SEMICONDUCTOR INDUSTRY

UPDATE

 

February 2015

 

McIlvaine Company

 

TABLE OF CONTENTS

 

TSMC to Expand Taiwan Fab

Phoenix Semiconductor Growth

Singapore, India Expand Semicon Industry Collaborations

India Reforms Panel on Semiconductor Units

Samsung Electronics Starts Producing 8-gigabit Graphics DRAM

JTC Building Semiconductor Facility in Tampines

 

 

 

TSMC to Expand Taiwan Fab

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest chip foundry, announced its plan to expand an existing fab in Taiwan to the tune of NT$500 billion ($15.9 billion).

 

The company provided no more specific timeframe for the expansion other than to say the investment would be over several years, with the amount in each year based on expected demand for capacity.

 

The planned investment is in the Central Taiwan Science Park, near the city of Taichung. TSMC said it expects the investment to create an additional 5,000 jobs at the site that currently employs more than 3,400 people.

 

"Taichung is a place where TSMC is well established in Taiwan," TSMC Co-CEO C.C. Wei said in a statement. "It's an important base where we not only want to develop advanced technology, continue revenue growth and reach new milestones, but more importantly, create a world-class green enterprise. "

 

The company's fab in central Taiwan in 2014 had an output worth NT$200 billion ($6.3 billion) last year, accounting for 28 per cent of TSMC's total production last year.

 

TSMC has raised its capital expenditure budget for 2015 to $11.5-12 billion, an increase of 11.5-20 per cent compared with 2014, mainly due to its confidence in demand for advanced geometries.

 

TSMC's sales revenue in 2015 will likely rise by "several percentage points" more than the estimated industry average of 12 per cent, according to TSMC co-CEO Mark Liu, speaking at an earnings event in January.

 

For the first quarter of 2015, TSMC forecast sales revenue ranging from NT$221 billion ($7 billion) to NT$224 billion ($7.1 billion), about 50 per cent higher than the first quarter of 2014.

 

While TSMC may grow sales by a mid-teen percentage in 2015, its year-on-year momentum has peaked and will slow materially in the second half of 2015, according to Maybank Kim Eng analyst Warren Lau.

 

TSMC's commitment to invest in Taiwan comes as industry analysts expect China to quickly expand domestic production during this decade. Taiwan's government has restricted investment by its chipmakers in China on concerns about losses of jobs and technology.

 

Taiwan and China have been political rivals since 1949, when soldiers of the Nationalist Party were defeated by an army led by the Communist Party in China, forcing the Nationalists to leave mainland China and establish a new government in Taiwan.

 

Phoenix Semiconductor Growth

Phoenix Semiconductor Philippines Corp. grew its net income by 61.53 percent to $13.35 million in the first nine months of 2014 from $8.27 million a year earlier 2013.

 

Higher demand for memory modules helped the company book $170.31 million in sales revenues in the same comparable period, up 10.92 percent from $153.55 million.

 

"Our solid execution and discipline in expense-management allowed us to deliver a strong finish in 2014, marking a milestone year for the company coming from the successful IPO," vice president and chief finance officer Dongjoo Kim said.

 

The Philippine unit of South Korea's STS Semiconductor and Telecommunications Co. Ltd. debuted on the Philippine Stock Exchange in December last year.

 

The company said it is "solidifying its plans" to build a new facility in Clark Freeport Zone in Pampanga this year "to meet an expected surge in global demand for its products."

 

Phoenix Semiconductor expects to have an additional monthly output of 40 million units of memory chips "once the new production facilities are in operation."

 

Singapore, India Expand Semicon Industry Collaborations

The Singapore Semiconductor Industry Association (SSIA) and the India Electronics and Semiconductor Association (IESA), the trade body representing the Indian Electronic System Design and Manufacturing (ESDM) industry, signed a Memorandum of Understanding (MoU) that aims to establish and develop trade and technical cooperation links between the electronics and semiconductor industry of both countries.

 

India and Singapore are two countries with varied strengths and opportunities in their respective ESDM industries. India has a huge domestic ESDM market, but lacks adequate manufacturing capacity. The demand-supply gap is expected to widen up to $300 billion by 2020 as the ESDM industry size is expected to reach $400 billion, while local production and services is estimated to be around $100 billion. On the other hand, Singapore is one of the leading countries in manufacturing of electronics products and semiconductors. With approximately 40 IC design companies, 14 silicon wafer fabs and 20 assembly and test units, Singapore nurtures an end-to-end ESDM ecosystem.

 

While it opens opportunities for Singapore EDSM companies to move up the value chain by shifting some manpower intensive operations to competitive and proximal locations like India; Indian firms are benefitted through setting up their operations in Singapore, providing them a better understanding of the trends and demands in the South East Asian markets.

 

India Reforms Panel on Semiconductor Units

The previous UPA government had formed a panel in 2011 to identify technology and investors and recommend incentives for semiconductor manufacturing.

 

Now, the Union cabinet has reconstituted an empowered committee on setting up semiconductor wafer fabrication manufacturing facilities in the country.

 

The committee chaired by NITI Aayog member V.K. Saraswat will include K. Radhakrishnan, former chairman of Indian Space Research Organization, M.J. Zarabi, former chairman and managing director of Semiconductor Complex Ltd, Narendra Krishna Karmarkar, visiting professor, IIT-Bombay, Ratan P. Watal, secretary, department of expenditure, Amitabh Kant, secretary, department of industrial policy and promotion and R.S. Sharma, secretary, department of electronics and information technology.

 

The previous United Progressive Alliance (UPA) government had formed a panel in 2011 to identify technology and investors and recommend incentives for semiconductor manufacturing. The committee submitted its recommendations in March 2013. In September, the government approved the setting up of two such units. The units will attract about Rs.63,000 crore in investments, according to a press statement issued in February 2014.

 

Jaiprakash Associates Ltd is teaming up with International Business Machines Corp. (IBM) and Israel-based TowerJazz to set up a Rs.29,000 crore unit in Greater Noida. Hindustan Semiconductor Manufacturing Corp., in partnership with French-Italian electronics and semiconductor maker STMicroelectronics (STM) and Malaysia-based wafer manufacturer Silterra, wants to set up a Rs.34,000 crore facility in Prantij near Gandhinagar. These facilities are expected to start producing wafers two-and-a-half years after ground breaking.

“The setting up of Semiconductor Wafer Fabrication units is a critical pillar required to promote Electronics System Design and Manufacturing in India which will stimulate the flow of capital and technology, create employment opportunities, help higher value addition in the electronic products manufactured in India, reduce dependence on imports, and lead to innovation,” said a statement issued by the government.

 

In addition to the approved members, the committee may co-opt other experts, the statement added.

 

Samsung Electronics Starts Producing 8-gigabit Graphics DRAM

Samsung Electronics announced that it has begun mass producing the industry’s first 8 gigabit (Gb) GDDR5 DRAM, based on the company’s leading-edge 20-nanometer (nm) process technology. GDDR5 is the most widely used discrete graphics memory in the world.

 

Designed for use in graphics cards for PCs and supercomputing applications, and on-board graphics memory for game consoles and notebook PCs, discrete graphics DRAM provides an extensive amount of bandwidth to process large high quality graphically-oriented data streams. With the rising popularity of 3-D games and UHD video content soon to be widespread, the need for high-performance, high-bandwidth graphics memory has begun to rapidly increase.

 

“We expect that our 8Gb GDDR5 will provide original equipment manufacturers (OEMs) with the best graphics memory solution available for game consoles as well as general use notebook PCs,” said Joo Sun Choi, Executive Vice president of Memory Sales and Marketing at Samsung Electronics. “By expanding our production of 20nm-based DRAM products including the new GDDR5, we will meet increasing global customer demand and take the lead in accelerating the growth of the premium memory market.”

 

Samsung’s new GDDR5 DRAM offers outstanding bandwidth. Combining only eight of the new 8Gb chips will achieve the same density as the 8 gigabytes (GB) needed in the latest game consoles.

 

The memory operates with an I/O data rate of 8 gigabits per second (Gbps) per pin, which is more than four times faster than the DDR3 DRAM widely used in notebook PCs today, and each chip can process data at 32-bit I/O rate. Two GB of graphics memory can be created with just two of the new chips, which together can process up to 64GB of graphical images per second. That equates to processing approximately 12 full-HD DVDs (5GB equivalent) in a second.

 

With this new 20nm 8Gb GDDR5, Samsung has completed its line-up of 8Gb DRAM solutions based on its leading-edge 20nm process technology, covering the server, PC, mobile and graphics memory markets. The world’s largest memory manufacturer will keep expanding the production volumes of its 20nm DRAM products at a variety of densities including 4Gb, 6Gb, 8Gb and higher densities to solidify its leading position in high-end IT market segments as well as more value-driven markets.

 

JTC Building Semiconductor Facility in Tampines

Industrial landlord JTC is building a facility in Tampines to support the fast-growing semiconductor industry.

 

JTC nanoSpace, which is expected to be completed by the first half of 2017, is aimed at lifting productivity and competitiveness in the sector.

 

The four-story building with shared facilities and utilities will be used by companies manufacturing in areas such as compound semiconductors, advanced packaging and micro-electro-mechanical systems.

 

JTC chief executive Png Cheong Boon said in a statement that the facility could allow companies a "faster time-to-market, lower upfront capital costs by up to 20 per cent, and lower operational costs by between 10 per cent and 15 per cent".

 

"Globally, the semiconductor industry remains fast-growing, where 2014 saw the largest year-on-year increase in worldwide semiconductor sales over the past three years," he added, noting that demand is shifting in favor of "smarter, smaller and more energy-efficient devices, with diverse functionality".

 

While JTC has developed nine facilities to support sectors such as aviation, chemicals and biomed over the past year, the upcoming nanoSpace center is its first initiative focused on developing suitable industrial infrastructure to boost the electronics and semiconductor industry.

 

Semiconductors are the largest segment within the electronics industry, which is a key pillar of the manufacturing sector.

 

The segment contributed more than half of the electronics industry's total value-added in 2012, according to the Economic Development Board.

 

It also provided 43,000 jobs, with workers earning about 22.8 per cent more than the manufacturing average.

 

"The Government and JTC remain committed to support the growth of the (semiconductor) industry and capture new opportunities in the global market, by providing various incentives and developing appropriate industrial infrastructure," Mr. Png said.

 

 

McIlvaine Company

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