologies will become available to the masses — democratized. Movements and trends like cloud computing, the “maker” community and open source will eventually propel AI into everyone’s hands.

This trend is enabled by the following technologies: AI Platform as a Service (PaaS), Artificial General Intelligence, Autonomous Driving (Levels 4 and 5), Autonomous Mobile Robots, Conversational AI Platform, Deep Neural Nets, Flying Autonomous Vehicles, Smart Robots, and Virtual Assistants.

“Technologies representing democratized AI populate three out of five sections on the Hype Cycle, and some of them, such as deep neural nets and virtual assistants, will reach mainstream adoption in the next two to five years,” said Mr. Walker. “Other emerging technologies of that category, such as smart robots or AI PaaS, are also moving rapidly through the Hype Cycle approaching the peak and will soon have crossed it.”

Digitalized Ecosystems

Emerging technologies require revolutionizing the enabling foundations that provide the volume of data needed, advanced compute power and ubiquity-enabling ecosystems. The shift from compartmentalized technical infrastructure to ecosystem-enabling platforms is laying the foundations for entirely new business models that are forming the bridge between humans and technology.

This trend is enabled by the following technologies: Blockchain, Blockchain for Data Security, Digital Twin, IoT Platform and Knowledge Graphs.

“Digitalized ecosystem technologies are making their way to the Hype Cycle fast,” said Walker. “Blockchain and IoT platforms have crossed the peak by now, and we believe that they will reach maturity in the next five to 10 years, with digital twins and knowledge graphs on their heels.”

Do-It-Yourself Biohacking

Over the next decade, humanity will begin its “transhuman” era: Biology can then be hacked, depending on lifestyle, interests and health needs. Biohacking falls into four categories: technology augmentation, nutrigenomics, experimental biology and grinder biohacking. However, questions remain about how far society is prepared to accept these kinds of applications and what ethical issues they create.

This trend is enabled by the following technologies: Biochips, Biotech — Cultured or Artificial Tissue, Brain-Computer Interface, Augmented Reality, Mixed Reality and Smart Fabrics.

Emerging technologies in do-it-yourself biohacking are moving rapidly through the Hype Cycle. Mixed reality is making its way to the Trough of Disillusionment, and augmented reality almost reached the bottom. Those pioneers will be followed by biochips, which have just reached the peak and will have moved on to the plateau in five to 10 years.

Transparently Immersive Experiences

Technology will continue to become more human-centric to the point where it will introduce transparency between people, businesses and things. These technologies extend and enable smarter living, work, and other spaces we encounter.

This trend is enabled by the following technologies: 4D Printing, Connected Home, Edge AI, Self-Healing System Technology, Silicon Anode Batteries, Smart Dust, Smart Workspace and Volumetric Displays.

“Emerging technologies representing transparently immersive experiences are mostly on their way to the peak or — in the case of silicon anode batteries — just crossed it,” said Mr. Walker. “The smart workspace has moved along quite a bit and is about to peak in the near future.”

Ubiquitous Infrastructure

Infrastructure is no longer in the way of obtaining an organization’s goals. The advent and mass popularity of cloud computing and its many variations have enabled an always-on, available and limitless infrastructure compute environment.

This trend is enabled by the following technologies: 5G, Carbon Nanotube, Deep Neural Network ASICs, Neuromorphic Hardware and Quantum Computing.

Technologies supporting ubiquitous infrastructure are on track to reach the peak and move fast along the Hype Cycle. 5G and deep neural network ASICs, in particular, are expected to reach the plateau in the next two to five years.

Gartner clients can read more in the report “Hype Cycle for Emerging Technologies, 2018.” This research is part of the Gartner Trend Insight Report, “2018 Hype Cycles: Riding the Innovation Wave”. With profiles of technologies, services and disciplines spanning over 100 Hype Cycles, this Trend Insight Report is designed to help CIOs and IT leaders respond to the opportunities and threats affecting their businesses, take the lead in technology-enabled business innovations and help their organizations define an effective digital business strategy.

Additional analysis on emerging technologies will be presented during Gartner Symposium/ITxpo, the world’s most important gathering of CIOs and other senior IT executives. IT executives rely on these events to gain insight into how their organizations can use IT to overcome business challenges and improve operational efficiency. Follow news and updates from the events on Twitter using #GartnerSYM.

Upcoming dates and locations for Gartner Symposium/ITxpo include:

17-20 September 2018: Cape Town, South Africa

14-18 October 2018: Orlando, Florida

22-25 October 2018: Sao Paulo, Brazil

29 October-1 November 2018: Gold Coast, Australia

4-8 November 2018: Barcelona, Spain

12-14 November 2018: Tokyo, Japan

13-16 November 2018: Goa, India

4-6 March 2019: Dubai, UAE

3-6 June 2019: Toronto, Canada

Global semiconductor industry revenue grew 4.4 percent, quarter over quarter, in the second quarter of 2018, reaching a record $120.8 billion. Semiconductor growth occurred in all application markets and world regions, according to IHS Markit (Nasdaq: INFO).

“The explosive growth in enterprise and storage drove the market to new heights in the second quarter,” said Ron Ellwanger, senior analyst and component landscape tool manager, IHS Markit. “This growth contributed to record application revenue in data processing and wired communication markets as well as in the microcomponent and memory categories.”

Due to the ongoing growth in the enterprise and storage markets, sequential microcomponent sales grew 6.5 percent in the second quarter, while memory semiconductor revenue increased 6.4 percent. “Broadcom Limited experienced exceptional growth in its wired communication division, due to increased cloud and data-center demand,” Ellwanger said.

Memory component revenue continued to rise in the second quarter, compared to the previous quarter, reaching $42.0 billion dollars. “This is the ninth consecutive quarter of rising revenue from memory components, and growth in the second quarter of 2018 was driven by higher density in enterprise and storage,” Ellwanger said. “This latest uptick comes at a time of softening prices for NAND flash memory. However, more attractive pricing for NAND memory is pushing SSD demand and revenue higher.”

Semiconductor market share

Samsung Electronics continued to lead the overall semiconductor industry in the second quarter with 15.9 percent of the market, followed by Intel at 13.9 percent and SK Hynix at 7.9 percent. Quarter-over-quarter market shares were relatively flat, with no change in the top-three ranking. SK Hynix achieved the highest growth rate and record quarterly sales among the top three companies, recording 16.4 percent growth in the second quarter.

Murata, a manufacturer of electronic components, is significantly increasing global production capacity, including most recently its factory located in Finland. After having recently purchased the previously leased buildings, the company will construct a new building of approximately 16,000 square meters. The new facility is scheduled to be completed by the end of 2019.

The total value of the investment is five billion yen and is underpinned by the growing worldwide demand for MEMS sensors used in the automotive industry and various health and industrial applications.

“The market for advanced driver-assistance systems, self-directed cars, healthcare, and other emerging technologies are expected to be significant growth drivers. MEMS sensors are critical solutions for these applications and deliver proven measurement accuracy and stability in a variety of conditions,” said Yuichiro Hayata, Managing Director for Murata Electronics Oy.

“With the construction of this new production building, we will significantly increase our MEMS sensors production capacity. Moreover, by responding to the strong demand of gyro sensors, accelerometers, and combo sensors in the automotive, industry and healthcare fields, this will strengthen our business base in the automotive market, industrial equipment and medical devices market, while contributing to the economy and employment of Finland,” stated Makoto Kawashima, Director of Sensor Product Division in Murata Manufacturing.

Developing operations with long-term perspective

With the factory expansion in Finland, Murata will strengthen both R&D and manufacturing operations with a long-term perspective for increasing utilization of this facility. The company currently employs 1,000 people in Finland and estimates to create 150–200 new jobs in 2018–2019.

Murata acquired the Finnish company VTI Technologies – today known as Murata Electronics Oy – in 2012. It is the only factory of Murata which manufactures MEMS sensors outside of Japan, and has experienced tremendous growth over the last 10 years. This site in Finland also hosts R&D space and one of the biggest clean room facilities in the country.

Murata Electronics Oy

Murata Electronics Oy is part of the Japanese Murata Group. The company is located in Vantaa and specializes in the development and manufacture of 3D MEMS (micro electro mechanical systems) sensors mainly for safety critical applications in automotive, as well as in healthcare and industrial applications. The company employs 1000 people in Finland.

IC Insights released its August Update to the 2018 McClean Report earlier this month.  This Update included a discussion of the top-25 semiconductor suppliers in 1H18 (the top-15 1H18 semiconductor suppliers are covered in this research bulletin) and Part 1 of an extensive analysis of the IC foundry market and its suppliers.

The top-15 worldwide semiconductor (IC and O-S-D—optoelectronic, sensor, and discrete) sales ranking for 1H18 is shown in Figure 1.  It includes seven suppliers headquartered in the U.S., three in Europe, two each in South Korea and Taiwan, and one in Japan.  After announcing in early April 2018 that it had successfully moved its headquarters location from Singapore to the U.S. IC Insights now classifies Broadcom as a U.S. company.

Figure 1

As shown, all but four of the top 15 companies had double-digit year-over-year growth in 1H18. Moreover, seven companies had ≥20% growth, including the five big memory suppliers (Samsung, SK Hynix, Micron, Toshiba/Toshiba Memory, and Western Digital/SanDisk) as well as Nvidia and ST.

The top-15 ranking includes one pure-play foundry (TSMC) and four fabless companies. If TSMC were excluded from the top-15 ranking, U.S.-based Apple would have been ranked in the 15th position. Apple is an anomaly in the top company ranking with regards to major semiconductor suppliers. The company designs and uses its processors only in its own products—there are no sales of the company’s MPUs to other system makers. IC Insights estimates that Apple’s custom ARM-based SoC processors and other custom devices had a “sales value” of $3.5 billion in 1H18.

IC Insights includes foundries in the top-15 semiconductor supplier ranking since it has always viewed the ranking as a top supplier list, not a marketshare ranking, and realizes that in some cases the semiconductor sales are double counted. With many of our clients being vendors to the semiconductor industry (supplying equipment, chemicals, gases, etc.), excluding large IC manufacturers like the foundries would leave significant “holes” in the list of top semiconductor suppliers. Foundries and fabless companies are identified in the Figure. In the April Update to The McClean Report, marketshare rankings of IC suppliers by product type were presented and foundries were excluded from these listings.

Overall, the top-15 list shown in Figure 1 is provided as a guideline to identify which companies are the leading semiconductor suppliers, whether they are IDMs, fabless companies, or foundries.

In May 2018, Toshiba completed the $18.0 billion sale of its memory IC business to the Bain Capital-led consortium. Toshiba then repurchased a 40.2% share of the business. The Bain consortium goes by the name of BCPE Pangea and the group owns 49.9% of Toshiba Memory Corporation (TMC). Hoya Corp. owns the remaining 9.9% of TMC’s shares. The new owners have plans for an IPO within three years. Bain has said it plans to support the business in pursing M&A targets, including potentially large deals.

As a result of the sale of Toshiba’s memory business, the 2Q18 sales results shown in Figure 1 include the combined sales of the remaining semiconductor products at Toshiba (e.g., Discrete devices and System LSIs) and the new Toshiba Memory’s NAND flash sales. The estimated breakdown of these sales in 2Q18 is shown below:

Toshiba System LSI: $468M
Toshiba Discrete: $315M
Toshiba Memory Corporation: $3,107M
Total Toshiba/Toshiba Memory Corporation 2Q18 Sales: $3,890M

In total, the top-15 semiconductor companies’ sales surged by 24% in 1H18 compared to 1H17, four points higher than the total worldwide semiconductor industry 1H18/1H17 increase of 20%. Amazingly, the Big 3 memory suppliers—Samsung, SK Hynix, and Micron, each registered greater than 35% year-over-year growth in 1H18. Fourteen of the top-15 companies had sales of at least $4.0 billion in 1H18, three companies more than in 1H17. As shown, it took just over $3.7 billion in sales just to make it into the 1H18 top-15 semiconductor supplier list.

Intel was the number one ranked semiconductor supplier in 1Q17 but lost its lead spot to Samsung in 2Q17 as well as in the full-year 2017 ranking, a position it had held since 1993. With the continuation of the strong surge in the DRAM and NAND flash markets over the past year, Samsung went from having only 1% more total semiconductor sales than Intel in 1H17 to having 22% more semiconductor sales than Intel in 1H18!

It is interesting to note that memory devices are forecast to represent 84% of Samsung’s semiconductor sales in 2018, up three points from 81% in 2017 and up 13 points from 71% just two years earlier in 2016. Moreover, the company’s non-memory sales in 2018 are expected to be only $13.5 billion, up 8% from 2017’s non-memory sales level of $12.5 billion. In contrast, Samsung’s memory sales are forecast to be up 31% this year and reach $70.0 billion.

The Trump administration’s consideration of tariffs on Chinese printed circuit assemblies and connected devices would cost the economy $520.8 million and $2.4 billion annually for the 10 percent and 25 percent tariffs, respectively, according to a new study commissioned by the Consumer Technology Association (CTA).

“With the economy thriving under President Trump – we’ve seen remarkably low unemployment and a booming stock market – the administration shouldn’t jeopardize America’s global standing with tariffs,” said Gary Shapiro, CEO and president, CTA. “Foreign governments don’t pay the cost of tariffs, Americans do – and for that reason, U.S. trade policy needs to steer clear of tariffs that act like taxes on American manufacturers and consumers. The danger we face – the unintended consequence – is that tariffs mean Americans will pay more for all the devices they use every day to access the internet.”

The economic impact study shows American shoppers will have to pay between $1.6 billion and $3.2 billion more for connected devices such as gateways, modems, routers, smart speakers, smartwatches and other Bluetooth enabled products. The price of connected devices from China will increase by between 8.5 and 22 percent. And prices for these products from all sources will rise between 3.2 and 6.2 percent.

Similarly, the price of printed circuit assemblies from China –– will increase by between nine and 23 percent, while an alternative supply from U.S. manufacturers will cost two to three percent higher. As a result of higher input costs, totaling an additional $900 million to $1.8 billion, American manufacturers of products that contain printed circuit assemblies will purchase between six and 12 percent less from suppliers overall.

“When our government begins to charge its own companies and people with more taxes in the form of tariffs, we have put in jeopardy not just the American Dream of many small and mid-size businesses, but you put in jeopardy the people that work for them too,” said Win Cramer, CEO, JLab Audio, a California based company and CTA member. “These people support a growing economy, support a growing business and, most importantly, pay taxes. Pre-tariffs, JLab Audio was planning to scale up with new hires and programs to push our company’s growth to another level, but now we’ve put all of that on hold as we need to see how everything shakes out.”

Based on CTA’s most recent U.S. Consumer Technology Sales and Forecasts report, if the administration enacts tariffs of 10 and 25 percent, CTA projects 2019 U.S. unit shipments of connected devices such as fitness trackers, smartwatches, wireless headphones, modems/broadband gateways, wireless earbuds and smart speakers would decline by as much as 12 percent. Also, U.S. shipment revenues for these devices would decrease by as much as 6.5 percent in 2019.

On the heels of a 37.3% growth in wafer front end (WFE) semiconductor equipment growth in 2017, the market will grow only 10% in 2018 to $62.3 billion, according to the report “The Global Semiconductor Equipment: Markets, Market Shares, Market Forecasts,” recently published by The Information Network, (www.theinformationnet.com) a New Tripoli, PA-based market research company.

For the first six months of 2018, WFE billings were $35.3 billion, meaning billings of $27.0 billion will be registered in the second half of 2018 if the sector as a whole grows 10% in CY 2018.

This means a drop of 24% between 1H 2018 and 2H 2018.

The chart below shows that U.S. equipment companies held a 48.8% share of the total sector in 1H 2018 followed by Japan with a 30.3% share and ROW (primarily Europe) with a 26.9% share. For 2H 2018, the weak Japanese Yen means Japan will have a 29.1% share, but stronger EUV sales by ASML will mean Europe’s share will grow to 28.0%.

The memory market is moving into a period of oversupply: NAND oversupply started six months ago and has resulted in device price drops, while DRAMs will reach an oversupply situation in the next few months. As a result, market leader Samsung Electronics has pushed out purchases. Foundry leader TSMC has reduced its estimate for sales revenue growth in 2018 and its capital expenditure budget.