Weiner International Associates Consultants- Board & Advisory Board Seats Technology: Commercial Viability Assessment Product Introduction/Marketing
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February 2021

 

How China views the importance of gaining capabilities in advanced chip technology and production may be inferred by the fact that the government is keeping SEMICON China live at the Shanghai New International Expo Centre March 17-19, 2021 while the CPCA Show scheduled March 15-17 has been posponed. Travelers to SEMICON, even from Hong Kong, have to arrive 14 days early in order to meet quarantine requirements before attendng the event. There are some complaints by foreigners already in Shanghai as to the poor quality of the quarantine hotels (and meals provided) chosen for them by the government. See the following announcement.

 

"Due to the current epidemic situation and the epidemic prevention and control measures introduced by various governments,and according to the requirement of "Exhibition activities should be held cautiously in winter and spring, Spring Festival and other key holidays" based on "the technical guide for epidemic prevention and control of Shanghai exhibition activities" issued by Shanghai municipal government, to fully protect the health and safety of exhibitors, visitors and participants, the 2021 International Electronic Circuits  (Shanghai) Exhibition, originally scheduled to be held at the National Exhibition and Convention Center (Shanghai) from March 15 to 17, 2021, will be postponed to July 7 to 9, 2021 after communication and consultation with relevant departments of Shanghai municipal government and Shanghai National Exhibition and Convention Center. The original venue of the exhibition and the original booth of the exhibitors remain unchanged."

 

Reshoring?

 

Motorola Solutions announced the opening of its new, Video Security & Analytics (VS&A) manufacturing facility in Richardson, Texas. The 136,000 square foot building represents the company’s continued investment in North American manufacturing and the expansion of its production and shipping capabilities to further the growth of its video security portfolio which serves customers around the world.

 

Note: Motorola was one of the first to move assembly (of its mobile phones with buried capacitor PCBs) off-shore to China some decades ago.

 

Samsung Electronics on the move ?

 

Samsung Electronics is considering investing up to $17 billion to build another chip-making factory in the U.S. It already has one in Texas. Samsung’s new facility would employ up to 1,900 with operations to be initiated by October 2022.

 

An important factor in whether Samsung moves forward with the expansion will be the availability of U.S. federal government incentives to offset those offered by foreign countries and cheaper costs in other parts of the world, according to the Wall Street Journal (WSJ). 

 

The plans were proposed as the U.S. weighs allocating billions of dollars in funding to grow U.S. chip manufacturing and reduce its reliance on Taiwan, China and South Korea. New chip-making incentives were included in the National Defense Authorization Act passed in January, although the measures have yet to receive funding.

 

The U.S. has historically not offered federal aid for chip plants. But the coronavirus pandemic highlighted how disruptions in the global supply chain could interrupt the flow of key ingredients needed to make vital technologies ranging from 5G smartphones to jet fighters, and sparked U.S. interest in becoming more self-sufficient according to the WSJ.

 

The U.S. share of global chip manufacturing has fallen to around 12%, according to a Boston Consulting Group report last year. It said significant new financial help would be needed for the country to reverse the trend.

 

Huawei told suppliers it will order fewer smartphone components this year amid crippling U.S. sanctions. Estimated reductions of its cell phone output range as high as 50% for 2021.

 

Chip shortages fuel boost in semiconductor equipment orders to new record

 

North America-based manufacturers of semiconductor equipment posted a historic  monthly high $3.04 billion in billings worldwide in January 2021 (three-month average basis). This is the first time monthly billings have reached $3 billion, according to the January Equipment Market Data Subscription (EMDS) Billings Report published today by SEMI. The billings figure is 13.4% higher than the final December 2020 billings of $2.68 billion and is 29.9% higher than the January 2020 billings level of $2.34 billion.

 

Ajit Manocha, SEMI president and CEO said, “The acceleration of digital transformation is fueling strong, durable demand for semiconductor equipment.”

 

Conquering capacity constraints 

 

Taiwan's TSMC, the world's biggest foundry, plans to raise about $9 billion through bond sales to expand production and take increased steps for pollution control. TSMC also approved the establishment of a wholly owned subsidiary in Japan to expand research on materials for three-dimensional chip

 

The company is running full tilt to meet demand that exceeds its production capacity. TSMC finds itself at the center of an increasingly geopolitical scramble to secure supplies of chips for everything from automobiles to smartphones.  Prices for phone parts such as chips and displays have jumped as much as 15% in the past two quarters.

 

Chip shortages are likely to erase $61 billion of expected sales for automakers, while the impact to the electronics industry could be far larger, according to Bloomberg.

 

In 2021, TSMC expects to invest between $25 billion and $28 billion in capital expenditures, this year compared with $17.2 billion last year This includes construction of its new megafab facilities on the 1,100 acres in Arizona it purchased last year. Rival foundry United Microelectronics (UMC) has increased its capex budget for 2021 to $1.5 billion from $1 billion in 2020. 

 

Both TSMC and UMC with fully loaded capacities are relegated to reallocating production to meet demand from global automakers like Volkswagen and Toyota, just to name a few. The carmakers are forced to take a rear position in the line behind bigger chip buyers such as Apple and Qualcomm.

 

According to the Nikkei Huawei told its component suppliers that it will reduce its smartphone production by about 50% due to shiortages caused by crippling U.S. sanctions in the "Tech War".

 

The U.S. Partnership for Assured Electronics is inviting electronics manufacturers and related companies to participate in its programs, highlighting the opportunities to collaborate with industry peers and the U.S. government. The USPAE was established in 2020 with a mission of ensuring the U.S. government has access to resilient and trusted electronics supply chains. The USG has many electronics needs, especially for defense- and security-related missions, and the USPAE is lining up funding and collaboration opportunities to address those needs. 

 

Taiwan update

 

Taiwan managed the pandemic better than any other country – 924 total cases and 9 deaths.  Its PCB industry reported record revenues for 2020.   The pandemic provided a boost for electronics from the “Work from Home” employees who drove sales for Notebooks, Laptops, Desktop Computers, Monitors and any hardware related to an internet connection. Board makers in Taiwan have been busy the second half of 2020.

 

The monthly production for rigid circuit boards set a new record in September, and that volume continued throughout the 4th quarter 2020.  Revenue in 2020 reached $17.15 billion, a 4.9% grow from the previous year. Flexible circuits recorded negative growth during the first three quarters due to the delayed release of Apple’s new iPhone 12.  A huge rally from Apple and other manufacturers pushed December’s revenue up 59.2% over the same month in 2019.  This incredible growth increased the total revenue for flexible circuits in 2020 to $6.68 billion, a 7.5% increase year over year.

 

Total revenue for all segments within the Taiwanese PCB industry reached $223.83 billion  in 2020, a 5.6% increase over 2019r.

Historically, electronics production during the first two months in Taiwan slows down because of the Chinese New Year. However, this year, demand remained strong into February.    Source: DKN Research

 

Reports from Europe show an unexpectedly strong bare board demand to start 2021. This appears to be driving possible overbooking amid fears of further supply chain disruptions from China board makers. This is coupled with Cu-clad laminate shortages and price increases with lead times ioncreasing from 3 weeks to 7 weeks in some cases. This is compounded by the expected February 11 Chinese New Year shutdown as Germany and others remain in a Covid-19 extended lockdown. Add to that rumored shipping container shortages. Some companies were said to be placing orders for their board needs through December 2021!  

 

It's not just the pandemic

 

Component demand for 5G and other high-tech electronics is booming! It takes time, technology, and $$$$$$ to build a new foundry or increase chip capacity!

 

Imagine ceasing production of a $60,000 vehicle for want of a $2 chipl

 

General Motors became the latest automaker hit by the global shortage of semiconductor chips. Production ceased entirely during the week of February 8 at plants in Fairfax, Kansas; Ingersoll, Ontario; and San Luis Potosi, Mexico. It also ran its Bupyeong 2 plant in South Korea at half capacity that week.  

 

The chip shortage has led several other automakers, including Volkswagen, Ford, Subaru, Toyota, Nissan, and Stellantis NV, to cut vehicle production. Mazda is considering cutting its global output by a total of 34,000 vehicles this month and in March due to the shortage. AutoForecast Solutions estimated the total lost  production this year could be 964,000 vehicles. Source: Reuters

 

January 2021

 

Although the world appears to be deeply mired in turmoil die to spikes in and mutations of the Codivd-19 virus causing increased lockdowns from Germany through portions of the U.S. to Hong Kong the electronics manufacturing industries continue to perk along. 5G component demand has caused shortages affecting modules destined for automotive factories in Europe causing some line shutdowns.

 

The effect of the stream of new Executive Orders by President Biden on America's electronics makers is not yet predictable.

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