SEMICONDUCTOR INDUSTRY
UPDATE
September 2016
McIlvaine Company
TABLE OF
CONTENTS
ON
Semiconductor Acquires Fairchild
Toppan
Photomasks Approves New Advanced Production Capacity in China
Qualcomm
Opens Shanghai Facility
ON Semiconductor has completed its previously announced
$2.4 billion cash acquisition of Fairchild Semiconductor International.
"The acquisition of Fairchild is a transformative step in
our quest to become the premier supplier of power management and analogue
semiconductor solutions for a wide range of applications and end-markets," said
Keith Jackson, president and CEO of ON Semiconductor.
He added: "Fairchild provides us a platform to aggressively
expand our profitability in a highly fragmented industry. With the addition of
Fairchild, our industry leading cost structure has further improved in a
significant manner and we are now well positioned to generate substantial
shareholder value as we integrate operations of the two companies."
The two companies have a limited portfolio of compound
semiconductors. Fairchild offers a range of high voltage SiC Schottky diodes. ON
Semiconductor sells some power GaN Cascode transistors made by Transphorm.
On September 16, 2016, ON Semiconductor received
confirmation that clearance related to the completion of its proposed
acquisition of Fairchild from the Ministry of Commerce in the People's Republic
of China had been obtained and that ON Semiconductor was entitled to close the
transactions under PRC law.
The acquisition is expected to be accretive on a GAAP EPS
basis in the second half of 2017 and immediately accretive on a non-GAAP basis.
ON Semiconductor expects to achieve annual cost savings run rate of $160 million
by the end of 2017, $200 million by the end of 2018, and $225 million by the end
of 2019. The cost savings targets are based on Fairchild's 2015 annual results.
ON Semiconductor has also announced a new organizational
structure which will comprise three reporting units - Power Solutions Group,
headed by Bill Hall, Analogue Solutions Group, headed by Bob Klosterboer, and
Image Sensor Group, headed by Taner Ozcelik. The operations of System Solutions
Group have been absorbed in the three reporting units.
Toppan Photomasks, global supplier of photomasks, has
announced the approval of the next phase of investment for its recently expanded
factory in Shanghai, China operated under Toppan Photomasks Company Limited,
Shanghai (TPCS), a wholly-owned subsidiary. TPI's new US$80 million investment
in this factory further demonstrates Toppan's long-term commitment to its
customers in China's rapidly growing semiconductor industry. This comes after
the company's previous US$20 million investment in the expansion of TPCS
Shanghai II, which is now operational and ramping as the only available
commercial mask shop with a full range of technology product offerings in China.
"TPI's Shanghai factory provides our mainland China
customers a two-day cycle time advantage over other suppliers, thereby speeding
their time to market. The announcement builds upon that speed and cycle time
advantage while extending TPI's capability down to the 28-nm node for both
photomask production and wafer fab services support," said Mike Hadsell, chief
executive officer for TPI. "Our factory capability will be further extended down
to the 14-nm node to meet the requirements of this quickly evolving market. In
addition, our facility has sufficient expansion space to support our customers'
growth over the next decade and beyond.
The recent expansion of the Shanghai facility, a sub-Class
1 cleanroom located in a new manufacturing facility adjacent to the company's
existing operation, was constructed to allow for phased growth. The next phase
of technology focus will be on 65-nm to 14-nm logic and advanced memory (DRAM
and NAND) design features using industry standard equipment for proven
capability and reliable supply. Upon completion of today's announced project, 40
percent of the clean room space will remain available for future expansion.
Qualcomm has announced the opening of Qualcomm
Communication Technologies (Shanghai), a semiconductor test facility in the
Waigaoqiao (WGQ) free-trade zone in Shanghai, and its first foray into providing
manufacturing services for semiconductors.
Qualcomm indicated by working with Amkor Technology, the
new company will combine Amkor's extensive test services experience and
cleanroom facilities with Qualcomm Technologies' industry leadership in product
engineering and development.
The new manufacturing facility also demonstrates Qualcomm's
commitment to continue to invest and help develop semiconductor expertise in
China, and is indicative of growth in semiconductor market leadership in the
country, the company said. Through the ownership and operation of a
semiconductor test center, Qualcomm will enhance its focus on customer service,
and increase its business presence in China.
"Qualcomm Technologies continually strives to improve our
manufacturing footprint in China and the formation of Qualcomm Communication
Technologies in Shanghai is another example of this dedication," said Frank Meng,
chairman, Qualcomm China.
"We are excited to work with Qualcomm Technologies in their
new test operation in China," said Steve Kelley, Amkor's president and CEO.
"Amkor offers the most advanced outsourced assembly and test technologies in
China, and this expanded relationship is a natural extension of the long history
of close collaboration between our two companies."
The Shanghai-based facility is set to begin operations on
October 18, 2016.
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