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Qualcomm Incorporated today announced that it has reached a resolution with China’s National Development and Reform Commission (NDRC) regarding the NDRC’s investigation of Qualcomm under China’s Anti-Monopoly Law (AML). The NDRC has issued an Administrative Sanction Decision finding that Qualcomm has violated the AML. Qualcomm will not pursue further legal proceedings contesting the NDRC’s findings. Qualcomm has agreed to implement a rectification plan that modifies certain of its business practices in China and that fully satisfies the requirements of the NDRC’s order.

Although Qualcomm is disappointed with the results of the investigation, it is pleased that the NDRC has reviewed and approved the Company’s rectification plan. The following are the key terms of the rectification plan:

  • Qualcomm will offer licenses to its current 3G and 4G essential Chinese patents separately from licenses to its other patents and it will provide patent lists during the negotiation process. If Qualcomm seeks a cross license from a Chinese licensee as part of such offer, it will negotiate with the licensee in good faith and provide fair consideration for such rights.
  • For licenses of Qualcomm’s 3G and 4G essential Chinese patents for branded devices sold for use in China, Qualcomm will charge royalties of 5% for 3G devices (including multimode 3G/4G devices) and 3.5% for 4G devices (including 3-mode LTE-TDD devices) that do not implement CDMA or WCDMA, in each case using a royalty base of 65% of the net selling price of the device.
  • Qualcomm will give its existing licensees an opportunity to elect to take the new terms for sales of branded devices for use in Chinaas of January 1, 2015.
  • Qualcomm will not condition the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement. However, this does not require Qualcomm to sell chips to any entity that is not a Qualcomm licensee, and does not apply to a chip customer that refuses to report its sales of licensed devices as required by its patent license agreement.

In addition, the NDRC imposed a fine on the Company of 6.088 billion Chinese Yuan Renminbi (approximately $975 million at current exchange rates), which Qualcomm will not contest. Qualcomm will pay the fine on a timely basis as required by the NDRC.

“We are pleased that the investigation has concluded and believe that our licensing business is now well positioned to fully participate in China’s rapidly accelerating adoption of our 3G/4G technology,” said Derek Aberle, president of Qualcomm. “We appreciate the NDRC’s acknowledgment of the value and importance of Qualcomm’s technology and many contributions to China, and look forward to its future support of our business in China.”

“Qualcomm has played an important role in the success of the mobile and semiconductor industries in China for many years, and we look forward to building upon this foundation as we grow our investments, engagement and business in China,” said Steve Mollenkopf, CEO of Qualcomm. “We are pleased that the resolution has removed the uncertainty surrounding our business in China, and we will now focus our full attention and resources on supporting our customers and partners in China and pursuing the many opportunities ahead.”

Qualcomm is proud to have contributed extensively for many years to the growth and success of the mobile and semiconductor industries in China, and plans to continue to grow its investments and collaborations going forward, including with China’s mobile operators and handset and other device suppliers, and within the Chinese semiconductor sector. Some recent examples of these investments and support include:

  • Providing extensive engineering assistance and support to China’s mobile operators in rolling out their 4G LTE networks in China.
  • Working closely with Chinese handset manufacturers to build their businesses both inside and outside of China as they seek to become top global brands and leading global suppliers of smartphones.
  • Expanding Qualcomm’s longstanding relationship with Semiconductor Manufacturing International Corporation (SMIC), one of China’s largest and most advanced semiconductor foundries, which has led to SMIC’s major milestone of producing high-performance, low-power mobile processors using cutting-edge advanced 28nm technology.
  • Creating a China-specific investment fund of $150 million to further the development of mobile and semiconductor technologies, including initial investments from the fund in five innovative Chinese companies.

Spansion Inc. and XMC, China’s fastest growing 300mm semiconductor foundry, today announced that the two companies will work together to develop and manufacture 3D NAND technology. The companies have signed development and cross-licensing agreements.

According to TechNavio, 3D NAND is expected to grow at a compounded annual growth rate of over 180 percent by 2018.  The increase in memory requirements and demand for low form factors for NAND flash is contributing to this growth.

“The explosion of data created by the rapid growth of the Internet of Things and more advanced automotive systems is placing greater demands on storage technologies. 3D NAND will revolutionize how data will be more efficiently stored in the future,” said Ali Pourkeramati, senior vice president of strategic alliances at Spansion.  “Our leading charge trap MirrorBit technology, which we invented over 10 years ago, will be the key advantage for 3D NAND innovation and will provide unparalleled high-performance data storage.”

“We are pleased to co-develop 3D NAND technology with Spansion,” said Michael Chen, Chief Business Officer of XMC. “XMC will continue to leverage its leading edge manufacturing capabilities, extensive volume production experience with charge trap technology and world-class R&D team in memory expertise. By partnering with Spansion, we are confident to successfully bring innovative 3D NAND technology to market. “

The first 3D NAND products will be available in 2017.

SEMICON Korea 2015 at COEX in Seoul opens tomorrow with more than 500 exhibiting companies and an expected 40,000 attendees. With the backdrop of Korea as a pacesetter in the industry in memory and DRAM, today’s SEMICON Korea press conference expressed an optimistic lookout, for both 2015 and for longer-term monolithic growth drivers, like the Internet of Things (IoT).

Denny McGuirk, president and CEO of SEMI, summarized recent 2015 semiconductor revenue forecasts, which ranged from IDC’s 3.6 percent to VLSI’s 7.8 percent (IC only). 2015 semiconductor equipment revenue forecasts varied from Gartner forecasting an increase of 5.6 percent to the 15.0 percent growth SEMI forecasted in early December, which would see revenues approaching historic 2011 spending levels.  For semiconductor materials, 2015 could also approach 2011 spending levels. McGuirk described silicon cycles moderating with year-to-year volatility becoming more rational within the consolidated industry.

Semiconductor manufacturing in Korea represents the largest region of installed 300mm fab capacity in the world, with much of the capacity targeted towards both advanced NAND Flash and DRAM.  Korea holds 40 percent of the worldwide Memory output, and is the market leader for installed Memory fab capacity.  According to the SEMI World Fab Forecast, DRAM was a significant driver for the 18 percent growth rates for semiconductor equipment in 2014 and is expected to again fuel growth in 2015. While NAND’s pricing and growth moderated, the tight capacity and expansion of DRAM applications and customer diversity roughly doubled the DRAM ASPs in three years.  Mobility continues to be the primary driver for the Memory market and has kept the pressure on scaling and added functionality. In addition, 3D-IC is now coming to fruition as a solution to NAND to ensure the costs continue to scale with size and transistor density.

Korea fab equipment spending (front-end) in 2015 is forecast to be US$7.8 billion, an almost 28 percent increase over 2014.The combined equipment and materials spending outlook for Korea in 2015 will likely top US$14 billion. The semiconductor, semiconductor equipment, and materials supply chain in Korea is developing depth and breadth and becoming a more complete ecosystem.

The LED market remains an important segment for SEMI members, and this market will experience strong double-digit growth in lighting applications over the next several years. Overall LED fab capacity expansion is stabilizing, and many manufactures continue to transition manufacturing to 4-inch diameter sapphire wafers. Similar to the capacity growth trends, spending on LED fab equipment is also stabilizing with 12 percent growth estimated for 2015. 

Keynotes tomorrow at SEMICON Korea will be presented by Samsung Electronics, Intel, and Cisco Systems. Highlights include: Semiconductor Technology Symposium which addresses the global trends and new technologies of the semiconductor manufacturing process; Supplier Search Program; OEM Supplier Search Meeting; Presidents Reception; and International Standards meetings.

SEMICON Korea 2015 is the leading semiconductor technology event to explore the latest market trends and future developments for technology, featuring extensive technical forums, business programs and standards programs. Key sponsors of SEMICON Korea 2015 include Samsung, SK Hynix, and Dongbu HiTek, plus Lam Research, Applied Materials, Wonik IPS, ASE Group, Advantest, Hanmi Semiconductor, and TEL.

The event is co-located with LED Korea 2015, the largest exhibition in the world for LED manufacturing. For more information on the events, visit SEMICON Korea: www.semiconkorea.org and LED Korea: www.led-korea.org.

ClassOne Technology, the wet-chemistry semiconductor equipment manufacturer, has announced the acquisition of two complete product lines from Microprocess Technologies. Included in the acquisition are the Microprocess Spin Rinse Dryer (SRD) and Spray Solvent Tool (SST) families — which have become ClassOne’s Trident SRD and SST lines. The news was jointly announced by Byron Exarcos, President of ClassOne, and Charles Brown, President of Microprocess Technologies.

“This acquisition is a natural fit for us, “ said Byron Exarcos. “ClassOne’s fundamental mission is to provide higher performance wet processing equipment at lower cost to the user, just as we’ve done with our Solstice electroplating tools — and that’s exactly what the new Trident SRDs and SSTs deliver.”

“It’s a win-win for us and for the industry,” said Charles Brown. “ClassOne will continue development and enhancement of the products, and they also will be able to make the tools available to a broader worldwide market.

“This acquisition is the culmination of a relationship that’s been in progress for some time with Microprocess Technologies,” said ClassOne CFO Richard Dotson. “Months ago we began with an exclusive sales agreement for the SRD and SST products, and now ClassOne has secured full ownership of both lines. The manufacturing will be moving to our Kalispell facility where ClassOne’s wet processing experience and ongoing product engineering will make these outstanding products even more advanced in the future.”

“ClassOne has been actively seeking opportunities to expand its offerings in high-growth segments of the industry,” said Exarcos. “Some of the emerging technologies such as MEMS, LEDs, power devices and RF are estimated to be growing at double-digit annual rates.”  He explained that in many of those fabs the Spray Solvent Tool is becoming an essential process-of-record tool for metal lift-off, resist strip and more. “In those scenarios Trident tools are being seen as attractive solutions,” said Exarcos, “because they’re able to handle a range of advanced processes at a cost substantially lower than competitive systems.”

Exarcos explained that many of the Trident performance advantages are the result of innovative and elegant design features, such as wrap-around heating to enhance drying, a Deluge spray manifold to improve rinsing and reduce particles, and ClassOne’s powerful new Solaris system controller.

Extreme ultraviolet lithography (EUV), 3D integration, and the Internet of Things will be among critical technologies featured at SPIE Advanced Lithography 2015 22 to 26 February in San Jose, California.

The SPIE symposium is the year’s premier lithography event, bringing together leading industry professionals and academic researchers for conference presentations, panel discussions, a suite of professional development courses, an exhibition featuring major industry suppliers, and numerous networking opportunities.

SPIE 2015 marks the 40th anniversary of the event, organized by SPIE, the international society for optics and photonics.

Conference topics are extreme ultraviolet lithography; alternative lithography; metrology, inspection, and process control; patterning materials and processes; optical lithography, DPI manufacturability, and advanced etch technology for nanopatterning. Panel discussions will explore metrology for 3D devices and dimensional scaling.

SPIE 2015 will once again provide a forum for meeting and interacting with a wide range of industry experts, researchers, and other key players in the field, noted symposium chair Mircea Dusa of ASML US, Inc., and symposium cochair Bruce Smith of the Rochester Institute of Technology. The event is unmatched as a forum for facilitating collaboration and networking, and for sharing the latest developments in areas of central importance in lithography, they said.

Plenary presentations from Xiaowei Shen, director of IBM Research in China; Tsu-Jae King Liu of the University of California, Berkley; and Alan Willner from the University of Southern California will open the conference program on Monday 23 February.

Shen will outline the technical challenges of building Internet-of-Things (IoT) cloud platforms and describe his experience in creating IoT solutions in fields such as renewable-energy forecasting and chronic-disease management.

Liu will detail challenges in transistor scaling and the cost-effective 3D integration required to sustain the growth of the semiconductor industry.

Willner will give an overview of the National Photonics Initiative (NPI) and detail recent success in advocacy for the semiconductor industry – including the announcement in November of a a $110 million matching funding commitment from the U.S. Department of Defense for a new Integrated Photonics Institute for Manufacturing Innovation.

Exhibiting companies including ASML, Zeiss, Mentor Graphics, ShinEtsu, TOK, Synopsys, JSR Micro, Tokyo Electron, Physik Instrumente, and Brewer Science will show the latest developments in equipment, software, and techniques, in the two-day exhibiton, 24-25 February.

New Fellows of SPIE from the lithography community will be recognized and the Frits Zernike Award for Microlithography will be presented.

The largest lithography expert gathering on the globe, SPIE 2015 is expected to host more than 2,400 individuals from more than 30 countries.

Gov. Charlie Baker today announced a $4 million dollar grant from the Massachusetts Technology Collaborative (“MassTech”) to UMass Lowell to support development of a printed and flexible electronics industry cluster, an emerging field that has the potential to become a $76 billion global market in the next decade.

The new Printed Electronics Research Collaborative (PERC) at UMass Lowell intends to position Massachusetts employers, large and small, to capitalize on the burgeoning printed and flexible electronics field, whether through direct development of products or as a piece of the supply chain. The PERC will initially focus on supporting the state’s defense cluster in printed electronics, but long-term, these technologies are expected to also have a broad range of applications in fields including health care, telecommunications and renewable energy. Printable electronics is currently a $16 billion global market and is projected to quadruple in 10 years, according to a 2014 report by IDTechEx.

“It is a privilege to announce today’s grant as another positive step forward for UMass Lowell, students and businesses across the Commonwealth. We have already seen great success stem from this partnership to fund research, support education and make new strides in innovation,” said Gov. Baker. “By connecting the incredible resources in our universities with the business community, the Commonwealth will continue to stimulate economic growth and create more good-paying jobs.”

The four-year grant award will be matched by $12 million in industry support and is being made as part of the Collaborative Research and Development Matching Grant Program, a $50 million dollar capital fund formed to support large-scale, long-term research projects that have high potential to spur innovation, cluster development and job growth in the Commonwealth. The fund was created as part of the 2012 Jobs Bill and is managed by the Innovation Institute at MassTech. Proposals are reviewed by an Investment Advisory Committee composed of executives from academia, industry, and the venture capital communities.

UMass Lowell Chancellor Marty Meehan and MassTech CEO Pamela Goldberg joined Gov. Baker at UMass Lowell’s Mark and Elisia Saab Emerging Technologies and Innovation Center, an 84,000-square-foot, state-of-the-art research facility where PERC will connect businesses with the expertise of UMass Lowell researchers. The MassTech grant will outfit laboratories and other research space at the Saab Center, also home to the Raytheon-UMass Lowell Research Institute, which will be among the participants in PERC. Other companies that have signed on include MicroChem of Westborough, Rogers Corp. of Burlington, SI2 Technologies of Billerica and Triton Systems of Chelmsford and more are expected, according to UMass Lowell Vice Provost for Research Julie Chen.

“Our mission is to convene industry, academia and government to catalyze economic opportunity in regions and clusters around the Commonwealth,” said Pamela Goldberg, CEO of the Massachusetts Technology Collaborative. “This project hits the mark on several fronts, including the potential to drive the development of innovative products and business growth. We are excited to partner with UMass Lowell and regional industry partners like Raytheon to expand R&D capacity and help advance this exciting new industry cluster.”

“UMass Lowell has decades of experience in partnering with businesses, large and small, to advance technologies and economic development. Not only does bringing our researchers together with innovators in industry stimulate economic growth, it offers our students unparalleled opportunities for experiential education,” Meehan told attendees, including representatives of the business and technology communities, UMass Lowell and the Lowell legislative delegation. “We are grateful to the Commonwealth for its investment in what we believe will be a model for academic and industry collaboration.”

Highlighting the importance of both public and private investment in the University of Massachusetts, today’s event also included the announcement by UMass Lowell that two of its most successful and generous alumni are making another multimillion-dollar gift to the campus and students, bringing their total commitment to the campus to nearly $10 million.

Robert and Donna Manning, Methuen natives who earned degrees at UMass Lowell, will commit an additional $4 million to the university to be used specifically for strategic initiatives in UMass Lowell’s Robert J. Manning School of Business and the School of Nursing.

The gift, combined with the MassTech grant, will strengthen the university’s North Campus Innovation District, located on University Avenue in Lowell. Made up of the Saab Center, the Manning School, the Lydon Library and nearby academic and laboratory complex, the district brings together the expertise of UMass Lowell’s engineering, science and business programs to provide ease of access for students, entrepreneurs and industry partners.

The business school was named for Rob Manning in May 2011 in recognition of the couple’s earlier multimillion-dollar commitment to the university. Since the Mannings graduated from UMass Lowell in the 1980s, they have supported capital and other initiatives at the university, including establishing the Robert and Donna Manning Endowment Fund, which supports scholarships for students majoring in nursing and business. Rob Manning began his career at MFS Investment Management shortly after receiving his UMass Lowell degree in business administration. He worked his way up from research analyst to chairman, a role he has held since 2010, overseeing billions of dollars in assets and employees in 80 countries around the world.  Donna Manning – whose career as an oncology nurse at a Boston hospital spans three decades – earned degrees in nursing and business administration at UMass Lowell.

“Donna and I received a world-class education at UMass Lowell that allowed us to become successful in our careers and our passion is to give back to future generations so they can fulfill their hopes and dreams,” said Rob Manning.

The latest commitment to UMass Lowell by the Mannings will support strategic priorities in the university’s School of Nursing and the Manning School of Business. Those include providing resources for the new dean of the business school as its new home, the Pulichino Tong Business Building, is constructed and outfitted, as well as equipping the new nursing simulation laboratory in the Health and Social Sciences Building.

“Once again, UMass Lowell is grateful to Rob and Donna Manning for their generosity and their support for the future of business and nursing education on our campus. They understand firsthand how a UMass Lowell education positions students for success after graduation and thanks to their gift, our students will be even more prepared they enter the job market,” said Meehan.

The automotive semiconductor market did exceptionally well in 2014, according to new analysis from IHS. Robust vehicle production growth, together with increased semiconductor content in cars charted a path of 10 percent growth year over year to reach $29B in 2014. IHS reports the fastest growing segments for automotive semiconductors are hybrid electric vehicles, telematics and connectivity and advanced driver assistance systems (ADAS).

The semiconductor revenue in these applications is forecast to achieve a compound annual growth rate (CAGR 2013–2018) of 20 percent, 19 percent and 18 percent respectively. The outlook for 2015 is also promising and the automotive semiconductor market is forecast to reach $31B, a strong 7.5 percent improvement over 2014.

Main growth drivers

Emissions legislations are leading semiconductor take rates in powertrain applications in regions around the world.

“The new concepts in emissions mitigation in the engine and in exhaust aftertreatment systems require advance sensors for their operation, said Ahad Buksh, analyst, automotive semiconductors, at IHS. “For example, a hybrid electric vehicle demands ten times more semiconductor content in powertrain,” he said.

Some of the key semiconductor applications for these vehicles include: a motor inverter is needed to convert the direct current to alternating current and vice versa, DC/DC converter is needed for bidirectional voltage control, battery management system is needed to monitor the state of the battery and plug-in charger required for charging the battery. All these applications require high-power management which will be achieved mainly with analog integrated circuits (ICs) and discrete components. After 24 percent growth in 2014, this segment is forecast to increase 22 percent in 2015, the highest of any automotive application.

Safety mandates and guidelines are driving the adoption of ADAS technology. Because of the encouragement of regional authorities and regulators for better safety standards, OEMs are increasingly adopting ADAS applications such as Lane Departure Warning (LDW), Forward Collision Warning (FCW) and Automatic Emergency Braking (AEB), among other technologies. These applications are being implemented with a front view camera module besides radar and lidar modules, providing high potential for semiconductor growth. A higher processing power (DMIPS) in micro-component ICs, increased non-volatile memory for image storage and increased volatile memory for execution of image processing functions would be required for these applications. The semiconductor market for ADAS technology is expected to reach $1.8B in 2015, a 21 percent increase over 2014.

The infotainment domain also provides strong growth opportunities for the future.  An important trend in head-units is the high-definition video function. It primarily comes from the adoption of consumer and mobile devices. This is also reflected in the incredible growth of the consumer electronic suppliers in the automotive industry, including Nvidia, which is estimated to have grown more than 80 percent in 2014.

The next five years are extremely important for telematics and broadband technology as well. 4G LTE technology will continue to grow in 2015, marking an inflection point toward sunset on 2G and 2.5G solutions in years to come. In the instrument cluster, the trend is moving from conventional analog to hybrid and fully digital instrument clusters. At the moment, the premium OEMs are going for a digital approach for their high-end vehicles, but in the long run, having digital instrument clusters in all the vehicles could be an option as well.

2014 Winners

2014 has seen a major change in the automotive supply chain, according to the Competitive Landscaping Tool CLT – Automotive – Q4 2014, now available from IHS Technology.  It has been a great year for Infineon, which enjoyed double digit revenue growth. Infineon has a strong presence in Powertrain, Chassis and Safety and Body and Convenience domains. Increased electrification in vehicles has helped its power management solutions, including the micro-component ICs.  Infineon, which was lagging more than $500 million behind Renesas in 2013, has now taken the lead over Renesas, who had been leading the market for many years.

IHS research indicates this change is largely due to fluctuation rates between the U.S. Dollar and the Japanese Yen, but it does not take into account the acquisition of International Rectifier, which was still in process in 2014. Now that the acquisition is complete, Infineon will further increase its lead over Renesas. International Rectifier’s strong presence in low-power insulated-gate bipolar transistor (IGBT), power modules and power metal-oxide-semiconductor field-effect transistor (MOSFET) arenas will particularly reinforce Infineon’s position in the key growing applications.

Based on the IHS analysis, other suppliers and their ranks are as follows:

Top Winners among Automotive Semiconductors Suppliers in 2014

Supplier

Rank, 2014

Rank, 2013

Market Share, 2014

Market Share, 2013

Key Drivers

Infineon

1

2

9.8%

9.2%
  • Strong growth in Chassis and Safety, Powertrain and Body and Convenience
  • Infineon’s power management solution benefit from HEV/EVs market

Freescale

4

4

7.4%

7.0%
  • Distinctive presence in fast growing segments such as Infotainment, ADAS and HEV/EVs

Texas Instruments

5

7

6.4%

5.3%
  • Strong year for TI’s embedded processors especially in ADAS and Infotainment

On Semiconductors

8

8

3.6%

2.9%
  • Increased position in ADAS with acquisition of Aptina’s CMOS imaging sensors

Micron

9

13

2.5%

1.8%
  • Increased its share in memory ICs for infotainment with its DRAM and eMMC solutions

Source: IHS

Gigaphoton Inc., a lithography light source manufacturer, today announced that the company has been recognized with a 2015 Partnership Award from Toshiba Semiconductor & Storage Company’s Yokkaichi Operations, a world production base of NAND flash memory devices. Gigaphoton received this award for its efforts in developing innovative solutions for reducing the consumption of rare gas, thereby contributing to a great reduction of materials cost.

Gigaphoton has been providing semiconductor device manufacturers with its green innovations, including its “Helium-Free Purge Process” and “eTGM Solution” that allow a great reduction in the consumption of rare gases, including helium and neon, used for the excimer lasers incorporated into semiconductor lithography tools. Gigaphoton’s green innovations have been highly recognized by Toshiba: Mr. Tomoharu Watanabe, General Manager of the Yokkaichi Operations awarded a trophy and certificate to Gigaphoton Inc., on January 6.

“We are honored to receive this award from one of the leading semiconductor device manufacturers, Toshiba Semiconductor & Storage Company’s Yokkaichi Operations,” commented Hitoshi Tomaru, President and CEO of Gigaphoton, “Last year, our green innovations were well accepted, and we were designated as a major vendor by the world’s six leading semiconductor device manufacturers. We are committed to maximizing our effort for providing technologies and products that are more productive for our customers.”

Gigaphoton developed a helium-free purge process that uses nitrogen, thereby reducing helium consumption by 99 percent (compared with the conventional purge process), and started marketing this process in 2013. In addition, the company developed the eTGM Solution, a new technology that reduces neon gas consumption by up to 50%; in 2014, it began providing this function free of charge until the supply of neon gas has returned to the normal condition. These technologies have been systematically developed and provided bases on the EcoPhoton program promoted by Gigaphoton to reduce the consumption of resources. The fruits of this EcoPhoton program have been highly recognized by the users, and currently are being introduced by major DRAM manufacturers.

North America-based manufacturers of semiconductor equipment posted $1.37 billion in orders worldwide in December 2014 (three-month average basis) and a book-to-bill ratio of 0.98, according to the December EMDS Book-to-Bill Report published today by SEMI. A book-to-bill of 0.98 means that $98 worth of orders were received for every $100 of product billed for the month.

The three-month average of worldwide bookings in December 2014 was $1.37 billion. The bookings figure is 12.3 percent higher than the final November 2014 level of $1.22 billion, and is 1.1 percent lower than the December 2013 order level of $1.38 billion.

The three-month average of worldwide billings in December 2014 was $1.39 billion. The billings figure is 17.0 percent higher than the final November 2014 level of $1.19 billion, and is 3.1 percent higher than the December 2013 billings level of $1.35 billion.

“While three-month averages for both bookings and billings increased, billings outpaced bookings slightly, nudging the book-to-bill ratio slightly below parity,” said SEMI president and CEO Denny McGuirk. “2015 equipment spending is forecast to remain on track for annual growth given the current expectations for the overall semiconductor industry.”

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of U.S. dollars.

 

Billings
(3-mo. avg)

Bookings
(3-mo. avg)

Book-to-Bill
July 2014 

$1,319.1

$1,417.1

1.07
August 2014 

$1,293.4

$1,346.1

1.04
September 2014 

$1,256.5

$1,186.2

0.94
October 2014 

$1,184.2

$1,102.3

0.93
November 2014 (final)

$1,189.4

$1,216.8

1.02
December 2014 (prelim)

$1,391.9

$1,366.2

0.98

Source: SEMI, January 2015

By Dr. Adam He, director of Industry Research and Consulting, SEMI China

In June 2014, the State Council of China issued the “National Guideline for the Development and Promotion of the IC Industry,” to support the domestic semiconductor industry. The document addresses development targets, approaches, and measures. It has echoed strongly across the semiconductor industry and attracted global attention due to the ambitious development targets and sizeable support for a national IC industry investment fund.

What’s new?

(1) The Ambitious Development Target

According to the Guideline, the China IC industry revenue should reach RMB350 billion in 2015, and maintain a CAGR of more than 20 percent through 2020. In other words, 2020 revenues are expected to reach US$143 billion, which is 3.5 times that of the US$40.5 billion in 2013. (Note: China IC Industrial revenue refers to the total IC companies’ sales revenue within China, including IC design companies, foundries, IDMs and OSAT companies.)

SEMI--Adam He--for China article

 

Technical and product targets in each segment of the IC industry are clearly defined in the Guideline. The major targets of each segment are listed below.

  • IC manufacturing: mass production for 32/38 nm process shall be realized by 2015 and 16/14 nm process shall be realized by 2020.
  • IC design: certain key technologies (e.g. mobile smart terminal, network communication) shall approach international first-tier level by 2015, and other strategic technologies shall achieve international leading edge by 2020.
  • IC packaging and test: revenue from mid-end to high-end technologies shall be more than 30% of total revenue by 2015, and key technologies shall achieve international leading edge by 2020.
  • Material: 12-inch silicon wafers produced in China shall be ready for use in device production by 2015, and enter global supply chain by 2020.
  • Equipment: 65-45nm key equipment manufactured in China shall be used into production line by 2015, and enter global supply chain by 2020.

(2) National IC Industry Investment Fund Establishment

The manner of industry support has markedly changed from previous policies. The new policy will be adopted with a market-based approach and implemented through national IC industry investment funds to support industry development.

As of December 16, 2014, the latest information indicates that ordinary share-raising for a national IC industry investment fund has been completed and RMB 98.72 billion (US$ 15.9 billion) has been raised. Preferred shares amounting to RMB 40 billion (US$ 6.5 billion) will be further issued in the first quarter of 2015, accumulating to more than RMB130 billion (US$ 21 billion).

Meanwhile, local IC industry investment funds have been established by the cities of Beijing, Shanghai, Wuhan, and Hefei. Of these, Beijing took the lead in establishing a fund in June 2014, totaling RMB 30 billion (US$ 4.8 billion). It is structured as a “fund of funds” and two sub-funds. One sub-fund, supporting for IC manufacturing and semiconductor equipment, is managed by CGP Investment (the “fund of funds” is also managed by CGP); the other sub-fund, supporting IC design and packaging, is managed by Hua Capital.  In addition, the Shanghai IC industry fund, named Shanghai Summitview Capital IC information industry merger fund, totaling RMB10 billion (US$ 1.6 billion) was established in November 2014.

The total government funds are estimated to reach to US$100 billion with the implementation of local industry funds.

What will happen?

It is anticipated that the new policies will exert a significant influence on the semiconductor ecosystem in China.

China’s semiconductor industry will be dramatically expanded given the scale of industry equity funds that are leveraged by government investments. The existing semiconductor industry in China is estimated to have more than 10 percent of global fab capacity and more than 20 percent of global packaging capacity. The new investments will contribute to a powerful expansion in China-based capacity and create a stronger and more globally prominent semiconductor industry in China.

Secondly, the investment and merger activity in the semiconductor industry in China has been very dynamic and will continue to be so with the new investment funds. These newly established national and local IC industry investment funds will not only directly focus on the Fab and IC design companies, but also stimulate the IC industry merger and acquisition activity in and outside of China. For example, shortly after its establishment, Hua Capital (the investment company of IC design and packaging sub-fund of Beijing IC industry fund) proposed to buy Omnivision with Shanghai Pudong Science and Technology Investment Co. Ltd.

In addition, the new policies will also promote marketization development and global cooperation beyond previously implemented investment activities. In the 1990s, the Chinese government established two semiconductor production lines directly through National Engineering Project 908 and 909. In the beginning of the 21st century, SMIC was co-established by state-owned enterprises and an entrepreneurial team. Now, relying on the new capital, the Chinese government is going to support the industry development through equity funds, which is in line with the marketization reform philosophy of the new government and places investors and entrepreneurs at center stage in implementing industry growth. Experienced investors and entrepreneurs with international vision will lead China’s semiconductor industry to a broader global cooperation.

How should international companies respond?

China IC industry investment funds will likely drive market share gains for China players and also more buyout offers from China. Therefore, it is increasingly critical for international companies to consider their strategy and cooperation objectives with China’s semiconductor industry in the light of a huge application market and a dynamic industry ecosystem.

The first step is to better understand China. Companies need to recognize that China is not only the largest semiconductor market — and not just a manufacturing base with a cost advantage. The most important point is that China’s economy and semiconductor industry is changing dramatically, and this will affect the global semiconductor industry ecosystem. Second, China is a diversified economic body, with the developed metropolitan areas such as Shanghai, Beijing and Shenzhen, and the to-be-developed middle and west regions.  Each of these regions will offer specific opportunities for companies in the semiconductor supply chain.

To participate in China’s industry ecosystem, it is essential to establish connections with the stakeholders in China, such as government, customers, suppliers, and even competitors, and to seek opportunities in cooperation and development through mutual understanding and engagement.

During SEMICON China 2015 (March 17-19), SEMI China will host the Tech Investment Forum-China 2015 on March 18. The Tech Investment Forum has already become an important platform between investment and pan-semiconductor industry in China. This year, Mr. Wenwu Ding, the CEO of China National IC Investment Fund will give a keynote speech. There will also be a session where startup companies can pitch to venture investors for project funding.

SEMI China’s Industry Research and Consulting team provides market research, supply chain surveys, investment site evaluations, and partner matching services (visit www.semi.org.cn/marketinfor/exclusive.aspx) or visit the SEMI Industry Research and Statistics website at www.semi.org/en/MarketInfo.