Semiconductor market news from DPE- February 7 to February 13

1、AMD: ‘All Necessary Approvals’ Received for Proposed Xilinx Deal

Feb. 10, 2022, AMD announced it has received approval from all necessary authorities to proceed with the acquisition of Xilinx, a deal estimated at $35 billion.

With the exception of the remaining customary closing conditions, all conditions to the transaction closing have been satisfied and the company expects the transaction to close on or about February 14, 2022.

AMD announced its intention to acquire Xilinx in an all-stock transaction on October 27, 2020. The transaction brings together two industry leaders with complementary product portfolios and customers, combining CPUs, GPUs, FPGAs, Adaptive SoCs and deep software expertise to enable leadership computing platforms for cloud, edge and intelligent end devices.

2、Sumco, a key supplier of silicon wafers, has loaded its capacities at 100% until 2026

Japanese company Sumco Corp, which is among the main suppliers of silicon wafers to the semiconductor industry, said it had already sold out its production capacity until 2026. This indicates that the shortage of chips may drag on for many years, reports Bloomberg.

The Japanese company’s report says it has already received five-year orders for 300mm wafers, so demand will outstrip supply in the coming years. Sumco does not accept orders for 150mm and 200mm wafers for such periods, because there is no evidence of a possible shortage of such supplies. Silicon wafer prices are up 10% in 2021 from 2020, and Sumco expects prices to rise through 2024.

The company adds in the report that despite strong demand, there will be no production expansion this year. Sumco has already optimized its production lines, but there is still a supply/demand imbalance across the entire product range.

3、SSD prices could spike after Western Digital loses 6.5 billion gigabytes of NAND chips

Western Digital says it has lost at least 6.5 exabytes (6.5 billion gigabytes) of flash storage due to contamination issues at its NAND production facilities. The contamination could see the price of NAND — the main component of SSDs — spike up to 10 percent, according to market research firm TrendForce. Any potential NAND shortages or price fluctuations could affect the PC market over the next few months, which had another big year in 2021 despite global chip shortages and demand for GPUs.

The contamination of materials used in the manufacturing processes appears to have been detected in late January at two plants in Japan, with Western Digital’s joint venture partner, Kioxia (previously Toshiba), revealing it has affected BiCS 3D NAND flash memory.

Western Digital and Kioxia’s partnership amounts to around 30 percent of the NAND flash market, according to TrendForce. Both Western Digital and Kioxia primarily supply SSD and eMMC storage drives for PCs, and Western Digital is one of the leading suppliers in the industry.

It’s not clear what caused the contamination, whether products on the market will need to be recalled, or when production will resume. Western Digital says it’s “working closely with its joint venture partner, Kioxia, to implement necessary measures that will restore the facilities to normal operational status as quickly as possible.”

4、Truckers' bridge blockade forces shutdowns at auto plants

Five car companies have halted production at some facilities, citing supply chain problems in part affected by the Canadian trucker protest convoy. The convoy, which is protesting COVID-19 restrictions, is blocking the Ambassador Bridge between Windsor, Ontario and Detroit, Michigan.

Ford, GM, Toyota, Honda and Stellantis — the parent company of Chrysler — all canceled shifts or reduced capacity at plants. Some disruptions were expected to continue into the weekend.

"This interruption on the Detroit/Windsor bridge hurts customers, auto workers, suppliers, communities and companies on both sides of the border that are already two years into parts shortages resulting from the global semiconductor issue, COVID and more," said a Thursday statement from Ford, which confirmed it was running two plants at reduced capacity again Friday, which also saw the company's Ohio Assembly Plant down. The company had shut production at its Windsor engine plant Wednesday. "We hope this situation is resolved quickly because it could have widespread impact on all automakers in the U.S. and Canada."

Stellantis cut short shifts at plants in Canada since Tuesday and second shifts Wednesday in the U.S. "The situation at the Ambassador Bridge, combined with an already fragile supply chain, will bring further hardship to people and industries still struggling to recover from the COVID-19 pandemic," read a statement from the company.

Toyota reported disruptions starting Wednesday at several of its North American plants, including Canada and Kentucky and spreading Friday to plants in West Virginia and Alabama. The company said it expected disruptions to continue through the weekend.

"Due to a number of supply chain, severe weather and COVID related challenges, Toyota continues to face shortages affecting production at our North American plants," the company said in a statement Friday, pointing to the Ambassador Bridge blockade.

Honda also blamed border delays for the temporary suspension of manufacturing on a production line in its Alliston, Ontario plant Wednesday and again Friday. The company said all U.S. production lines were expected to run Friday.

5、Nvidia to Withdraw From Acquisition of SoftBank’s Arm

Nvidia Corp. is abandoning its purchase of Arm Ltd. from SoftBank Group Corp., according to people familiar with the situation, bowing to regulatory opposition and ending what would have been the chip industry’s largest deal.

SoftBank now plans to proceed with an initial public offering of Arm, in lieu of the deal, according to the people, who asked not to be identified because the move isn’t yet public. The IPO is expected to happen in the fiscal year ending March 2023.

Arm Chief Executive Officer Simon Segars has resigned, handing the job to President Rene Haas, according to the people. The move wasn’t related to the demise of the deal, one of the people said. Segars was one of Arm’s first employees and worked his way up through the ranks to become CEO in 2013. He continued to lead the company after it was acquired by SoftBank in 2016.

The Financial Times reported earlier that the transaction collapsed on Monday. Last month, Bloomberg reported that Nvidia was preparing to wind down the deal. SoftBank and Arm are entitled to keep $2 billion that Nvidia paid at signing, including a $1.25 billion breakup fee.

Nvidia, Arm and SoftBank representatives declined to comment.

6、Samsung employees set to go on first-ever strike

Samsung Electronics could face the first strike in 50 years after the collapse of wage talks with the National Samsung Electronics Labor Union.

After several months of negotiations, union representatives filed a lawsuit with the National Labor Relations Commission of South Korea, which is a government agency under the Ministry of Labor. The move gives Samsung 10 days (from Feb. 4) to reach an agreement, failure to comply with which will lead to a strike and shutdown of several critical Samsung divisions, including semiconductors.

The South Korean company has found itself in a quandary as it has already been hit hard by semiconductor shortages, leading to inventory shortages and delivery delays. In addition, the launch of the flagship Galaxy S22 series has been delayed by a few weeks.

“Despite the union’s 15 rounds of negotiations with Samsung, management unilaterally fraudulently delayed the negotiations,” the National Samsung Electronics Labor Union said in a statement.

The Samsung union currently has 4,500 members, and negotiations began in October. During the talks, demands for wage increases, compensation due to COVID-19 and special leave options were voiced for the first time, but they all fell on deaf ears.

“We went to court after we realized that the negotiations would no longer continue. Our future direction will depend on Samsung’s willingness to negotiate,” the National Samsung Electronics Labor Union added.

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