Lfoundry closes ex-Atmel wafer fab in France; 600 jobs lost

http://www.edn-europe.com/en/lfoundry-closes-ex-atmel-wafer-fab-in-france-600-jobs-lost.html?cmp_id=7&news_id=10003098#.Ut_-OdLTmig

Lfoundry Rousset, the French chip manufacturing site of Lfoundry GmbH, has been declared bankrupt by the Commercial Court of Paris, with an immediate stop to activities on the site from Dec. 26 and the loss of 613 jobs, according to French reports.

The move has prompted angry demonstrations by the workforce in Rousset and Marseille as well as allegations that Lfoundry in Germany misappropriated €20 million (about $27.5 million) from Lfoundry in France. The German group is now the subject of a French criminal investigation, according to a report in Le Figaro.

Analog and mixed-signal chip maker Lfoundry bought the Rousset site from Atmel Corp. in 2010 for €1 together with a lengthy order book and Atmel was the main customer for Rousset until mid-2013. However, when Atmel's requirement turned down suddenly in June 2013 the Commercial Court in Paris placed Lfoundry into receivership with a six-month observation period to give time to develop a continuation plan for the business.

A voluntary redundancy plan was sketched out in November 2013 (see Jobs to go at Lfoundry Rousset) but it has failed to postpone the closure of the business.

The Rousset site will be preserved for a further three months while efforts continue to try and find a buyer but this will be for the site and equipment rather than for the business as a going concern with employees.

General Vision Inc. (Petaluma, Calif.) has expressed an interest, according to Varmatin, a local online publication. However, General Vision is a developer of image recognition systems rather than a chip manufacturer. The company is led by French expatriate imaging experts Anne Menendez and Guy Paillet.

The German parent company Lfoundry GmbH was formed in 2008 by the management buy-out of a Renesas wafer fab in Landshut, Germany. However, it subsequently closed the Landshut fab in 2011 after if failed to find sales to replace legacy orders from the original owner of the fab.

Immediately prior to Lfoundry Rousset being put into receivership, Lfoundry GmbH entered into an agreement to acquire Micron Technology Italia, Srl. and all of its semiconductor fabrication facility assets in Avezzano, Italy (a fab originally constructed and operated by Texas Instruments). In June 2013 it was announced that the takeover would be undertaken by way of a 50:50 joint venture between an entity called LFoundry Europe and Marsica Innovation SpA, a company owned by the Italian fab's management.

The Rousset wafer fab made chips on 200-mm diameter wafers in a clean room of about 12,000 square meters. It has a manufacturing capacity of about 25,000 wafer starts per month, according to data provided by the company in 2011.

Texas Instruments Cutting 1,100 Jobs; 4Q Profit Up

http://www.manufacturing.net/news/2014/01/texas-instruments-cutting-1100-jobs-4q-profit-up?et_cid=3725660&et_rid=490548696&type=headline

DALLAS (AP) -- Chipmaker Texas Instruments Inc. said Tuesday that it will cut 1,100 jobs worldwide, about 3 percent of its workforce, to trim costs and will reduce its investments in certain markets.

The company said the cuts in its embedded processing unit and in Japan will result in $130 million in annual savings by the end of 2014. The job cuts are in the U.S., India and Japan.

The Dallas-based company also said Tuesday that its fourth-quarter net income nearly doubled as restructuring charges fell and revenue ticked up 2 percent.

Texas Instruments has been reshaping its business, paring back its wireless unit as its biggest smartphone and tablet customers develop their own chips. It is shifting its focus to industrial and automotive customers.

The embedded processing unit is not part of the wireless division. Revenue in the embedded processing business, whose products serve various industries, rose 11 percent in the fourth quarter to $604 million.

In the three months through Dec. 31, Texas Instruments' overall net income rose to $511 million, or 46 cents per share, matching analyst expectations. In the same quarter the year before, profit came to $264 million, or 23 cents per share. But the fourth quarter's results included a restructuring charge of $49 million, or 3 cents per share, which Texas Instruments did not account for when issuing its guidance.

Revenue rose to $3.03 billion from $2.98 billion. That beat the $2.99 billion expected by analysts polled by FactSet.

For the first quarter, the company said it expects revenue between $2.83 billion and $3.07 billion and earnings per share of 36 cents to 44 cents including restructuring charges of about $30 million. Analysts were looking for first-quarter earnings per share of 44 cents on revenue of $2.95 billion.

Shares slipped 10 cents to $43.75 in after-hours trading. The stock closed regular trading up 40 cents at $43.85, and is up 31 percent over the past 12 months.

Slumping Intel To Cut More Than 5,000 Jobs In 2014

SAN FRANCISCO (AP) -- Intel plans to trim more than 5,000 jobs from its workforce this year in an effort to boost its earnings amid waning demand for its personal computer chips.

The Santa Clara-based company confirmed the job cuts Friday, the day after Intel Corp. reported its profit and revenue had fallen for the second consecutive year.

The purge represents about 5 percent of the roughly 108,000 jobs that Intel had on its payroll at the end of December. The company intends to jettison the jobs without laying off workers, said Intel spokesman Bill Calder. The reductions instead will be achieved through attrition, buyouts and early retirement offers.

The company didn't estimate how much money it hopes to save by eliminating jobs. But Intel needs pare its expenses if it hopes to end a two-year slump that has seen its earnings fall from $12.9 billion in 2011 to $9.6 billion in 2013. Intel is forecasting its revenue this year will be about the same as in 2013, making it unlikely its profits can rise without cost cuts.

This marks Intel's first significant job cuts since a company insider, Bryan Krzanich, succeeded Paul Otellini as CEO eight months ago.

"We are constantly evaluating and realigning our resources to meet the needs of our business," Calder said.

Intel's financial performance is faltering because the company didn't adapt quickly enough as the growing popularity of smartphones and tablet computers undercut sales of PCs running on its chips. Worldwide PC sales have dropped from the previous year in seven consecutive quarters, an unprecedented decline.

The trend is a problem for Intel because most mobile devices don't rely on its processors.

As Intel has struggled to come up with a successful strategy for mobile computing, the company has turned into a stock market laggard.

Since Intel's stock hit a five-year high of $29.27 in May 2012, the shares have fallen by 12 percent. Meanwhile, the Standard & Poor's 500 index has climbed by 31 percent.

Intel's stock dropped 69 cents Friday to close at $25.85, then dipped another 4 cents in extended trading.

http://www.manufacturing.net/news/2014/01/slumping-intel-to-cut-more-than-5000-jobs-in-2014?et_cid=3721261&et_rid=490548696&type=cta

Panasonic To Sell 3 Overseas Chip Assembly Plants

http://www.manufacturing.net/news/2014/01/panasonic-to-sell-3-overseas-chip-assembly-plants?et_cid=3716997&et_rid=490548696&type=cta

OSAKA (Kyodo) -- Panasonic Corp. plans to sell three semiconductor assembly plants in Southeast Asia to Singaporean chip manufacturer United Test and Assembly Center Ltd., sources close to the matter said Friday.

The move is part of efforts by the Japanese electronics manufacturer to accelerate outsourcing of its slumping semiconductor manufacturing operation. Last month, the company said it will sell off three of its semiconductor plants in central Japan to an Israeli chipmaker.

Panasonic aims to unload the plants in Indonesia, Malaysia and Singapore by the end of fiscal 2014 starting April, with workers at the plants to have their employment transferred to UTAC, the sources said. Other than the three plants, the company is also considering the sale of a plant in China, they said.

The three plants subject to the sale assemble semiconductors for electronics products including flat-panel televisions and digital cameras, but their operating rates have been low due to sluggish sales of digital home electronics products.

After selling the three plants, Panasonic will purchase finished products from UTAC, which assembles and tests semiconductors, the sources said.

Regarding its domestic semiconductor plants, Panasonic will spin off three plants -- two in Toyama Prefecture and another in Niigata Prefecture -- into a separate entity, in which Tower Semiconductor Ltd. has agreed to purchase a 51 percent stake.

The company also plans to close another plant in Okayama Prefecture which makes components related to semiconductor lasers by the end of March to trim losses in the semiconductor business.

Honeywell under investigation for Chinese-made parts in US warplanes

http://www.theguardian.com/world/2014/jan/12/honeywell-investigation-chinese-made-parts-warplanes

The US Justice Department is investigating export and import procedures at Honeywell International Inc after the firm included Chinese parts in equipment it built for the F-35 fighter jet, three sources familiar with the matter said.

Reuters last week reported that the Pentagon twice waived laws banning Chinese-built components in US weapons in 2012 and 2013 for parts supplied by Honeywell for the $392bn Lockheed Martin Corp F-35 programme.

New details have now emerged about one of those waivers, which involved simple thermal sensors that Honeywell initially produced in Scotland before moving that production line to China in 2009 and 2010. The other waivers involved high-performance magnets built in China and elsewhere.

Federal agents from the Defense Criminal Investigative Service, a law enforcement arm of the Pentagon, are working with prosecutors on the case, a person briefed on the matter said. The DCIS and the Pentagon declined to comment.

The precise nature of the investigation could not be confirmed. Typically, however, DCIS export investigations focus on whether a company violated the Arms Control Export Act by sending overseas products or technical specifications for items on the US Munitions List without first obtaining a US government licence. The sensors and F-35 specifications in this case may be subject to the US Munitions List. In terms of import violations, DCIS often investigates whether companies have engaged in fraud by misleading the Pentagon as to the origin of foreign parts.

The case throws a spotlight on the reliance of American companies, even in sensitive areas, on China as a manufacturing base for basic components. In the past 20 years, much production has been shifted out of the United States to lower-cost areas, particularly China.

The sensors are part of the power thermal management system that Honeywell builds to cool the F-35, start its engines and pressurise the cabin, said Joe DellaVedova, spokesman for the Pentagon's F-35 programme office.

A Honeywell spokesman, Scott Sayres, said the company decided in late 2012 – after consulting with Lockheed and the Pentagon – to move production of the sensors used on the F-35 from China to a plant in Boyne City, Michigan. It funded the move at its own cost, he said. Honeywell made the move after the origin of the sensors was discovered during a comprehensive review of the supply chain for the F-35, the newest US warplane.

That was carried out by Lockheed after another key supplier, Northrop Grumman Corp, discovered it had used non-compliant magnets made in Japan in building the jet's advanced radar system. The Pentagon acquisition chief, Frank Kendall, also issued a waiver for those parts.

Sayres said the sensors were part of a basic circuit card used in products sold commercially around the world.

"We firmly believe Honeywell has complied with all applicable US laws and regulations relating to the manufacture of the component in China," Sayres said.

Officials at the Justice Department and Pentagon declined to comment on the reported Honeywell investigation.

One of the three sources familiar with the probe, who were not authorised to speak publicly, said it was focused on Honeywell's processes and procedures, rather than the components involved. They were seen as low-risk items that did not pose any security risk for the F-35 programme.

The sources also cautioned that such investigations can take months or years to complete, and said no determinations had yet been made about Honeywell's actions.

Honeywell's Sayres declined to comment on the Justice Department investigation, telling Reuters: "As a general practice, we do not comment on the existence or nature of any active government investigations."

Honeywell decided to move the sensor production to China to save money and simplify its supply line, he said.

The Government Accountability Office (GAO), the investigative arm of Congress, is also looking into the sensor issue and two others involving the F-35, as part of a report due on 1 March. US lawmakers ordered the GAO report because they are concerned that American firms are being shut out of the speciality metals market, and that US weapons could become dependent on parts made by a potential future adversary.

A Pentagon spokeswoman, Maureen Schumann, said the Pentagon's Kendall had granted national security waivers to allow foreign-built parts on other aircraft in the past, but had no immediate details about those cases.

DellaVedova, the spokesman for the F-35 programme office, said the thermal sensors were simple parts that did not include any software and were not programmable. He said there was no security risk associated with use of the sensors. He said all the Chinese-built sensors would eventually be replaced on the F-35s, but the process had not yet been completed. He had no immediate information on how many Chinese-built sensors were installed on the planes.

"This will all be taken care of," DellaVedova said.

Medical Electronics Set For Double-Digit Growth

http://globalpurchasing.com/medical/medical-electronics-set-double-digit-growth?NL=ESB-01&Issue=ESB-01_20140108_ESB-01_814&YM_RID=ksnider@erai.com&YM_MID=1442764&sfvc4enews=42&cl=article_1

The medical electronics market has been a strong performer amid the sluggish economic conditions for electronics distributors and manufacturers over the last few years. As 2014 gets underway, those companies can count on an even bigger bang out of the medical market, as analysts predict a return to double-digit growth globally.

Worldwide growth in medical electronics is expected to speed up in the next three years after slowing since 2010, according to the 2014 edition of IC Insights’ IC Market Driversreport, released in November. The research company says medical electronics sales will grow 8% to about $51 billion in 2014 after rising just 3% in 2013 to roughly $47 billion. Sales of semiconductors used in medical systems are also expected to gain strength this year, rising 12% to about $5 billion after growing 7% in 2013 to $4.4 billion.

Also, IC Insights predicts worldwide sales of medical electronics will rise by a compound annual growth rate (CAGR) of 7.3% between 2012 and 2017, reaching $65.4 billion. Sales of semiconductors used for healthcare systems applications will rise by a CAGR of nearly 11% to reach almost $7 billion by 2017, the group says. The researchers cite growing demand for medical equipment in China and other developing countries, along with the trend toward mobile healthcare systems, as key reasons for the expected increase in sales.

“In the years ahead, stronger growth in medical electronics will be fueled by sales of less expensive diagnostic and imaging equipment in China and other developing country markets as well as the explosion of wireless mobile healthcare systems that monitor patients remotely and reduce the need for expensive stays in hospitals,” according to IC Insights. “The 2014 IC Market Drivers report forecasts wireless mobile medical systems and closely associated wearable fitness-tracking devices generating revenues of nearly $1.9 billion in 2014, which is a 53% increase from about $1.2 billion in 2013, when worldwide sales grew 27%.”

IC Insights also points to two key development trends in the marketplace. The first is the drive to make new medical diagnostic systems smaller and less expensive so equipment can be used in patients’ rooms, clinics, and doctors’ offices instead of hospital exam rooms and imaging centers. Hand in hand with that are advances in semiconductor sensors, wireless ICs, and system-on-chip (SoC) designs that enable mobile medical devices. The other trend is the creation of more powerful and integrated systems, which are expensive but will reduce healthcare costs by detecting diseases sooner and supporting less invasive surgery for quick recovery times and shorter hospital stays.

“Computer-assisted surgery systems, surgical robots, and operating-room automation are among new technologies being pursued by some hospitals in developed-country markets,” IC Insights says.

The world’s aging population and China’s heavy investment in healthcare will be growth drivers over the next few years as well. China is expected to invest nearly $64 billion in medical and healthcare infrastructure this decade.

Times Are A-Changin' in the DRAM Market

http://www.ebnonline.com/author.asp?section_id=1162&doc_id=270894&

DRAM demand is on the upswing as sales are expected to continue growing in the double digits through next year. More importantly, there is nothing usual about this latest cyclic rise in DRAM revenues.

While the DRAM sector will experience tighter capacity and rising unit prices as it has during past growth cycles, the supplier base has consolidated to such an extent that only three dominate players account for more than 90% of the market share. This means that heavy hitters Samsung, Hynix, and Micron have more leverage to raise prices than they would have been able to do during the past few years, as they, for the time being, try to put their low-margin and unstable pricing days behind them.

Source: iSuppli

In the immediate future, DRAM suppliers, including the smaller players as well as the big three, are expected to benefit from double-digit growth and revenue gains thanks to higher pricing next year and in 2014. Following a 10.7% drop in DRAM revenues in 2012 to $26.4 billion, DRAM revenues are expected to surge 35.4% to $35.7 billion in 2013 and 10.8% to $39.6 billion in 2014, according to IHS iSuppli.

The rise in demand for DRAM as well as NAND flash memory, which is expected to see revenue growth of 27.7% in 2013, will lift the semiconductor market, IHS iSuppli says. Revenue growth driven by memory demand will increases by almost 5% to $317.9 billion. DRAM sales will account for 1.25% of the semiconductor industry's total growth worldwide, IHS iSuppli said.

Strong demand from the mobile sector from smartphones and tablets has helped the DRAM sector see growth. However, industry consolidation and what IHS iSuppli says is "more rational shipment growth" among DRAM makers are the main factors behind the up cycle.

Samsung, Hynix, and Micron also collectively benefit as the surviving large players in the market following a wave of consolidation. They have a share of over 92% of all DRAM revenues worldwide. Samsung alone in the third quarter had a 37% share of the DRAM market. Hynix and Micron commanded shares of 28% and 27%, respectively, in the third quarter, according to IHS iSuppli.

Micron has especially benefited from the industry consolidation. In the context of the total chip market, Micron's share of the total semiconductor market will more than double to 4.5% in 2013, up from 2.2% in 2012, IHS iSuppli says. Micron's acquisition of Elpida Memory in 2012 was also a main factor in Micron's sales gains this year.

Samsung, Hynix, and Micron are using new market domination to stoke prices in the immediate future. They are doing this in part by not adding manufacturing capacity to meet demand and thus limiting supply growth to 25% to 30%, Mike Howard, senior principal analyst for IHS' DRAM and compute platforms group.

"There are only three DRAM companies left... and there is little threat right now that anyone will jump into the industry," Howard wrote in an email message. "It is our belief that the current players in DRAM are more focused on profits and less focused on market share... a situation that is tenable when [the large players] have at least 25 percent market share and untenable when there are a handful of players with 5-10 percent share."

The bad news for electronics OEMs is, of course, that they will have to wait for at least a year or so before they might be able to seek lower pricing from their DRAM suppliers.

"DRAM suppliers are responding to shortages by raising prices," Howard wrote. "We expect shortages in much of 2014 -- a situation that will keep prices from declining at historical rates."