March 2012 Issue

Your monthly digest which aims to provide you a round up of the semiconductor headlines with a special focus to the Asian arena - direct to your inbox. Simply click on the relevant links provided to get the details.

Key Take-Away

Local Asia-Pacific News

Industry Headlines

Financial Watch

Mergers, Acquisition, Joint Ventures,

Spin-offs and People

Market Outlook

Views and Opinions

Stock Watch

Hi, Well, with the Mobile World Congress in Barcelona, the buzz in the virtual space has mostly centred on that this month. Some parting shots from MWC 2012......... Nokia made news with its 41 megapixel smartphone. Huawei made a surprise announcement the night before opening of Mobile World Congress with an in-house developed quad core application processor chip K3V2 and with claims to beat Nvidia’s Tegra3. Now that’s a big leap from multi-core network processor and base station chips that it had done before. The Chinese telecom giant has also announced deals to buy $6 billion of hardware from Qualcomm, Broadcom and Avago. Its compatriot, ZTE, also announced deals worth $5b with Qualcomm and Broadcom. This month saw Japan’s DRAM maker Elpida filing for bankruptcy. Will the market consolidation help in stabilizing the DRAM prices? Micron is poised to cash in on this news. TSMC, the industry’s bellwether is almost booked out of capacity on 40nm processes and better. As Future Horizon’s Malcom Penn pointed out, "TSMC’s Q1 is everyone else’s Q2 so if TSMC sees a strong Q1 then everyone else is expecting growth in Q2." An acquisition which caused some ripples is that of AMD buying micro server start-up, SeaMicro. AMD to sell Intel based servers – does sound intriguing, right? Speaking about Intel, Tabula became the second programmable logic start-up confirmed to be using Intel's Custom Foundry division for foundry work. In October 2010, Achronix Semiconductor announced that Intel would build its 22-nm FPGAs. On the outlook, with a 4th consecutive month of growth in wafer fab tool orders, the current outlook of equipment spending

looks improved for the North American manufacturing tool providers. If you have any thoughts on the semiconductor news & would like to share them with me and your industry colleagues through this e-newsletter, please email me at meenu@asic-vlsi.com. Best Regards Meenu Ps: If you see a need for

Training for your engineers (pl. visit http://asic-vlsi.com/training.html for a list of offerings) Detailed research and an in-depth analysis for your specific market intelligence requirements, do let me know; we can value-add. Visit www.asic-vlsi.com for details or simply drop me an email

LOCAL ASIA-PACIFIC NEWS

AMAT, A*Star advanced packaging centre of excellence plans grand opening Source: Electroiq – 1st March 2012 Applied Materials (AMAT) and Singapore's A*STAR Institute of Microelectronics (IME) will officially open the Centre of Excellence in Advanced Packaging, in Singapore’s Science Park II, on March 7.The joint laboratory is Applied Materials’ first semiconductor R&D laboratory in Asia. Qualcomm, HiSilicon, China drive unified LTE Source: Rick Merritt, EE Times – 27th February 2012 Qualcomm and HiSilicon announced multi-mode chipsets that support both the FDD and TD flavours of the LTE. Separately, China Mobile pledged to launch a converged TD/FDD LTE network this year in Hong Kong and Vodaphone expressed support for the technology. ZTE launches industry’s first TD-LTE pico based station Source: Business Wire – 26th February 2012 The new Pico base station is used to mitigate problems associated with rapidly increasing mobile service data requirements. The base station can be deployed in hot spots, blind spots, cell-edge spots and indoors dependent on traffic. Huawei claims quad-core chip outguns Tegra3 Source: Rick Merritt, EE Times – 26th February 2012 Huawei has announced what it claims the world's fastest handsets and tablets, using a new quad-core applications processor designed by its chip division. The company said its K3V2 chip significantly outperforms the competition, including Nvidia’s quad-core Tegra3 Toshiba and SanDisk shrink 128 Gbit memory chips Source: Jay Alabaster, IDG News Service – 23rd February 2012

KEY TAKE-AWAY

From the Asian arena Huawei in news for quad core chip. Big deals awarded by Huawei and ZTE to Broadcom, Qualcomm and Avago. ZTE launches industry first TD-LTE Pico Base Station, Elpida files for bankruptcy, Samsung reorganizes for LED biz. Acquisitions AMD buys SeaMicro, Micron buys Intel stake in flash JV, Rambus buys Unity Semiconductor

The companies are mass producing a 128Gbit NAND flash memory chip using three-bits-per-cell storage. The 170 square mm chip uses a 19-nanometer technology process, one step smaller than a 20-nanometer chip announced by Intel and Micron in December Mainland China likely to enlarge LED lighting subsidization coverage Source: Jay Alabaster, IDG News Service – 23rd February 2012 Mainland China is likely to enlarge LED-lighting subsidization coverage, including not only more product items but also more supply sources. This is the mainland’s second phase of the subsidization initiative for LED-lighting consumptions, aiming to subsidize over 10 million lamps this year. Some 10% of the number was subsidized in first phase of the project. Samsung positions its fab to take on TSMC Source: EE Times – 21st February 2012 Samsung touted its new 32-nm high-k metal gate (HKMG) process at the International Solid-State Circuits Conference showing features it hopes might win customers over from a supply constrained TSMC. Samsung approves LED business absorption Source: Electroiq – 20th February 2012 Samsung LED, Co, Ltd. will be merged into Samsung Electronics by way of small-scale merger and be dissolved following the merger. This is expected to nurture the light emitting diode (LED) business as the future growth engine of Samsung Electronics’ component business by utilizing its advanced technology, manufacturing competency, and global sales network Samsung shifts to new TV technology with LCD spin off Source: Reuters – 20th February 2012 The world's biggest maker of televisions is shifting its focus towards new generation OLED display technology and said it will spin off its loss-making LCD flat-screen business into an affiliate Silicon Image opens up R&D centre in Hyderabad Source: EE Times – 21st February 2012 In addition, the US-based provider of wireless and wired high definition connectivity solutions is also planning to work closely with local universities and institutions to foster student research and internship programmes. Huawei to buy $6 billion from Qualcomm, Broadcom and Avago Source: Reuters – 17th February 2012 China's Huawei Technologies said it would enter contracts worth $6 billion over the next three years to buy components from U.S. chip companies Qualcomm, Broadcom and Avago Technologies for its telecommunications products.

Nvidia suffers as TSMC’s 28nm ramp steeper than expected Source: Timothy Prickett Morgan, The Register – 16th February 2012 GPU and system-on-chip maker Nvidia says that the ongoing shortages of disk drives that have stalled the PC industry took a chunk out of its fourth quarter business, as did a steeper than expected ramp to 28 nanometer processes at chip foundry partner TSMC. JSR Micro Taiwan opens LCD materials research lab Source: Electroiq – 16th February 2012 JSR Group anticipates a rise in demand for LCD materials, following the construction of LCD factories in China by major Chinese, Korean, Japanese, and Taiwanese companies. Taiwan is both a major market for LCD panel manufacturing and an emerging location for touch-panel materials and related display products TowerJazz makes bid for 300mm fab in India Source: Semiconductor Manufacturing and Design Community – 16th February 2012

Specialty foundry vendor TowerJazz has made a bid with a leading Indian infrastructure conglomerate to build and operate a 300mm fab in India. This will enable the Israeli company to offer 300mm wafer sizes, 90nm analog technology and companion chips at from 65nm to 45nm.

ASE expands investment in South Korea Source: Focus Taiwan – 16th February 2012 Taiwan's Advanced Semiconductor Engineering (ASE) Group, one of the world's leading suppliers of semiconductor assembly and test services, announced an increase in investment worth $930m in South Korea. ASE Korea, established 12 years ago, plans to expand its production in Gyeonggi Province's Paju City through 2020. Escatec beefs up Malaysian facility Source: EE Times – 16th February 2012 As part of its upgrade program, Escatec has fleshed out $2.5 million to refurbish its factory in Johor Bahru, Malaysia. This includes installing new electronic assembly and plastic moulding machines with robotic load/unload systems on the site Nokia to axe 4000 jobs, move assembly to Asia Source: Reuters – 8th February 2012 Nokia's recent business results have underscored the need for drastic cuts. Late last month it reported a 73 per cent fall in quarterly earnings as sales of new Windows Phones failed to dent the dominance of Apple’s iPhone or compensate for diving sales of its own old smartphones. Back to top

INDUSTRY HEADLINES

Nokia unveils 41 megapixel smartphone Source: Esther Samboh, The Jakarta Post – 28th February 2012 The company said that Nokia’s mammoth megapixel smartphone, the Nokia 808 PureView, would usher in a revolution in smartphone imaging with its 41-megapixel sensor, Carl Zeiss optics and Nokia-developed pixel over-sampling technology. Germany slashes FIT subsidies in an effort to rein in solar power installations Source: John Blau, Renewable Energy World – 23rd February 2012 Solar power has grown so massively in Germany that the government now plans to rein in the boom in photovoltaic installations by cutting generous subsidiaries. APIC CEO leads germanium laser barrier breakthrough team Source: Business Wire – 23rd February 2012 The core breakthrough was to get the element Germanium to act as a laser, for use as a light source on a new generation of mass produced silicon semiconductor chips using light particles, or photons, instead of electronics for its functions - i.e. photonic chips. Intel confirmed as foundry for second FPGA startup Source: Dylan McGrath, EE Times – 21st February 2012 Programmable logic start up Tabula confirmed that Intel will manufacture the firm's 22-nm 3PLD products using Intel's 3-D tri-gate transistors. Semiconductor inventory correction has occurred, Gartner Source: Electroiq – 21st February 2012 Semiconductor vendors, on average, announced weak revenue in Q4 2011, on top of a sub-seasonal Q3 indicating that the anticipated correction to chip inventory levels occurred, Gartner reports. Based on Gartner's inventory analysis and vendor guidance, the correction process will be largely completed by Q1 2012, as evidenced by rising trends in the lead-time index 49 semiconductor wafer fabs close in 2009-2011 Source: Electroiq – 15th February 2012 Most of the 2009-2011 fab closures were 150mm wafer fabs (43%). Fab closures by wafer size: 21 for 150mm, 13 for 200mm, 7 for 125mm, 5 for 300mm, and 3 for 100mm. With Qimonda going out of business in early 2009, its 300mm wafer fabs became the first of their kind to cease commercial operations. Back to top

FINANCIAL WATCH

Thailand flooding help Seagate move into 1st place in hard drive market in fourth quarter Source: Fang zhang, iSuppli – 29th February 2012 Seagate Technology recaptured the lead in hard disk drive (HDD) shipments during the fourth quarter of 2011 ousting Western Digital which suffered heavy losses in the devastating Thailand floods last year. In the final quarter of 2011, Seagate shipped 46.9 million HDD units worldwide compared to 28.5 million for arch rival Western Digital, according to an IHS iSuppli report. Elpida files for bankruptcy protection with $5.6 billion Source: Nobuhiro Kubo and Mayumi Negishi, Reuters – 27th February 2012

Japan's sole maker of DRAM chips has been hobbled by weak prices, heavy capital spending to keep pace with well-funded South Korean rivals Samsung Electronics and Hynix Semiconductor while a strong yen hurt its global competitiveness.

Tokyo Electron joins Luxtera investors in $21.7M Round C Source: Electroiq – 28th February 2012

Silicon CMOS photonics company Luxtera closed $21.7 million in Round C financing, with participation from NEA, August Capital, Sevin Rosen, Funds, and Lux Capital as well as new investor Tokyo Electron (TEL) and personal investment from an industry titan

North American chip fab tool makers report 4th month of orders growth in January Source: Electroiq – 24th February 2012 As per a SEMI report, North American semiconductor manufacturing tool providers booked $1.18 billion in orders for January (three-month average), 7% more than in December and 22.1% less than January 2011. Micron increasing stake in Inotera Source: EE Times – 23rd February 2012 In a filing with Taiwan's stock exchange, Inotera disclosed that Micron through its Numonyx Holding BV subsidiary would buy more than 763 million shares of Inotera at a discounted price of NT$6.55, about 10 per cent lower than Inotera's stock value at the time Analog Devices revenue fall 11% in Q1 Source: Telecom Paper– 23rd February 2012 Total analogue products revenue declined 12 per cent year over year to USD 590.7 million, while digital signal processing revenues increased (3 per cent y-o-y), industrial revenues declined 15 per cent, automotive revenues grew 26 per cent,

while consumer revenues fell 20 per cent and communications revenue also fell 18 per cent. Chunghwa may be dethroned in Taiwan’s telecom market Source: Taiwan Economic News – 23rd February 2012 Chunghwa Telecom is estimated to lose the title of the most profitable telecom carrier in Taiwan this year after the company announced its forecast of NT$5.05 per share in after-tax earnings for 2012. The estimated figure is NT$1 short of 2011’s earnings result and may be outperformed by NT$5.34 per share estimated for Taiwan Mobile Corp.’s 2012 operation. Dialog Semiconductor reports fourth quarter and year ended 31st December results Source: Reuters – 22nd February 2012 The Company maintains revenue growth momentum with record revenue for both Q4 2011 and FY 2011; delivering 78% year-on-year revenue growth.

ZTE signs $5b purchase contracts with Qualcomm and Broadcom Source: C114 – 21st February 2012 Qualcomm will supply $4 billion worth of chips for the 2012-2015 period, while Broadcom will provide $1 billion worth of chips from 2012 to 2014, reports China Securities Journal citing a company filing CSR revenues up but operating profit slips Source: StockMarketWire – 20th February 2012 The wireless technology specialist company saw revenue growth in Q4 2011 year-on-year in Automotive (15%) and Home Business Group (33%) with declines in Personal Navigation Devices (PND) (56%) and Handsets (11%). Applied Materials first quarter results exceed expectations Source: Reuters– 16th February 2012 Applied generated orders of $2.01 billion and net sales of $2.19 billion. "Global demand for mobile devices is driving a third consecutive year of strong capital investment by semiconductor customers," said Mike Splinter, chairman and chief executive officer. "As a result, we see solid order momentum and an improved outlook overall for our second quarter."

LED oversupply shrinks in 2012 on consumer demand uptick Source: Electroiq – 16th February 2012 LED supply exceeded demand by 30% in 2011, thanks to poor LED TV sales and slow growth in LED lighting. Recovering backlight demand and a new uptake in LED lighting are closing this gap in 2012, shows a recent NPD DisplaySearch report, putting the LED supply glut at 19% in Q1 2012, dropping 3 percentage points by the next quarter. Nvidia’s Q4 revenue meets lower forecasts

Source: Reuters– 15th February 2012 The company’s fourth-quarter revenue met scaled-back expectations as the chipmaker focused on its newest processor for smartphones and tablets in a tepid personal computer market. ChipMOS reports January 2012 revenue Source: PRNewswire – 15th February 2012 ChipMOS reported that revenue for the month of January 2012 was NT$1.44 billion, down 6.8% from NT$ 1.55 billion reported for the same month in 2011. TI, Infineon, Skyworks, ON Semi gain in analog rankings Source: Semiconductor Manufacturing and Design Community – 10th February 2012

Total global analog revenue remained nearly flat from 2010 to 2011, reaching $42.3 billion for the year, according to Databeans. Texas Instruments, the leader in the market for analog ICs, ended 2011 with a slight increase in year-over-year analog sales, growing 5 percent to $6.5 billion.

TSMC says January sales up 11.4 per cent on month Source: Reuters – 10th February 2012

The world's biggest contract chip maker posted an 11.4 per cent monthly rise in January sales as the industry is seeing an end to the inventory correction that has lasted two quarters, while smaller rival UMC also showed signs that sales might be stabilizing.

ON Semiconductor reports 4Q loss, profit for year on record revenue Source: Patrick O’Grady, Phoenix Business Journal – 8th February 2012

The company reported record revenue in 2011 but the company saw only a slight profit for the year and a loss for the fourth quarter as it integrated its purchase of Sanyo’s semiconductor unit

Back to top

MERGERS, ACQUISITIONS, JOINT VENTURES, SPIN OFFS AND PEOPLE

AMD to acquire micro server startup SeaMicro for $334m Source: Damon Poeter, PCMag – 29th February 2012 AMD representatives said they believed SeaMicro's unique supercomputer fabric was a major innovation in data centre technology, characterizing the platform as a "new server building block" which would increasingly make its way into the growing cloud infrastructure space Micron buys Intel stake in flash joint venture for $600 million

Source: Himank Sharma, Reuters – 28th February 2012 Micron Technology will pay $600 million to buy back Intel's stake in two wafer factories as the chipmaker bets on the fast-growing NAND flash market to offset margin erosion in its mainstay memory chips. Ferro forms LCD glass polishing materials JV in China Source: Business Wire – 17th February 2012 Baotou Jin Meng Rare Earth will provide access to high-quality rare earth compounds from its refining operations in Baotou. Ferro’s Surface Technologies business will provide its manufacturing technology, market and applications requirement knowledge. DuPont and Yingli Green Energy enter $100 million agreement Source PR Newswire – 13th February 2012 The two companies have signed a $100 million strategic agreement for photovoltaic materials aimed at accelerating the adoption of solar energy Rambus buys Unity Semiconductor Source: David Manners, Electronics Weekly – 7th February 2012

Rambus has bought Unity Semiconductor for $35m, about half of the value of the equity and loan funding put into the company. Unity has been trying since 2002 to bring to market a cross-bar memory technology invented by IBM which it calls CMOx.

Corning, Samsung Mobile Display announce OLED glass partnership Source: Daily Tech – 7th February 2012 Samsung Mobile Display and Corning have announced that they have formed a new OLED glass venture that will be located in Korea. The two companies have signed an agreement that will establish an equity venture to manufacture specialty glass substrates that will be used in the emerging OLED display market Back to top

MARKET OUTLOOK

MEMS devices to generate mobile revenues exceeding $6b annually by 2016 Source: CBR – 23rd February 2012 As per Juniper Research, three different categories contributing to the revenues opportunity from MEMS devices are those already deployed (accelerometers, magnetometers & gyroscopes), those currently in initial stages of deployment (displays, RF devices, pressure sensors & microphones) and future applications, including joysticks, temperature and humidity sensors, speakers & pico-projectors.

Combo chipsets to suffer against new embedded Wi-Fi chipsets Source: Electroiq – 21st February 2012 The potential combo chipset revenue lost as new embedded Wi-Fi chipsets replace current chipsets could be as high as $590 million in 2015. Smart grid market defies hurdles with $81b forecast Source: EE Times – 14th February 2012 The global smart grid market is forecast to approach $80.6 billion in 2016 from $22.8 billion last year at a CAGR of 28.7 per cent. This is driven by the primary advantage offered by smart grids: efficient energy distribution and transmission. Record semiconductor sales in 2011, 2012 outlook Source: Meredith Courtemanche, Digital Media – 8th February 2012 The Semiconductor Industry Association (SIA) representing US semiconductor manufacturing and design shows 2011 worldwide semiconductor sales hit $299.5 billion, a 0.4% year-on-year (YOY) increase and new record. Semico Research's forecast for 2012 shows a 10.11% growth in semiconductors revenues over 2011. It believes that the bottom of the cycle is occurring now, in Q1 2012, with pent-up PC demand and other factors carrying 2012 growth starting in Q2. Back to top

VIEWS AND OPINIONS

Bullish Penn sees chip market growth of 8% in 2012 Source: Peter Clarke, EE Times-EDN – 23rd January 2012

Malcolm Penn, founder and chief analyst with semiconductor market analysis firm Future Horizons Ltd, has predicted that the global chip market will rise on an annual basis by 8% to $323.2 billion in 2012. Penn said that after a flat first quarter he expected the chip market to bounce back in the second half of the year. Back to top

STOCK WATCH

Source: NASDAQ

1 month chart for Intel, TSMC, TI, Broadcom, STM, Xilinx, KLA-Tencor, Qualcomm, LSI, UMC, Applied Materials, Teradyne, Toshiba

and Infineon

INTEL

TSMC

TI

BROADCOM

STM

XILINX

KLA-TENCOR

QUALCOMM

LSI

UMC

APPLIED MATERIALS

TERADYNE

TOSHIBA

INFINEON

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