Last week, we discussed the US $16 billion investment additions by TSMC into their expansion of Fab 15 in Taiwan, this year there are more upstream chip manufacturers in the news. Looking at 2015 fab forecasts, the is good reason to invest in fabs at this point, despite the immense capital expense. As DigiTimes Research notes this week, "Output value for the global IC foundry industry is forecast to reach US$54.8 billion in 2015, up 12% from US$49 billion in 2014 […].IC demand for 4G smartphones will fuel the foundry sector's 12% output value growth in 2015 […]." Interestingly, while CAPEX investments are obvious, what we are also seeing is an increase in industry consolidations, as well as some talk about significant purchases.
Expansion plans continue at fabs
Among the recent additions to the news about additional CAPEX plans for 2015, Advanced Semiconductor Engineering's (ASE) manufacturing site in Chungli, northern Taiwan, will have a new plant coming on line soon, according to a recent DigiTimes article reporting from ASE's annual year-end banquet. The DigiTimes article specifies ASE's expansion details: "In addition, production lines installed at ASE's manufacturing site in Chungli have expanded to include 12-inch wafer bumping and flip-chip (FC) packaging lines, the company noted, adding the site supplies to more than 200 customers worldwide."
Wanna buy a fab?
Late last week, there were a few rather vague reports in Reuters, The New York Post and The New York Times that Freescale Semiconductor might be acquired, at least in part. While The New York Post was listed as the initial report of this possible sale, there is an earlier, speculative article in Bloomberg considering how Samsung might invest some of its US $63 billion, this comes on the heels of the news that Samsung might look to acquire Blackberry for US $7.5 billion and speculating where else investments might occur.
Samsung was hit this past year with a slowdown in consumer electronic sales, particularly smartphones, causing the global leader to refocus its market strategies and investments. With the recent announcement that Apple will be going to Samsung over TSMC for the next generation A9 chip due to Samsung's capability at the leading-edge nodes, there is the question of how Samsung will continue to grow its chip manufacturing arm, a very important part of the company.
Rumors about a Samsung and Freescale arise out of Freescale reportedly having some investment banking firms exploring various sales, as reported in Reuters, noting that they had an anonymous source but that Freescale was unwilling to comment on the matter. Freescale provided its revenue forecast for the first quarter of 2015 (1Q15) as coming in above industry expectations. That news was positive and brought up Freescale's shares by 12%. That's an important point because if there is to be a purchase, it is important to note that Freescale is on an upward trend and foresees a strong 2015. The interest in Freescale, should these rumors hold true, is not likely to be a simple expansion of chip manufacturing capabilities, but importantly Freescale's strong automotive semiconductor market share.
The rise in automotive semiconductors and auto-electronics is an important market with some high barriers to entry due to certification for components in vehicles for safety and highly ruggedized requirements. The purchase of a leading company already with a strong automotive electronics/semi market would be a prime strategic investment.
2015 should be very interesting indeed. Stay tuned as we keep an eye on our industry's trends and give you insight you can use.