SEMICONDUCTOR INDUSTRY UPDATE
October 2014
McIlvaine Company
TABLE OF
CONTENTS
UMC to
Invest in China Foundry
Growing
Semiconductor Manufacturing in Vietnam
IBM to
pay GlobalFoundries to take over Chip Fabs
Samsung
to Invest in New Semiconductor Fab
Cardiff
University Investment includes Compound Semiconductor Institute
United Microelectronics Corp. is entering into a three-way agreement venturing in a new foundry in Xiamen, China. According to the Taiwanese chipmaker, the foundry will be a joint venture with a total investment of $6.2 billion, aimed at producing 50,000 12-inch wafers a month using 55nm and 40nm process technologies.
The two other partners in the foundry are the Xiamen Municipal People's Government and Fujian Electronics and Information Group. UMC expects its funding to progress in installments starting in 2015, pending approval of the Taiwan government.
To date, China has had limited success developing its chipmaking capabilities. For example, the country's largest foundry, SMIC, is just starting to ramp a 28nm process with help from a deal struck in July with Qualcomm.
SMIC's output is dwarfed by the China fabs of SKHynix and Intel. But a fire last year set back production at the SKHynix fab, and a supplier said Intel's Dalian fab is running significantly below capacity.
The Taiwan government prevents its foundries such as TSMC from transferring their latest process technology to China, said Bill McClean of IC Insights. That's likely why the new UMC joint venture will use relatively mature 55 and 40 nm processes.
TSMC is already ramping a foundry in China that IC Insights estimates will have 2018 sales of about $900 million, less than a third of SMIC's projected sales.
China seems to be shifting its semiconductor strategy to fabless companies, said McClean in a talk given in September. Intel agreed to invest $1.5 billion in the Spreadtrum/RDA combination in September. In addition, China has amassed a multi-billion-dollar war chest to support other fabless deals, including the purchase of Omnivision.
Nevertheless, UMC's chief executive Po-Wen Yen praised the Xiamen joint venture and China's growth in chips in a press statement:
China's domestic semiconductor market has become the world's largest. Current levels of domestic semiconductor demand far outweigh China's production supply, with semiconductor import revenue surpassing that of crude oil. As the semiconductor industry is closely monitored by the Beijing government, China has implemented national policies to expedite the development of its domestic IC design and semiconductor manufacturing through a multi-prong approach to support and expand its IC industry.
We believe our decision to establish local manufacturing is our best approach to benefit from this substantial China growth and to gain additional foundry opportunities worldwide. The joint venture not only provides our customers the option to source IC components that are made in China, but also locates us within the Chinese market to enhance UMC's service and support for local fabless customers. We anticipate the joint venture can propel the next round of UMC's foundry business growth...
Xiamen has a well-established infrastructure to supply sufficient local engineering talent to establish a world-class foundry base for the company.
UMC already owns 86.88 per cent of HeJian Technology (Suzhou) Co., Ltd., a foundry that makes 8-inch wafers for customers in China and other Asian countries.
The 2nd annual SEMI Vietnam Semiconductor Strategy Summit, co-organized with the Saigon Hi-Tech Park and with FabMax as the premier sponsor, was held September 16-17, 2014 in Ho Chi Minh City. This year’s conference drew over 160 attendees from Vietnam, Europe, U.S. and other Southeast Asian countries for a full day of presentations, panel discussions, networking opportunities and interactions with government, the Ho Chi Minh City Semiconductor Industry Association (HSIA) and the Saigon Hi-Tech Park (SHTP).
Building on the success of the inaugural Summit in September of 2013, attendees and speakers commented on the sense of progress and growing vitality of the emerging semiconductor manufacturing ecosystem in Vietnam. In his welcome remarks, Kai Fai Ng, president, SEMI Southeast Asia spoke to the importance of Vietnam in Southeast Asia, and SEMI’s plans to facilitate business interactions between Vietnamese and Southeast Asian companies, support efforts in workforce development and education, and continue to strengthen the relationship with key stakeholders in the country.
Of particular interest to the audience was the keynote presentation by Dr. Pham Ba Tuan, senior expert at CNS, the company tasked with executing the 200mm fab project in Saigon Hi-Tech Park that was announced last year. Tuan stressed the importance of domestically manufactured devices to satisfy a rapidly growing need in Vietnam thanks to the country’s young population and high university graduation rates. Tuan indicated that, depending on the product choice and the cost structure of the new wafer fab, at least 5,000 wafer starts per months would be needed. Fab capacity would be a function of product mix, so wafer starts need to be adjustable from 5,000 to 10,000 wafer starts per month. This would necessitate an investment of “a few million USD” to enable equipment purchases, fab construction and infrastructure readiness.
IBM and GLOBALFOUNDRIES today announced that GLOBALFOUNDRIES will acquire IBM’s global commercial semiconductor technology business, including IBM’s intellectual property, technologists and technologies.
IBM will pay GLOBALFOUNDRIES $1.5 billion in cash over the next three years to take the chip operations off its hands. The cash consideration will be adjusted by the amount of working capital which is estimated to be $200 million.
GLOBALFOUNDRIES will also become IBM’s exclusive server processor semiconductor technology provider for 22nm, 14nm and 10nm semiconductors for the next 10 years.
It its official statement, IBM said the agreement will enable the company to further focus on fundamental semiconductor research and the development of future cloud, mobile, big data analytics, and secure transaction-optimized systems. IBM will continue its previously announced $3 billion investment over five years for semiconductor technology research to lead in the next generation of computing. GLOBALFOUNDRIES will have primary access to the research that results from this investment through joint collaboration at the Colleges of Nanoscale Science and Engineering (CNSE), SUNY Polytechnic Institute, in Albany, N.Y.
Through the acquisition, GLOBALFOUNDRIES will gain substantial intellectual property including thousands of patents, making GLOBALFOUNDRIES the holder of one of the largest semiconductor patent portfolios in the world.
GLOBALFOUNDRIES will acquire and operate existing IBM semiconductor manufacturing operations and facilities in East Fishkill, New York and Essex Junction, Vermont, adding capacity to serve its customers and thousands of jobs to GLOBALFOUNDRIES’ workforce. GLOBALFOUNDRIES plans to provide employment opportunities for substantially all IBM employees at the two facilities who are part of the transferred businesses, except for a team of semiconductor server group employees who will remain with IBM. After the close of this transaction, GLOBALFOUNDRIES will be the largest semiconductor technology manufacturing employer in the Northeast.
GLOBALFOUNDRIES will also acquire IBM’s commercial microelectronics business, which includes ASIC and specialty foundry, manufacturing and related operations and sales. GLOBALFOUNDRIES plans to invest to grow these businesses.
IBM took a related pre-tax charge of $4.7 billion in its third quarter. It also reported a 4 percent drop in revenue on Monday.
In terms of its 14nm FinFET collaboration with Samsung, the acquisition and the sudden influx of top talent from IBM will certainly help get GLOBALFOUNDRIES up to speed, Robert Maire of Semiconductor Advisors LLC reported.
“Even though Samsung still holds the keys and most of the cards in their relationship, the addition of the IBM horsepower does help even things a little bit even though IBM hasn’t been a serious player in the semiconductor business for quite a while it still has a deep well of expertise,” said Mr. Maire.
Currently, analysts at Summit Research Partners are not concerned about the long-term financial impact of the acquisition.
“We think that at present, when the transfer of IBM’s chip manufacturing assets to GLOBALFOUNDRIES is done, this is a non-event to the semiconductor industry for the most part,” said Srini Sundararajan, Semiconductor, Semi-cap Equipment Analyst at Summit Research Partners. ”That is sad considering that there were times in the 90s that IBM and Intel competed with one another over bragging rights for technological advancements.”
“In terms of potential impact to semiconductor equipment companies, there would likely be minimal to no impact as potential capex spend would be absorbed within the capex spend of Global Foundries,” Mr. Sundararajan concluded.
A major nanotech research facility being built on the SUNY Polytechnic Institute campus in Marcy should benefit from a pending sale involving the semiconductor manufacturing business of IBM, officials said.
IBM is among several technology companies involved in the Quad-C/ Computer Chip Commercialization Center research site under construction at SUNY Poly, formerly known as SUNYIT.
When asked about the impact of the GlobalFoundries company’s plans to acquire IBM’s commercial semiconductor technology business, SUNY Poly spokesman Jerry Gretzinger said “the news is extremely positive and further strengthens the consortium at Quad-C.”
The agreement will enable IBM “to further focus on fundamental semiconductor research” and the development of related systems, said an announcement Monday by IBM and GlobalFoundries regarding a definitive agreement for the approximately $1.5 billion deal. GlobalFoundries, whose current operations include computer-chip manufacturing facilities in New York’s capital region, would acquire IBM semiconductor manufacturing sites in downstate New York and Vermont as part of the agreement.
The transaction should strengthen relationships at SUNY Poly and is a “positive announcement as it relates to the entire state,” said Steven DiMeo, president of the Mohawk Valley EDGE economic development organization. He said IBM already has announced it still will be involved in research and development efforts including SUNY Poly.
County Executive Anthony J. Picente Jr. said the pending transaction “actually enhances it,” regarding the “Nano Utica” initiative at SUNY Poly and Quad-C.
IBM spokesman Clint Roswell said there is “still a commitment to work with SUNY Poly,” and commented “I don’t think that would be an issue” when asked whether the transaction may have a negative impact. He commented, “From everything I’ve seen and heard...it’s full speed ahead.”
Roswell added, “Regarding SUNY Polytechnic Institute, IBM will continue to meet all of its obligations” to the state, “directly or in partnership with GlobalFoundries.”
The announcement by IBM and GlobalFoundries said “IBM continues its previously announced $3 billion investment over five years for semiconductor technology research to lead in the next generation of computing.” It said GlobalFoundries “will have primary access to the research that results from this investment through joint collaboration at the Colleges of Nanoscale Science and Engineering (CNSE), SUNY Polytechnic Institute, in Albany.” SUNY Poly has campuses in Marcy as well as Albany.
As part of the agreement, GlobalFoundries “will gain substantial intellectual property including thousands of patents,” the announcement said, making it “the holder of one of the largest semiconductor patent portfolios in the world.” Once the transaction is completed, GlobalFoundries “will be the largest semiconductor technology manufacturing employer in the Northeast,” the announcement added.
At SUNY Poly’s Marcy campus, the Quad-C building is on target to be largely completed by the end of this year, said DiMeo.
The $125 million project, to comprise about 253,000 square feet, will host public-private partnerships through the Nano Utica initiative.
The facility is projected to create about 1,500 high-tech jobs. It is in conjunction with Gov. Andrew Cuomo’s announcement last October that six leading global technology companies would invest $1.5 billion for the Nano Utica venture including research and development.
In addition to that project, a separate site is being developed on vacant land at the west end of SUNY Poly’s Marcy campus in efforts to attract as many as three semiconductor manufacturing plants. A contract for further various site improvements there is expected to be awarded in December, said DiMeo. Regarding prospects for bringing a semiconductor plant to the site, he cited “a lot of activity and interest in New York state....We’re well in the mix.”
Samsung Electronics announced plans to invest $14.7 billion (15.6 trillion Korean won) in a new semiconductor fabrication facility in Pyeongtaek, South Korea to meet growing demand from smartphones, enterprise computing and the emerging “Internet of Things” market.
The new fabrication plant is expected to help Samsung Electronics to develop a semiconductor cluster in Giheung, Hwaseong and Pyeongtaek to meet growing demand for advanced semiconductor products. However, the company wrote on its website that it has not determined the specific products to be manufactured.
The fab will be built in the 790,000 square meter (8,500,400 sq. ft.) site in Godeok Industrial Complex, where construction will begin during the first half of next year, with operations scheduled to begin sometime during the second half of 2017, Samsung told the press.
The investment “will significantly influence the shaping of Samsung’s future semiconductor business,” said Kwon Oh-hyun, co-chief and a vice chairman of Samsung Electronics.
Samsung’s semiconductor business announced revenue of close to 9.8 trillion Korean won in the second quarter.
A Samsung spokeswoman said a decision has not been taken yet on what type of chips would be made at the new fab and the manufacturing process. The company said in July it was on track to roll out 14nm manufacturing process in volume by the end of this year.
Cutting-edge facilities proposed to make Cardiff a leader in translational research
Cardiff University's vice chancellor Colin Riordan has outlined plans to invest £300m in four new research and innovation centers including one dedicated to compound semiconductor technology.
A unique facility in the UK, the proposed Compound Semiconductor Research Institute would demonstrate and test compound semiconductor technology in realistic environments, he said.
The aim for the institute is to provide cutting-edge facilities that allow for greater engagement with industry, and excellent research and development, to position Cardiff as the UK and European leader in translational research in this field.
The other three centers planned for a disused, former industrial space include a Translational Research Facility for turning academic research and innovation into real-world applications; an Innovation Centre for start-up companies; and the world's first Social Science Research Park.
Riordan revealed his vision to an audience drawn from business, industry, government and academia at the University's first Innovation Fast Forward Festival.
Professor Riordan said: "Cardiff Innovation System matches a multi-million pound investment with a vision to put innovation and entrepreneurship at the heart of our strategy.
"Working with the Welsh and UK governments, local authorities such as Cardiff Council, the NHS in Wales, business partners and civic society, Cardiff Innovation System can establish the University, the City and Wales as international leaders in innovation.
"Cardiff Innovation system will help us demonstrate the relevance of our work to the communities we serve, better connect industry, business, government and charities with our academics, and nurture student entrepreneurship and grass-roots business development.
"Through Cardiff Innovation System we can take the strengths we have at Cardiff University and effect a change such that Wales becomes an exemplar of the knowledge economy."
Riordan also outlined how the University would develop and embed an ethos of innovation across the University. Plans include a practitioners/innovators-in-residence program, high-level training and skills development for postgraduate students and the development of existing enterprise education and opportunities to strengthen the culture of entrepreneurial and innovative thinking among students.
Business cases are being developed for the proposed new buildings and are subject to the approval of the University's Council (its governing body).
Cardiff University has 28,000 students and last month moved back into the top 125 of world universities.
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