GLG News by Semiconductor Pricing Trend Experts

Jim HandyDirectorObjective Analysis

Infineon Looking Better, but Still Ripe for Takeover

February 19, 2009

Analysis of:Infineon Gains After Boosting Savings Target, Reducing Spending | www.bloomberg.com

Infineon has been looking for a suitor for over a year, and this latest news will not change that.  The consolidation that is overdue in the DRAM market is driven by basic economics.  Consolidation will result in fewer vendors, starting with the elimination of those at the bottom of the market share ranking.  Suppliers Samsung, Hynix, Micron, Elpida, Powerchip, ProMos, Nanya, Infineon, and others will be impacted.

Jim HandyDirectorObjective Analysis

HDD Makers are Under No Immediate Threat

February 19, 2009

Analysis of:Solid State Hard Drives Go Mainstream | www.thestreet.com

Flash SSDs are poised to replace HDDs in the notebook PC market provided users want them to.  If that happens it will be a big plus for SSD makers like SanDisk, Samsung, Toshiba, Intel, Micron, STEC, SuperTalent, SMART Modular, and many other firms.  It will meanwhile serve to harm Seagate, Western Digital, Hitachi, another part of Toshiba, and Fujitsu.  The PC OEMs: Dell, HP, Lenovo, Asus, and many others will be observers of this battle, as they can switch from one side to the other easily without any harm to themselves.

Chuen-Yi WangFormer Vice PresidentTAIWAN SEMICONDUCTOR CO., LTD.

M&A, JV in HDD Industry and SSD, Embedded System Replacement in 2011

February 19, 2009

Analysis of:Toshiba-Fujitsu Gives Storage Rivals an In | www.thestreet.com

HDD quantity of delivery under NB and the consumption electronic products demand leads, maintains 10~15% year growth rate, the hard disk quantity of delivery growth rate reaches as high as 18.9% in 2007, however because, on the other hand actually also the price competition day by day intensifies, causes the income earning to worsen, causes the hard disk market also to blow the purchase wind, even touches the related components factory. Stops to 2008, after eliminated and the conformity many times, the global hard disk entrepreneur from 41 in 1990, reduced to Seagate, WD, Hitachi Global Storage Technologies; HGST, Samsung, Toshiba and Fujitsu, Total 6. Seagate purchases and takes over Maxor after May, 2006, reaches as high as 35% of the global hard disk market in 2007. Fujitsu is the lowliest place in the hard disk market, because of hard disk enterprise deficit again and again, so that Toshiba is the most powerful customer to take over the Fujitsu hard disk enterprise.

Chuen-Yi WangFormer Vice PresidentTAIWAN SEMICONDUCTOR CO., LTD.

More Rating Cut

February 18, 2009

Analysis of:Hynix Falls Most in Two Months on JPMorgan Rating Cut | www.bloomberg.com

Hynix will not have the reduction of capital plan. Hynix pass on the year's end to sell Oregon the Eugene factory to attain 306,000,000 US dollars in accordance to the turnover. Hynix, the beautiful light offers NAND the Flash technology Taiwan factory not to appreciate kindness rendered solves the DRAM difficult position most first. Hynix’s Creditor bank plans before the end of September to release the stockholder's rights value to estimate 880,000,000 US dollars again. Hynix reduces the workshop promotion disbursement and postpones the mainland joint capital factory investment. Hynix pelts capital outlay the global DRAM supply rate to grow only this year 20~30%, The 4th quarter, 2008 loses money 964,000,000 US dollars analysts anticipated in 2009 transport business difficult to show improvement after illness.   Obviously, JPMorgan will continuously the rating cut again. 

Chuen-Yi WangFormer Vice PresidentTAIWAN SEMICONDUCTOR CO., LTD.

Pricing level based on supply and demand not consolidation

February 11, 2009

Analysis of:Winbond open to DRAM consolidation, says company executive | www.digitimes.com

As 30 X 12" memory fab were built in year 2007 and 14 of 30 were built in Taiwan for which the over supply statement happened with Zero Vista effect. Taiwan government trying to upgrade the advanced/ mainstream processing technology up to 48nm for DRAM and 30nm for NAND for cost down with high yield rate; integrate R&D power between Elpida, Micron and PSC, Inotera, Nanya, ProMos and Windbond. The technology alliance bundled with US$ 3B capitals. Above project is pending for an attractive business proposal. Qimonda went bankruptcy only provide around 10% of market demand which only created 20% price increases; 25% price gap to reach the breakeven price point. The global economic downturn made it worse as a serious storm in the 2nd layer although memory industry needs an M&A/ JV and cost down with advanced technology development as the industry dynamics.  As to the supply and demand relationship, expected to reach the balancing point in 2010 with basic Capex.   

Donald RheaultFounderOurSalesRep

Infineon should gain market share coming out of this downturn.

February 6, 2009

Analysis of:Infineon Gains After Boosting Savings Target, Reducing Spending | www.bloomberg.com

Infineon has recently cut costs by reducing capital spending and layoffs, but it has wisely kept its independent rep force in place. The benefit of this force is in its variable cost of sales: the number of sales people remain constant but cost less and get hungrier. Many of Infineons competitors have a direct, fixed sales cost force. Some of these competitors have even been laying off sales personnel. By capturing design slots during the downturn Infineon should come out quicker and stronger than TI, National etc.

Donald RheaultFounderOurSalesRep

SMIC may have bottomed due to increased demand in China but US semi companies may not benefit.

February 6, 2009

Analysis of:Semi Manufacturing Says Orders May Have ‘Bottomed’ (Update1) | www.bloomberg.com

If there is a turning point in demand ahead for US companies only some will see it because some have been "eating their seed corn". If the market does turn this summer a large number of semi companies ,especially in the analog/mixed signal market, will not be on the new systems being developed because they have cut their sales forces when they should have gone to a variable cost of sales. The one saving grace of this recession is that it has demonstrated the superiority of the manufacturing foundry model-variable, not fixed manufacturing cost. National Semi in the old days always picked up market share on TI and Fairchild because they kept their independent rep sales force in place-although making less money, and hungrier- gathering design wins during the down time. If the semi companies at least haven't aggressively redone their sales budgets and commission plans they will end up with a demoralized and less aggressive sales force.

Donald RheaultFounderOurSalesRep

The short trerm outlook for Taiwan Semi is not good, but the long term looks good.

January 7, 2009

Analysis of:Taiwan Semi Shares Fall on Only ‘Sell’ Recommendation | www.bloomberg.com

Selling Taiwan Semi now would seem to be a bad bet because this might be close to the bottom of the cycle for semi stocks, and particularly for Taiwan Semi, because the outsourcing model is winning.It is predicted that those companies outsourcing their manufacturing are better off now without large, fixed costs. Most analysts argue that the semi market will start to go up by June, and it should go up fast due to lack of a large inventory overhang at customers and distributors. As the feature sizes of semis go below 45nm Taiwan Semi will be in a strong position as their competitors and semi manufacturers slow down capital spending. Apart from normal replacement cycles there is no compelling upgrades to the computer business market. But the emerging Chinese standards and overall demand for mobil phones and small form factor computers should drive the market in 2009.

Donald RheaultFounderOurSalesRep

New opportuniyies open for linear and mixed signal companies due to switch to wireless phones.

December 20, 2008

Analysis of:Fitch: Poor Economy May Boost Pace Of Switch To Wireless | money.cnn.com

People are switching to wireless from land lines in droves, saving money in a bad economy. There are places where that is difficult to do, such as alarm systems in first and second homes. Freeze Alarm is a product made to warn a homeowner  especially in second homes that the furnace is not heating the house properly. It uses the land line connection. The same system is used for home security. The companies that make semiconductor temperature sensors such as National, Maxim,, and Linear Tech can add a second chip or stage for an RF transmitter or a dedicated cell phone to make a call to the homeowner thus eliminating the need for a land line. Frozen pipes are the second leading cause of home damage and rising fast due to unusual weather patterns. Electonic sensors and control mechanisms such as Freeze Valves can cut this damage significantly.

Jim HandyDirectorObjective Analysis

Intel/Hitachi SSD Deal Good for Intel, Good for Hitachi

December 17, 2008

Analysis of:Hitachi, Intel to Co-Design High-End SSDs | www.pcmag.com

With the recent announcement that Hitachi will be making Fibre Channel and SAS implementations of Intel's proprietary SSD architecture both companies should profit.  This will pose a threat to companies like Seagate, Western Digital (WD), and Fujitsu who do not have such an SSD and rely on sales of enterprise HDDs, as well as to less sizeable SSD firms like STEC, SMART Modular, and others.

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