Weiner’s World—March 2018

Estimated reading time: 9 minutes

Editor’s note: This blog was originally published in March 2018 at www.weiner-intl.com and is being reprinted here with special permission from the author. 

SEMICON China 2018 was amazing in its size and attendance. More than 1,000 exhibitors filled an event record of more than 74,000 square meters of exhibition space—the size of nearly 10 professional soccer fields. This year's theme was "collect, collaborate, innovate." 

China is set to build 19 new semiconductor fabs from 2017 onwards, according to SEMI’s World Fab Forecast. China’s fab construction spending is forecast to grow from a record high $6.2 billion in 2017 to $6.8 billion in 2018, accounting for over 50% of worldwide construction spending. Global semiconductor revenue, silicon shipments, capital expenditures, and fab equipment investment all set records in 2017—with China's government’s increased participation.

Keynote speakers included:

• Zhou Zixue, chairman of the board, SMIC
• Rick Wallace, CEO and president, KLA-Tencor*
• Walden Rhines, president and CEO, Mentor, a Siemens Business
• Steve Kelley, president and CEO, Amkor
• Jackie Sturm, VP and GM of the Global Supply Management Organization, Intel
• Rick Gottscho, executive VP and CTO, Lam Research
• Chu Qing, VP & CSO, Huawei 

(*Note: Shortly after SEMICON, KLA-Tencor announced its agreement to purchase Israel's Orbotech for $3.4 billion. The acquisition is expected to diversify KLA-Tencor's revenue base and add $2.5 billion of addressable market opportunity in the PCB, flat panel display (FPD), packaging, and semiconductor manufacturing areas.)

China will invest more in the development of advanced chips, with the goal of ensuring that the country has a secure chip industry of its own, according to Ding Wenwu, president of the China Integrated Circuit Industry Investment Fund, also known as the “Big Fund,” in a speech at the Semicon China fair on March 15. China will invest billions more to develop a secure chip industry of its own. 

The Big Fund is the country’s national semiconductor fund. It is now in its second phase of raising capital, after securing $21.9 billion in its first phase. Established in 2014 with support from the finance ministry and other Beijing-backed entities, it is China’s most prominent investment vehicle. It is designed to cut the country's heavy reliance on foreign suppliers. China imported more than $260 billion of chip-related products in 2017, a much bigger amount than it spends on oil. 

Ding said the development of the semiconductor industry is a top priority for China, as outlined in the latest government work report by Premier Li Keqiang during this year’s National People’s Congress.

Chips are not only the brains of electronic devices. But, they are also often used in surveillance, which means their production and development have national security implications and form a strong incentive for China to work relentlessly to expand the sector. 

FPD China, productronica China, and electronica China were co-located with SEMICON. All the co-located exhibits and conferences had major presentations on automotive electronics! electronica's forum agenda included tracks on "Innovation and Development of Electric Vehicles," as well as the "China International Automotive Electronics Conference." The latter included speakers from Avnet, Silicon Labs, and Micron Technology. 

This begs the question as to what segments of automotive electronics are most important to the IPC's membership—especially in the U.S? What should be presented to its leaders at an executive forum held in the U.S? What would have the greatest value? Who would provide the best guidance? An integrator or an OEM? 

Business was reported to be good on all fronts. Concern over a trade war tamped down a bit what should have been an exuberant event. Chinese executives complained about the current difficulty in partnering with or buying technology/businesses in Taiwan and America. China's government-sponsored press bemoaned and criticized the new forthcoming U.S. tariffs while stating that China was ready to open more of its markets. All this was widely publicized even as bilateral negotiations were being prepared between the U.S. and China. 

How does one reconcile the need for protecting intellectual property, maintaining an independent supply chain for defense, reduce artificial barriers (import duties) and not undermine the long-term health of the semiconductor industry which largely depends on international trade (it increased 30% last year)? 

What are the dangers when a nation’s boundaries are determined by corporations and global trade rather than a country’s borders? What are the boundaries between “free trade” and borders? Can they be balanced? If so, how? 

Meanwhile, the Financial Times reported on March 26 that China has offered to buy more semiconductors from the U.S. to help cut China’s trade surplus by diverting some purchases from South Korea and Taiwan. Chinese officials are also rushing to finalize new regulations by May that will allow foreign financial groups to take majority stakes in its securities firms, according to the Financial Times. 

SEMI analysts expect 9% growth for fab equipment spending in 2018 and 5% in 2019. There are 82 future facilities/lines scheduled to start volume production in 2018 or later. This year Samsung will invest about $14 billion in fab equipment, down from $17 billion in 2017. China (including non-Chinese headquartered companies) will begin to ramp up to $11 billion in 2018, increasing to $18 billion in 2019. 

Intel plans to invest in production expansion at its Kiryat Gat plant in southern Israel. 

ADI plans to close its Milpitas, California (Silicon Valley) lab within the next few years. 

Shanghai PhiChem Material is building a new larger production facility to meet increasing demand at its Anqing location for its epoxy molding compounds for SOP, QFG, SD cards/BGA, and other IC packages. PhiChem bought the business unit from Eternal last year. The company also introduced its new tin-silver plating solution for plating wafer bumps and a new copper plating solution designed for high-speed pillar formation in RDL applications. 

PMTC, a PhiChem subsidiary exhibited its low temperature (containing bismuth and indium), high temperature, and anti-fatigue micro solder balls at SEMICON. 

Taiwan's Everlight Chemical showed a wide line of positive working G-line and I-line photoresists for IC and LED fabrication. It also showed a "thick" photoresist (EPG-591) for plating copper and gold bumps. 

The numbers are in 

The Taiwan Printed Circuit Association (TPCA) states that the worldwide PCB industry grew 11.7% to $65 billion in 2017. 

Taiwan's PCB maker Compeq Manufacturing has reported consolidated revenues of $106.7 million for February 2018, down 31.1% on month and 15.1% on year. 

Will only the "giants" of industry be able to establish footing in the automotive electronics industry? There already appears to be a surplus in battery production. Yet new entries (e.g., Seikisui Chemical), keep announcing their intention of joining the fray. 

Will there be new legacy or exchange businesses in the yet-to-be matured markets? 

Nissan is launching an exchange program in Japan for Nissan LEAF batteries in Japan that allows LEAF owners to trade old batteries plus $2,850 for refabricated ones—less than half the price of a new LEAF battery pack. 

Foxconn’s FIT Hon Teng division will pay $866 million to buy Belkin International, a maker of smartphone accessories and home networking products. The acquisition is seen as helping FIT Hon Teng acquire a greater presence in new applications such as car camera modules that are used in driverless cars. 

Musical chairs! What were the original intents when all this began? What were the basic assumptions? One has to wonder! 

FLEX announced the divestiture of Multek's China operations to Multi-Fineline Electronix (M-Flex), a subsidiary of Suzhou Dongshan Precision Manufacturing (DSBJ) for a net consideration of $273 million. DSBJ is set to acquire all equity interests in the non-U.S. business of Multek and will continue to operate under its existing name and location in China. The Multek American business will remain under FLEX. The transaction is expected to close by year-end. 

Global Brands Manufacture (GBM) will acquire a 70% stake in Japan-based Elna Printed Circuits for $32.7 million. 

You can get the Japan Marketing Survey "Solder Resist Report 2017" published a year ago for only $2,850! 

While greater China now dominates the global printed circuit fabrication industry, and spends tens of billions of dollars through federal funding just on ICs, shouldn't the U.S. invest just a billion to ensure America's independence of a secure interconnect (printed and flexible circuit fabrication) industry? 

The U.S. Defense Advanced Research Projects Agency (DARPA) is planning to invest up to $1.5 billion* in the coming years to ensure the United States remains the world leader in the electronics field.

Working closely with the electronics industry, DARPA is seeking to create indigenous ‘leap-ahead’ technologies to ensure the United States maintains dominance in the electronics field, Bill Chappell, director of DARPA’s Microsystems Technology Office (MTO) stated in a recent interview. There is not much innovation in the semiconductor space anymore, Chappell noted. “If you look at the venture capital funds they have not gone into the core semiconductor material space,” he said. 

(*Note: Singapore's Broadcom "enriched" its takeover bid of Qualcomm by offering to establish a $1.5 billion fund to train and educate the next generation of U.S. engineers to ensure the country’s lead in future wireless technology.  A U.S. government panel had, in an unusual move, stepped into Broadcom’s hostile takeover bid for Qualcomm early this month, citing a number of concerns around the development of the next generation of mobile networks (5G) and technology. The Committee on Foreign Investment in the United States (CFIUS) delayed a shareholder meeting that had threatened to hand Broadcom control of the Qualcomm board. It fears that the merger would lower R&D spending weaken U.S.-based Qualcomm against Chinese companies.) 

General Motors will build production versions of its Cruise AV (autonomous vehicle) at its Orion Township plant in Michigan. The roof modules for its self-driving vehicles will be assembled at its Brownstown facility. GM will invest more than $100 million to upgrade these two facilities. It plans to commercialize the Cruise AV model in 2019. 

Germany's Schweizer Group (Schweizer Electronics) had a profitable record sales year of $149 million (preliminary unaudited results) with record bookings of $224 million—up 14% from 2016. The company has mutually agreed with Meiko Electronics for a mutual reduction in the shares of each other's company as Schweizer proceeds with its plans to construct a new facility in Jiangsu, China. 

Finnish PCB manufacturer Aspocomp will invest about $12.3 million in a technology update at its Oulu Plant. The company has two main objectives with the investments. First, to grow its new customer segment, the testing of semiconductor components, by producing high-tech PCBs to meet the testing and R&D needs of customers. Second, to increase its production capacity to meet rising demand from the 5G and automotive industries. 

Creative Materials introduced our new series of conductive Inks and coatings designed for manufacturing printed electronic circuits on washable textiles. The Ag, AgCl and C based inks can withstand 50 machine wash and dry cycles. They are stretchable and breathable and are designed for direct printing onto synthetic fabrics, including polyester, spandex and nylon, with no need for dielectric encapsulation to ensure wash durability. They are applied by screen-printing, syringe dispensing, dip coating or roll coating. Applications include wearable electrodes, biosensors, heart rate monitoring, pressure sensors and conductive wire replacement. Creative Materials products are manufactured in the U.S.