The Tech Week that was... July 31 ~ Aug 4

Welcome to the latest edition of my weekly newsletter bringing you all the key semiconductor and technology news from around the world in one easy read. 

Challenging macroeconomic conditions, weak end market conditions especially in the consumer and smartphone markets and high inventory seem the be the common phrases in this weeks results announcements, with most companies now predicting the upturn will happen next year.

US OSAT Amkor reported Q2 results of US$1.46billion, down -1% sequentially and down -3% YoY. For Q3 they are predicting a midpoint revenue of US$1.775billion, this is a sequential growth of 22% driven by advanced packaging in support of the full launch of premium tier smartphones. Revenue for the first half of 2023 was US$2.9billion down -6% compared to the same period last year. Giel Rutten, Amkor President and CEO said “overall business continues to be dampened by challenging macroeconomic conditions, high inventories and weak end market demand”

Taiwanese specialty foundry Vanguard International Semi (VIS) said at its investor conference this week that it expects wafer shipments to increase 4~6% this quarter after growing 24% last quarter with factory utilization to be flat at around 60%. They said that inventory digestion is going at a slow pace and that customers are taking a conservative approach to wafer ordering and inventory buildup in the second half of this year. VIS said it has short order visibility of about three months. The company is cautiously evaluating its capacity expansion for 2023 but said it will hold to it’s planned 6~7% expansion whilst slightly reducing expenditure to less US$317million. 60% of the capacity expansion is earmarked for its Singapore Fab.

The worlds 3rd largest wafer manufacturer GlobalWafers said that revenue growth this year would be flat or low to mid-single digit percentage as the market contends with inventory issues.   Company chairwoman Doris Hsu said that “many of our customers are still digesting their inventories,” and that “nobody really knows whether the market will recover in the second half of this year or next year. Visibility is still low.” However she said that GlobalWafers would enter another upcycle next year with revenue returning to previous growth patterns on an annual and quarterly basis.

Qualcomm forecast flat midpoint Q4 revenue of US$8.5billion and said it would likely cut jobs as consumer spending on smartphones remained stubbornly weak amid slowing global economic growth. Qualcomm reported Q3 revenue of US$8.4billion, down almost -10% sequentially and down -23% YoY. The company said it also expects no further sales to Chinese telecom giant Huawei because it does not have a license to sell 5G chips to Huawei. More broadly in China, a slower-than-expected economic recovery weighed on orders to Qualcomm. The only bright spot was the automotive sector where revenue grew 13%. 

The latest results from big semiconductor giants like Intel, Samsung are indicating that we are at the beginning of the end of the supply chain glut, but the outlook for demand from customers is gloomy except for AI customers. All the major markets for chips - smartphones, PCs and data centres - have shrunk this year, as both corporate customers and consumers scale back spending amid a weak global economy, high inflation and rising interest rates.

Fab Expansion news…

The Japanese government is considering whether to fund up to half of the cost of TSMC’s 2nd Fab in Japan. The amount of subsidies the government would pay for,  would depend on what type of chips are to be made there and how much of a wider economic impact it can generate in the region.

Infineon has announced it will significantly increase it’s investment in Kulim, Malaysia creating the “worlds largest 200-mm SiC Power Fab”. Infineon has said it will invest an additional US$5.5billion over the next 5 years saying this investment was backed by customer commitments and pre-payments. For the 3rd quarter Infineon reported revenue of US$4.5billion, this was down -1% sequentially and up 13% compared to the same quarter a year ago. For Q4 they are predicting revenue will be approximately -1% down, at around US$4.4billion. For the full year 2023 revenue is forecast to be unchanged at US$17.75billion.

Analog Devices is investing US$1 billion to expand its Beaverton wafer fab in Oregon. The investment will increase the cleanroom space to 118,000 sq-ft to almost double it’s 0.18um node and above, internal manufacturing output. In addition a new workforce training center, called the Semiconductor Advanced Manufacturing University (SAMU), will be located at the facility.

Bosch has opened it’s new semiconductor test centre in Penang Malaysia for chips and sensors. New test center includes more than 18,000 square meters of clean rooms, office space, and R&D laboratories for up to 400 employees. The centre cost US$72million and Bosch plans to invest a further US$310million at the site over the next decade.

Intel maybe planning to expand operations at it’s Hillsboro, Oregon site. Intel has applied for planning approval for “additional fab space and associated emissions” at its main Washington County outpost, as well as prep for additional manufacturing at an older campus in Aloha. Oregon Govenor Tina Kotek signaled she is planning to give Intel $90 million as part of that effort.

In market research news..

According to data from analytics company LexisNexis TSMC has developed the most expansive arsenal of patents surrounding advanced chip packaging, followed by Samsung Electronics and then Intel. TSMC has a cache of 2,946 advanced packaging patents and also has the highest quality of patent as the company expands it’s portfolio of advance assembly techniques required for the next generation of chips. Intel, Samsung and TSMC have been steadily investing in advanced packaging technology since around 2015, and are the only companies in the world that have or plan to deploy the technology to fabricate the most complex, advanced chips.

 Korean OSATs are reported to have had utilisation rates of below 50% in the first half of 2023 due to reduced semiconductor demand. Major IC manufacturers like Samsung and SK Hynix have reduced their packaging volume and are pulling in assembly to inhouse packaging houses, according to industry sources cited by Korean media Theelec. As a result, OSAT companies such as Nepes, LB Semicon, Hana Micron, and SFA Semiconductor have seen their capacity utilization fall below 50%.

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Stay safe and healthy... bye