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    VLSIinsiders’ Cloudside Chat — October 14, 2020

      Oct 14, 2020
    • The Outlook – What’s the order visibility?
      • Business is good now
      • But there is no visibility 3 to 6 six months out
    • Weather – Where’s the demand coming from: Mobile
    • John has 5G and says it’s incredible
    • Last week’s red flags coming out of last week’s calls
    • Skywater: Risto’s visit, what he saw and their move into Advanced Packaging with a new fab in Florida
    • ASML's Conference Call

    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

    Other VLSIinsiders

    Transcript

    VLSIinsiders’ Cloudside Chat — October 14, 2020

    DAN HUTCHESON: So welcome to this week's edition of VLSIinsiders. This week, I've got Andrea Lati, John West, Risto Puhakka, and myself, Dan Hutcheson. We're going to be talking about what's been going on. Hey guys, let's start off with the outlook. What are you seeing in terms of order visibility?

    RISTO PUHAKKA: Yeah, I had a couple of calls this week, this past week, with the various parts of the equipment companies and supply chain. And I mean, the business looks right now, as right now, looks pretty solid. No-nothing, no huge surprises coming any directions. People are nervous about, you know, three to six months out, you know, they don't have visibility. They, you know, the COVID is re-emerging so that creates nervousness, you know, and they're kind of let's call it wondering, hey, what's out there. But on the other side, it's always been, hey, we know the quarter, but what's the next quarter bring is a lot more uncertain. So that's kind of from the equipment side. And then, Andrea, you made a couple comments about the memory pricing to…

    ANDREA LATI: Yeah, and if we take a step back and look at the overall IC industry, it's doing really well at the moment. I mean, foundries are booming. I mean, both TSMC, UMC, they're hitting this record levels in terms of sales. Very, very strong growth, both sequentially. And also, on year per year basis, they're running, you know, very high utilization rates, are pretty much full at this point. You know, some of them are increasing their capex, again to, you know, keep up with demand. So, on the memory side, in the last few weeks, we've seen DRAM pricing improved quite a bit. It is a little bit of a surprise, because it's coming, you know, right after, you know, Micron had their quarterly earnings, but they kind of painted a pretty lousy picture of, you know, demand for the next two quarters, yet we're seeing pricing improved substantially. And it's also translating those sales of some of the smaller DRAM players where we're, we've seen actually an improvement, especially from some Taiwanese DRAM manufacturers, where September was a very good month. So, we're seeing these price increases being actually translated with higher sales. Now, maybe this has to do with inventory over build in China that pretty much everybody in China is building more inventories because of the uncertainties with the trade war and tech war that's going on. But nonetheless, prices are going up. And if prices go up, that means revenues will increase. So, things are looking pretty good at the moment. And of course, visibility into next year is pretty limited. However, there are many things at play that should help the industry next year. And the big one, of course, is the 5G rollout, and many companies are expecting that will be a very big driver in 2021.

    DAN HUTCHESON: Okay. John, you've been talking to a lot of people around the globe, especially in Japan and Europe, what have you been hearing?

    JOHN WEST: Yes, so the equipment supply chain order activities is solid. No real order push out, some cancellations, just a few little adjustments in order volumes and crop and type. But generally, it's been solid. And even in Japan and other places, no red flags being raised. Everyone’s like, I can think we could characterize the feeling is everyone's cautious. Now we can't quite believe how lucky we are to be running this strong for so long. And everyone's just walked, it just being careful and cautious. And getting back to Risto’s points, some of the suppliers complaining about three to six months order visibility. Well, that's all you get anyway, even when times are really good. So, I'll take that as certainly being a positive right now.

    DAN HUTCHESON: So, one of the things that I think is kind of driving it as it looks like we've gone from…I mean, obviously there's a lot of PC ramp again to do put cameras, you know, phone quality cameras, but the mobile markets also picking up again. It looks like 5G is happening. You've got a 5G phone, what's your experience with it?

    JOHN WEST: Yes, it's tough to roll it out in the UK, just trialling it in various areas. So, in our area, you can get 5G, I think, from midnight until about six in the morning. So, if you get up early enough you can actually experience it for yourself and actually, I'm really impressed. I mean, it is a game changer. You know the quality, the speed, everything. It's a completely different experience. And I'm finding when six o'clock comes and it switches back to 4G. I feel like, oh no, it's slow 4G again. So, I think that there's no going back really. I think this is happening. It's got to happen quickly. And even with Apple's rollout of their 5G phone, you know, from what I'm hearing from other analysts is this could be a blockbuster. And if it is, then 2021 for semiconductors is going to be a great year.

    DAN HUTCHESON: But you've seen some pretty good stuff on test consumables, right?

    JOHN WEST: Yes. So, yeah. So, these are clearly very driven by the actual number of semiconductors that are coming off the production line that have been shipped. And you know, those suppliers are seeing very strong sales or even seeing quite…they are getting quite good visibility. Normally, they get a very short visibility a few weeks, maybe or so, but that's extending over a month. So, I would say that, yeah, a lot of semiconductors have been made, a lot of being shipped, and a lot being tested.

    DAN HUTCHESON: Yeah, so that's certainly impressive. Hey, Risto, you were at SkyWater this week?

    RISTO PUHAKKA: Yeah, I got to do a business trip offer, what is it, six months hiatus so. So, it's nice to be out and have almost privately chartered 737 on Sunday, even though it is a commercial flight. But SkyWater? Yeah, they have built the $170 million dollars fab expansion there. Of, you know, they push their capabilities down to 65 nanometers on 200 millimeter. 200 millimeter fab and, you know, bringing in 193 nanometer scanner. So, they've done a lot a lot of work. Obviously, the customers on the defense side, the medical side, imaging side, so for those purposes. But they had a very nice event building up in capabilities and, you know, the interesting is its original fab build in the late 80s. And they brought it up to that current level and to have a good prospect outside. The more interesting newsfeeds was that they have a joint venture going on in Florida where they plan to bring advanced packaging capabilities to again, you know, serving their defense and medical customers. But it looks to be very much at the cutting edge two and a half to, you know, silicon interposer capabilities in that. And of course, it has the domestic defense requirements were there, they're also after but it's really interesting that they want to bring it back and they build a facility now why not in Florida to do that. So, I would say, for the packaging companies, you have to make a trip to Florida pretty soon to sell equipment. So, it looks pretty interesting. So yeah, very nice news out of out of that.

    DAN HUTCHESON: Yeah. Speaking of companies ASML reported last night. John, you said you had done a quick scan of the of the transcript. What did it say?

    JOHN WEST: Yeah, it was incredibly quick speed reading just before this podcast, actually. So, we need to go back and check. But it's certainly my understanding was that they're now predicting next year their growth could be single digit positive. So that's in line with our current equipment forecast.

    DAN HUTCHESON: Okay, well, great guys. Do you have anything else?

    RISTO PUHAKKA: I think we covered week.

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

     RISTO PUHAKKA: Thank you.

    JOHN WEST: Thanks.