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    VLSIinsiders’ cloudside chat — October 28, 2020

      Oct 28, 2020
    • The Semiconductor Outlook – It’s been very quiet out there
      • Equipment demand has shifted from China and Taiwan to Korea.
      • What’s up with TSMC’s Fab in AZ
      • Impact of the COVID-19 resurgence

    About VLSIinsiders: Every week our analysts have a cloudside* chat to discuss current events and key issues of concern, while sharing what they’ve heard over the past week from the semiconductor industry insiders.

    * cloudside chat: A fireside chat without the fire and is across the clouds of the internet

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    Transcript

    VLSIinsiders’ cloudside chat — October 28, 2020

    DAN HUTCHESON: Welcome to this week's VLSIinsiders. We got some really bad bandwidth problems, so we may be breaking up a bit, but we're recording anyway. So, we thought we'd bring it to you since we missed last week. This is Dan Hutcheson.

    ANDREA LATI: This is Andrea Lati.

    JOHN WEST: This is John from Europe.

    RISTO PUHAKKA: And Risto Puhakka in San Jose.

    DAN HUTCHESON: Great. So, guys, um, Risto, you were talking about things going on in Korea? Could you kind of update?

    RISTO PUHAKKA: Yeah, it was interesting. I was going through I was doing some work on that CBD, kind of going through the numbers, and then I've kind of started to say, hey, the Korean demand has really picked up it's already getting up in the in the second quarter and then clearly the indications are that the third quarter is going to be also high. So it basically when they equipment demand cool, has cooled down somewhat in Taiwan and China. It picked up in Korea, and they are, actually the run rates actually pretty high itself so almost record levels. So clearly, obviously sat both Samsung and Hynix have started to start to spend and build up a new capacity in doing this rink. So, and it's kind of now just to figure out how long it's going to last but and how they, how the cycle behaves in them in other parts of the world as well, namely Taiwan and China. But that's kind of an interesting trend line interest I found on that and of course it's it changes some of the product mixes because it's a memory heavy, you know, it's likely that lamb is going to do well. They are always very strong in Korea. So it's interesting to see how that that plays out through the through the rest of the year.

    DAN HUTCHESON: Yeah, John, are you seeing anything new? How's things going in your part of the world?

    JOHN WEST: It's been fairly quiet. Nothing's changed. Really, I think the emphasis in the supply chain is moving away from purely just delivering to actually really trying to make sure there's resilience in the supply chain, especially here in Europe as the COVID-19 seems to be having a resurgence right now. So, yeah, there's nothing much to report this. There's been a slightly, a slight increase in activity. I guess, questions we're getting from the financial community, which is usually a precursor to companies buying or selling. But apart from that, it's been nothing unusual this week.

    DAN HUTCHESON: Okay, Andrea, see anything?

    ANDREA LATI: We're in the middle of the earnings season as you now so it's been a pretty good earning season so far actually. Everything has come in line with our expectations. It seems that equipment makers have the edge actually over chip makers. Their earnings have been a little bit stronger, revenues a little bit stronger than expected. And also, the guidance for Q4 actually has been pretty good. But also, the chip makers actually had posted some really good earnings this season. And we still are waiting for Samsung and Hynix report, of course, are the big ones in memory. But on the logic side, things are looking pretty good and the things that we're noticing is an improvement in the automotive and industrial markets, which you know, had a very rough first half. So, there's been a lot of improvement on those fronts. So overall, things are, you know, I think this year will be a pretty good one for both the equipment and chip makers. Again, the question is what happens next year, but at least we're exiting the year with a pretty good momentum.

    DAN HUTCHESON: Right.

    RISTO PUHAKKA: Yeah. I mean, just to comment on the automotive. There's been recent news pieces that their inventories are even new car inventories are pretty low and the car companies have been reporting that the production levels are returning to close to pre-COVID levels. So that would then lead to also on the semiconductor side pretty well.

    DAN HUTCHESON: Yeah. So, although, you know, it does seem like what we've seen in laptop prices, that part has kind of softened. And I noticed in Andrea’s silicon data that in September, the silicon production in fabs was down about 3% or so. But that's kind of normal, right? For September as well.

    ANDREA LATI: Yeah, there is some seasonality now that we're going to have to, you know, work through. But again, I think that, overall, it's still looking pretty solid, even if you look at pricing. Yeah, we're getting some downward pressure there on, you know, at the electronics level, also the IC level, right? But again, it's within the norms that we expect at this time of the year. So, I think that again, you know, this year is pretty much in the bag. It's really what happens in 2021. And how you know, you know, especially with the new COVID cases and the new wave coming, you know, how we go about it. But, again, I think 2020 will be a pretty good year for the industry.

    DAN HUTCHESON: Yeah, one of the interesting things I saw I've been seeing is, as you mentioned that, in the TSMC call, they didn't seem to mention anything about the Arizona fab and that seems to be one of the world's best kept secrets right now.

    RISTO PUHAKKA: Yes, they are.

    DAN HUTCHESON: They're really being there's a really a big lockdown in that area right now. It's very interesting to see it happening and I do hear it's real, so from what people have been talking to, it does seem to be a real thing. It's just that they made it, they're probably not working with normal partners, things like that. But there, it is very interesting.

    RISTO PUHAKKA: And the other one is that it means that it is a new science in different continents. So, it's not as simple as building a new module in them. In a century, that's a simple.

    DAN HUTCHESON: It's always difficult you're working with, you know, contractors and whatnot that you've never worked with before and there's all kinds of issues there. So, and I remind everyone that's ever done this as found that it was really expensive, a lot more expensive than building the Fab, you already got one. So, any comments about the big surge in COVID? You know, there's lockdowns coming down in Europe and in Germany and France.  And, you know, it's going to we're going to see the same thing in our business where we continue to plough through this and do well and be decoupled or do you think it's probably going to hit us hard? And, you know, now that everybody's spent enough money on things? Andrea, you’re kind of in the proponent?

    ANDREA LATI: Well, I'll let John talk about Europe since where, you know, that's the situation more critical? I think. So…

    JOHN WEST: Yes, this is kind of interesting. So, the level of economic activity doesn't seem to have stopped at all. You know, the roads are full of traffic, people are still going to work. It's just essentially what they're trying to do. Unless you have to travel to work, you have to just stay within five miles of where you live essentially. So that’s the worst lockdown, essentially, but if you have to travel for work, you can still go to work. You can still travel to get to school or university. So really, it's not like the lockdown we had earlier where they shut everything and it took a long time to recover. This is just keeping people out of the situations where they're most likely to catch COVID. So, I don't think it's not going to have a big impact like it did earlier this year. But you know, of course, it is concerning. Actually, going back to, I was thinking really talking about automotive earlier, Daimler Benz reported almost record quarterly profit last quarter. They're just shipping so many luxury cars to China right now. So yeah, just shows you that Europe is awake and we're making things. It's just our personal freedoms are restricted a little right now.

    DAN HUTCHESON: Yeah, we've definitely seen a big pickup in the auto IC market and it's being driven by people not wanting to get into public transportation. Yeah, you know, or Uber cars or taxis. Whatever. You know, it's just, you know, having your own cocoon is a lot healthier.

    RISTO PUHAKKA: Yeah.

    DAN HUTCHESON: This is exactly Risto.

    RISTO PUHAKKA: So, yeah, that's exactly.

    DAN HUTCHESON: Okay, well, thanks guys for taking the time today.

    RISTO PUHAKKA: Sounds good.

    ANDREA LATI: Hey, welcome. Thank you.

    JOHN WEST: Thank you.