Archive for the ‘ _Foundry general issue ’ Category

Nissan abrupt production halt

Nissan abrupt production halt.

TOKYO – Nissan Motor’s unexpected production halt sure looks like the ultimate supply chain screw-up, resulting in nightmares for OEMs.

Nissan’s delay in delivering engine control units (ECUs) also illustrates the market reality that many chips continue to be produced and distributed on an allocation basis.

This dilemma also sounds the alarm for companies who have shifted chip manufacturing to foundry giants like Taiwan Semiconductor Manufacturing Co. whose capacity is maxed out.

Nissan Motor Co. announced here that it is suspending production lines at four of the company’s five domestic assembly plants for three days starting Wednesday, July 14th, because ECUs supplied by Hitachi Ltd. won’t arrive in time.

The abrupt production suspension will cost the Japanese automaker its output of 15,000 cars.

Hitachi, obviously insisting that such glitches will not become habitual, claimed that the ECU delivery delay was caused by a shortage of one of the key ICs used inside its ECU.

While Hitachi is not naming names as to its chip supplier, the Japanese company acknowledged that it’s been dependent on a single source.

It’s not Renesas

One Japanese industry source told EE Times that the said semiconductor supplier for Hitachi’s ECU is “a foreign-based chip vendor.”

Renesas, a Japanese chip vendor originally created by Hitachi’s semiconductor division and that of Mitsubishi, which recently merged with NEC Electronics, offers a broad range of automotive chip solutions including control systems such as powertrains that control exhaust and electric vehicle cores in ECUs. However, a Renesas spokesperson, when contacted, said that their ICs are not used in the Hitachi ECUs supplied to Nissan.

The lack of ECU inventories that has triggered Nissan’s production suspension is an ironic turn of events for a Japanese auto industry that prided itself on “just-in-time” (kanban) system originally developed by Toyota.

Yasuhiko Honda, Hitachi’s executive managing director, said during the Nissan/Hitachi joint press conference: “We were informed by our semiconductor supplier of the sudden decline of a specific IC chip supply. The chip vendor, however, has yet to tell us what’s going on.”

While the executive noted that the tighter supply and demand in the current semiconductor market may have been the issue behind all of this, he added, “We don’t know for sure yet.”

The shortage of the chip has left Hitachi no choice but to delay ECU delivery. Those affected by Hitachi’s ECU in question are Nissan and two other Japanese automakers. Hitachi declined to name the two automakers, but confirmed that a majority of its supply is for Nissan.

Sourcing a specific IC from a single chip vendor is not uncommon among automakers, who are always seeking cost advantages. Nissan claims it will restore its normal production-level next week.

Meanwhile, Toshiyuki Shiga, Nissan’s COO hinted that a problem in procuring an ECU from Hitachi could spread to North America and disrupt production there, reported <i>the Wall Street JournalMi>.

EETimes.com – Firm raises foundry forecast

EETimes.com – Firm raises foundry forecast.

SAN JOSE, Calif. — Market research firm iSuppli Corp. has raised its revenue forecast for the pure-play semiconductor foundry market in 2010.

The firm has also raised its revenue forecast for all semiconductor foundry activity for 2010 to $29.8 billion, up 42.3 percent from 2009’s $22.1 billion. iSuppli previously predicted revenue would rise 39.5 percent this year.

By 2014, total pure-play foundry revenue will reach $45.9 billion, managing a compound annual growth rate (CAGR) of 9.4 percent from $26.8 billion in 2008. iSuppli hasn’t changed its forecast for capital expenditures by the foundry segment in 2010. iSuppli still sees foundries spending 123 percent more on capital equipment in 2010 over 2009.

“During the first three quarters of 2010, foundries were under intense pressure to meet customer demand,” said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli, in a statement. “The pressure is leading to increased revenue, as consumer spending has come back with a vengeance following a dramatic downturn in the fourth quarter of 2008 and for all of 2009.”

Foundry revenue gains to outperform semiconductor industry gains in 2010 – 5/12/2010 – EDN

Foundry revenue gains to outperform semiconductor industry gains in 2010 – 5/12/2010 – EDN.

Things are looking up – way up – for foundries. With foundry revenue expected to grow by nearly 40% in 2010, revenue expansion in the foundry business is forecast to outperform that of the semiconductor industry this year.

That’s according to a recent report from iSuppli Corp, which estimates pure-play foundry suppliers will see revenues in 2010 increase 39.5%.

The forecast expects pure-play foundry revenue to reach $24.8 billion this year, up from $17.8 billion in 2009 and up 24.6% from 2008 levels of $19.9 billion. By 2013, iSuppli said it expects foundry revenue will reach $35.9 billion with a CAGR (compound annual growth rate) of 12.5%.

Earlier this month, iSuppli estimated semiconductor industry revenue will rise 30.6% from 2009’s $229.9 billion to $300.3 billion in 2010.

“Lured by innovative new features and a renewed economy, worldwide consumers again are purchasing electronic products,” said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli, in a statement. “Unless conditions deteriorate once more, previously pent-up need for new consumer products will fuel foundry demand, iSuppli believes.”

ISuppli noted that growth won’t be limited to the leading foundry vendors but will also extend to specialty foundries.

The market research company reminded that GlobalFoundries in 2009 purchased Chartered Semiconductor Manufacturing, a move that is expected to make the combined company the new number 2 player in the pure-play foundry market by the end of 2010.

The acquisition, said iSuppli, is just the beginning of the buying season among foundries. ISuppli expects a number of new deals to occur in 2010, some of which already have been announced, including the agreement UMC and He Jian Technology Co. Ltd.

The research company also sees several Tier 2 foundries examining the need to expand capacity. As many IDMs (integrated device manufacturers) look to offload manufacturing facilities in order to cut costs, many buyers could end up waiting for product

Korean chipmakers benefit most from recovery

코리아헤럴드 | 입력 2009.11.26 05:45

Korean chipmakers benefit most from recovery

The Korea Herald today publishes a four-page special report on Korea`s leading industries that have not only weathered the global financial crisis since last year, but also helped the local economy pull off one of the fastest recoveries in the world. – Ed.
By Jin Hyun-joo
Korean companies were latecomers to the global semiconductor industry, which was previously dominated by Japanese and U.S. firms.
The scene has changed, with Samsung Electronics and Hynix Semiconductors having grown fast to become the No. 1 and No. 2 memory chip makers in the world.
Their rapid rise resulted mainly from aggressive investments even during times of industrial downturn, which gave them higher market shares and bigger profits when the market turned around.
During the latest chip market slump, which is its worst ever, Korean companies invested in advanced technology to produce chips at cheaper costs, while their cash-strapped rivals pulled back.
As a result, Korean firms have widened their lead over their smaller competitors, and they stand to make the greatest gains from the industry recovery, analysts said.
Game over
“It requires more investment to advance technologies than it did in the past. Therefore, runners-up cannot endure such high costs. Korean firms will further widen a technological gap with their rivals,” said Kim Hyun-joong, an analyst at Tongyang Investment Bank.
He expected second-tier firms, mostly Taiwanese, would lag behind the race as they struggle to keep pace with technology development.
“The game is already over,” he said.
The global recession dealt a severe blow to the sector already suffering from overcapacity and price falls, leading chipmakers to post losses.
However, with their advanced technology and cost competitiveness, Korean firms have rapidly recovered from the slump and cemented their leadership while their rivals were still reeling.
Samsung and Hynix held a combined share of 57.2 percent in the DRAM market in the third quarter, up from 49.3 percent a year ago, according to data from iSuppli. Samsung controlled 35.5 percent of the global DRAM market and Hynix held a 21.7 percent share in April to June 2009. Trailing Samsung and Hynix were Japanese chipmaker Elpida Memory, with a 16.9 percent share and U.S. Micron, which held 12.7 percent, according to data from Samsung.
With the chip sector recovery visible in the third quarter, Samsung and Hynix logged profits, but their smaller rivals remained in the red or posted smaller profits.
Samsung`s semiconductor division posted an operating profit of 1.15 trillion won ($1 billion) in the third quarter, a sharp increase from 240 billion won the previous quarter and 190 billion won a year ago.
Samsung bucks slump
Samsung was the only semiconductor firm among the top 10 suppliers, which is expected to achieve growth in semiconductor revenue in 2009, according to a report by market research firm iSuppli on Tuesday.
Samsung`s revenue is set to grow by 1.3 percent this year, while global semiconductor revenue is forecast to tumble 12.4 percent, iSuppli said.
“Samsung is benefiting from its dominance in the memory market, whose performance was dramatically better than the semiconductor industry as a whole,” Dale Ford, senior vice president at iSuppli Corp. said.
“The company is the No. 1 supplier of both DRAM and NAND flash, the two largest segments of the memory market. Samsung managed to outperform the memory market partly due to its early leadership in new, higher-margin memory products, such as Double Data Rate 3 (DDR3) SDRAM.”
Hynix Semiconductors also ended seven straight quarters of losses and returned to profit in the third quarter, reporting an operating profit of 209 billion won during the July-September period, compared with an operating loss of 211 billion won in the second quarter.
Third-ranked Elpida also posted its first quarterly profit in two years in the third quarter, but its profit is a smaller 500 million yen ($5.6 million), compared with an operating loss of 2.3 billion yen in the previous quarter.
While Samsung and Hynix have started to produce DRAM chips based on more advanced 40-nanometer class technology and plan to increase the portion of the more powerful, cost-efficient chips, their rivals have yet to move to the 40-nanometer class technology.
However, some analysts raise concerns that the industry may face oversupply, as resurgent chipmakers are rushing to invest in manufacturing facilities. Market leader Samsung downplayed worries about overcapacity, saying cash-strapped firms would find it hard to boost investment aggressively.
“Chip vendors will increase investments because the market has improved, but the rise of investments will be limited,” a Samsung spokesperson said.
He added that the sector may see oversupply in first quarter 2010 because of low seasonal demand, but for the whole year the company sees little chance of a supply glut.
Non-memory challenges
But Korean firms, like their rivals, are exposed to the highly volatile memory chip industry. Therefore, they should expand their sales of non-memory chips, which are sophisticated and value-added devices, analysts said.
Although Korean firms hold unrivaled positions in the global memory chip market, they have a weak presence in the non-memory market led by Intel, Qualcomm and AMD. The non-memory market accounts for around 75 percent of the global semiconductor market.
Korean companies heavily rely on imports of system chips used in cars, home appliances and TVs. The non-memory semiconductor sector posted a chronic trade deficit since 2000, and the system semiconductor sector posted its worst trade deficit of $1.8 billion in the first quarter of this year, according to a report by Hyundai Research Institute.
“The major reason for a worsening trade deficit in the non-memory semiconductor business is that local companies have neglected investments in the field. In particular, for system semiconductors, enormous R & D expenses are required, and advanced countries hold key core technologies,” the report said.
Samsung is beefing up its non-memory business, focusing on eight LSI (large scale integration) devices including application processors, which are used in smartphones.
Kwon Oh-hyun, head of Samsung`s memory chip division, said last month that the company seeks to vigorously develop its non-memory business to drive growth and to solidify its market leadership in the memory chip business. The company wants to increase its semiconductor revenue by more than 50 percent in three years – to $25.5 billion in 2012 from an estimated $16.6 billion this year.
Knowledge Minister Choi Kyung-hwan said that the government will come up with measures to foster the non-memory sector.

EETimes.com – Foundry rankings: New firm emerges; Samsung, IBM lag

EETimes.com – Foundry rankings: New firm emerges; Samsung, IBM lag.

SAN JOSE, Calif. — Market research house IC Insights Inc. has released its rankings for the top 17 foundries in terms of sales in 2009.Most foundries lost share amid the downturn. One vendor, U.S.-based GlobalFoundries Inc., entered the rankings picture at the No. 5 spot. And the IDM foundries, namely IBM, Samsung and TI, lagged the field.

The pure-play vendors in Taiwan led the field. ”TSMC’s sales in 2009 were more than 3x that of UMC, which in turn had more than the combined foundry sales of Chartered and SMIC in 2009,” according to IC Insights.

”In 2007, SMIC moved past Chartered in sales and took over third place. However, with SMIC’s exit from the DRAM foundry business in 2008, coupled with Chartered’s acquisition of the Hitachi fab in Singapore, Chartered once again seized the third place ranking from SMIC in 2008. In 2009, Chartered’s sales were 43 percent greater than fourth-ranked SMIC,” according to the report.

”AMD spin-off GlobalFoundries acquired Chartered in 4Q09 and combined, would have had sales of just over $1.6 billion in 2009,” according to the report. ”The combined sales of Chartered and GlobalFoundries would have been just over $2.6 billion in 2009, enough to put the combined company’s sales only 8 percent behind second-ranked UMC.”

In 2008, the new silicon foundry spinoff from Advanced Micro Devices Inc. (AMD) opened for business, disclosed its corporate name and unveiled its strategy. GlobalFoundries is a joint venture between AMD and the Advanced Technology Investment Co. (ATIC) of Abu Dhabi. Under the current plan, AMD owns a 34.2 percent stake of the foundry venture, while ATIC will own the remaining shares.

Last year, TowerJazz gained share. More than one year after buying Jazz Semiconductor Inc., Israel’s Tower Semiconductor Ltd.–or TowerJazz–is now taking steps to reach its two main goals in its ongoing turnaround efforts. It hopes to finally reach profitability and become the world’s largest player in the wide-open specialty foundry business in 2010.

The IDM foundries are lagging, including IBM and Samsung. For years, Samsung has been in the foundry business and claims it wants to become a major player in the arena. Samsung entered the foundry business in 2006 with sales of about $75 million. In 2007, it had sales of $385 million, according to IC Insights, although this was behind other leading IDMs that are in the foundry arena.

Samsung, which is spending a ton in R&D, was in the ninth place in 2009. Its 2008 foundry sales were $370 million. Its 2009 foundry sales were $325 million, down 12 percent.

Enclosed are the rankings. The rankings include the company, followed in parentheses by 2008 sales, followed in parentheses by 2009 sales and percentage growth.

1. TSMC–(2008–$10.556 billion)(2009–$8.989 billion -15%)

2. UMC–(2008–$3.070 billion)(2009–$2.815 billion -8%)

3. Chartered*–(2008–$1.743 billion)(2009–$1.540 billion -12%)

4. SMIC–(2008–$1.353 billion)(2009–$1.075 billion -21%)

5. GlobalFoundries–(2008–$0)(2009–$1.065 billion N/A)

6. Dongbu (2008–$490 million)(2009–$395 million -19%)

7. Vanguard (2008–$511 million)(2009–$382 million -25%)

8. IBM (2008–$400 million)(2009–$335 million -16%)

9. Samsung (2008–$370 million)(2009–$325 million -12%)

10. Grace (2008–$335 million)(2009–$310 million -7%)

11. He Jian (2008–$345 million)(2009–$305 million -12%)

12. Tower**(2008–$252 million)(2009–$292 million 16%)

13. HHNEC (2008–$350 million)(2009–$290 million -17%)

14. SSMC (2008–$340 million)(2009–$280 million -18%)

15. TI (2008–$315 million)(2009–$250 million -21%)

16. X-Fab (2008–$368 million)(2009–$223 million -39%)

17. MagnaChip (2008–$290 million)(2009–$220 million -24%)

*Purchased by GlobalFoundries in 4Q09.**Tower bought Jazz in 2008.

Foundry Future: Challenges in the 21st Century (Morris Chang 2007 ISSCC)

*********** Foundry Future: Challenges in the 21st Century *************

Morris Chang,

Founding Chairman, TSMC

— Foundry Challenge for the 21st Century —

• The foundry market segment is now an integral and symbiotic part of the overall semiconductor supply chain

• The foundry business model exerts a positive and important influence on the health of the overall IC industry

• The foundry segment must support the IC industry to maintain, or increase, historic growth rates

— Conclusions —

• The importance of the foundry segment to the IC industry will continue to grow

• Continued IC industry growth will depend on the sustained growth of foundries

• Foundry growth will depend on expansion into new CMOS – logic applications, and into non – CMOS markets

• Future foundry success will require the creation of much deeper and broader
relationships between the foundry and each of its customers

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EETimes.com – China could take a decade to double IC production, says SEMI

EETimes.com – China could take a decade to double IC production, says SEMI.

CAMBRIDGE, UK — A recent research by SEMI indicates China is committed to narrow the gap between its IC production and consumption, leading to doubling the country’s global equipment and materials market in ten years.Given the size of the gap and the current policy actions by both national and provincial governments, this means a growing equipment and material purchasing over the next decade.

In addition, new equipment purchasing by multinational chip companies with fabs or packaging and test plants in China will increasingly be made in-country by Chinese RD and process engineering staffs.

Since China surpassed Japan and the US in 2007 to become the world’s largest consumer of ICs, China policy makers have increasingly voiced concerns about the “chip gap” between supply and demand. In 2008, China consumed approximately one-quarter of the world’s ICs, yet manufactured only $5.6 billion in chips, enough to support only 8 percent of their domestic requirements.

By 2011, the China IC market will grow to $85 billion with domestic production expected to reach $8.2 billion, about 10 percent (iSupply, IC Insights, CSIA). By 2013, China’s share of the global chip market will reach 35%.

In the past, in markets such as computers, mobile phones, and automobiles, such an imbalance between supply and demand has prompted increased investments in local production capacity.

While some observers expected China’s economy to slow following the Beijing Olympics, or become increasingly susceptible to global economic shocks, the Chinese economy continues to growth at robust rates. The International Monetary Fund projects China’s GDP to rise 8.5 percent in 2009, despite the global recession, and growing at 9 percent in 2010.

The Chinese government unveiled a 4-trillion-yuan (US$586 billion) stimulus package in November 2008, with the funds to be distributed through 2010. In addition to investments in the macro economy, the Chinese government also remains the biggest investor in the semiconductor industry in China.

In the past five years, the China government influenced the investment of about $7 billion in new fabs. In the next five years, local government will likely continue to be the significant co-investor in strategic IC Fab projects throughout the country. Going forward, the central government may also invest up to $30 billion on semiconductor (semiconductor equipment and material are included), also software and high-end chip hardware industry by 2020.

The national government is investing in various VLSI equipment and materials research projects totaling $2.6 billion. In 2009, there were 54 projects involving process technology, equipment, materials, parts and other semiconductor manufacturing research funded by the government.

Focus areas included 90nm production, 65nm pilot line manufacturing, and 45nm technology, as well as other front-end and back-end manufacturing research through 2012. The National Science and Development Plan 2008-2020 will continue to focus on core electronics research, including software and increasingly high-end chip hardware.

The commitment to closing the chip gap will make the China equipment and materials market increasingly more important for global suppliers.

According to the SEMI World Fab Forecast, total spending on front end fabs (construction and equipping) in China will grow by about 67 percent in 2010 to over $2 billion. This includes new, used equipment and any self-made equipment purchased at over 20 fabs.

Installed capacity is expected to grow by about 10 percent to over 1.5 Million wafers per month, about 10 percent of all worldwide capacity in 2010. In 2011, the equipment is expected to reach $2.56 billion, according to SEMI 2009 Consensus Forecast.

In materials, China is projected to spend $3.75 billion in 2010, up 15 percent from 2009, surpassing Europe and nearly approaching the levels of US spending (SEMI 2009 Consensus Forecast).

Visit SEMI’s website