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Semiconductor Industry Hails Passage of Permanent R&D Credit
Published Friday, December 18, 2015 12:00 pm
by Dan Rosso
http://www.semiconductors.org/news/2015/..._d_credit/
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Digitimes Research: Over 331 million smartphones shipped globally in 3Q15
Luke Lin, DIGITIMES Research, Taipei [Thursday 17 December 2015]
http://www.digitimes.com/news/a20151217PD209.html
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Internet of Things Market to Nearly Double by 2019
Internet of Things integrated circuit sales expected to display a CAGR of 15.9% over the next four years, with MCUs and SoC processors seeing the strongest growth. 
16-Dec-2015, By IC Insights
http://www.icinsights.com/data/articles/...ts/846.pdf
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Just sharing what I found out about All Star Fortress Sdn. Bhd. (“ASF”).

According to the company website (http://allstarfortress.com/v1/), it is "a company in the manufacturing of precision tooling, transfer mold parts, jigs and fixtures mainly for the semiconductor, Aerospace and Automotive industries." Among the customers are:

Aerospace industry
- ACM Malaysia (http://www.acmsb.com.my/01_company_background.html), a JV company owned by The Boeing Company and Hexcel Corporation.
- Composites Technology Research Malaysia Sdn Bhd ("CTRM", http://www.ctrm.com.my/ahist.php), one of the approved supplier for Airbus (http://www.airbus.com/fileadmin/media_ga...-Dec15.pdf)

Semiconductor Industry
- Seagate (http://www.seagate.com/sg/en/)
- Western Digital (http://www.wdc.com/en/)
- Nidec Corporation (http://www.nidec.com/)
- Advanced Semiconductor Materials Fico Sdn Bhd (seems like a small company with no website of its own)
- UMS

Oil and Gas
- Cameron (https://www.c-a-m.com/)
- AkerSolutions (https://www.akersolutions.com/)
- Halliburton (http://www.halliburton.com/en-US/default.page)
- Boustead Holdings Berhad (http://www.boustead.com.my/)

I wonder why the press release only focus on the Aerospace Industry customers of ASF... Perhaps their performance in the other industries are not very fantastic? Or perhaps they only talk about the Aerospace industry because it is the hype in Malaysia now?

Please correct me if I am wrong. The arrangement between UMS and ASF is such that UMS will buy some 10% of ASF shares (RM 0.13 Mil) and convertible loan another USD 7.5 Mil for operating expenses (USD 0.85 Mil) and expansion (USD 6.65 Mil). Does that mean they can convert their loan to equity? If so, aren't they loaning too much? Since ASF is effectively valued at RM1.3 Mil or ~USD 300K. UMS will also give up some space of their Penang site to ASF via tenancy agreement (rental income?).

Taking all these into consideration, I am unsure as to whether this MOU is really yield accretive for UMS.

(22-12-2015, 12:03 PM)Xiaosaint Wrote: [ -> ]Just sharing what I found out about All Star Fortress Sdn. Bhd. (“ASF”).

According to the company website (http://allstarfortress.com/v1/), it is "a company in the manufacturing of precision tooling, transfer mold parts, jigs and fixtures mainly for the semiconductor, Aerospace and Automotive industries." Among the customers are:

Aerospace industry
- ACM Malaysia (http://www.acmsb.com.my/01_company_background.html), a JV company owned by The Boeing Company and Hexcel Corporation.
- Composites Technology Research Malaysia Sdn Bhd ("CTRM", http://www.ctrm.com.my/ahist.php), one of the approved supplier for Airbus (http://www.airbus.com/fileadmin/media_ga...-Dec15.pdf)

Semiconductor Industry
- Seagate (http://www.seagate.com/sg/en/)
- Western Digital (http://www.wdc.com/en/)
- Nidec Corporation (http://www.nidec.com/)
- Advanced Semiconductor Materials Fico Sdn Bhd (seems like a small company with no website of its own)
- UMS

Oil and Gas
- Cameron (https://www.c-a-m.com/)
- AkerSolutions (https://www.akersolutions.com/)
- Halliburton (http://www.halliburton.com/en-US/default.page)
- Boustead Holdings Berhad (http://www.boustead.com.my/)

I wonder why the press release only focus on the Aerospace Industry customers of ASF... Perhaps their performance in the other industries are not very fantastic? Or perhaps they only talk about the Aerospace industry because it is the hype in Malaysia now?

Please correct me if I am wrong. The arrangement between UMS and ASF is such that UMS will buy some 10% of ASF shares (RM 0.13 Mil) and convertible loan another USD 7.5 Mil for operating expenses (USD 0.85 Mil) and expansion (USD 6.65 Mil). Does that mean they can convert their loan to equity? If so, aren't they loaning too much? Since ASF is effectively valued at RM1.3 Mil or ~USD 300K. UMS will also give up some space of their Penang site to ASF via tenancy agreement (rental income?).

Taking all these into consideration, I am unsure as to whether this MOU is really yield accretive for UMS.

Industry Prospect:
 
Why the press release only talks about the aerospace industry?
 
My take is  
 
a)  With the current low oil price and bleak outlook in the oil and gas industry – I doubt if they have any near term (and even long term) intention to grow this market.
b)  The clients of ASF in the semiconductor industry seem to be mainly in the HDD/SSD segment – at lower end of the value chain as compared to that of UMS. UMS (with Norelco) used to be active in the HDD business but had moved out of this business long time ago and into the higher end of the value chain. I don’t think Andy Luong is keen to move back into (or has any intention to further expand) the HDD business of ASF - even if ASF could bring in more customers - as the margins are too low. Besides, if UMS could diversify its semiconductor customer base beyond its current single customer, it probably would have done so on its own. Similarly, if ASF could move up the value chain ladder on its own, it probably would have done so. If together, they could not bring in more businesses at the higher end of the value chain (which seems to be the case to me) – there would be little or no scope for cooperation and expansion in this sector - bear in mind that UMS still have excess production capacity in this area as well.  
c)   The brighter spot seems to be in the aerospace industry in Malaysia where they see significant growth potential.
d)  Moreover, they also see synergy in working together to expand production capacity and to capture market shares in the aerospace industry.    
e)   In short, the focus and basis of their cooperation is to grow and capture market share in the aerospace industry. 
 
Valuation of ASF / Convertible loan:
 
Would it be right to value ASF at MYR 1.3 million (or ~USD 300K)?
 
Would ASF be willing to sell 10% of its equity to UMS for the PRICE of MYR 0.13 million - without attaching the loan obligation part to it?
 
Without any financial reports (past performance) of ASF being given, I reckon it would be impossible to work out the current value of ASF.
 
It would not be called a convertible loan, if it could not be converted into equity.
 
Questions are:
 
What is the interest rate for the loan?
Would it be on secured or unsecured basis?
What is the tenure of the loan?
What is the timeline for conversion?
What is the conversion rate? 
Is conversion an obligation or just a right to the lender?
 
I reckon, without all these information being provided, it would be difficult to evaluate on how attractive this deal really is.
 
Well, as I have said before, the deal is only at MOU stage with lots of details yet to be ironed out. Hopefully, information would be made available as soon as they have been worked out.
 
That said, I would consider the following to be yield accretive to UMS, if as a result of the deal, it could:
- Increase its equipment utilization rate.
- Increase its labour utilization rate.
- Increase its factory space utilization rate

and I believe it could.
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This tiny deal doesnt mean much for UMS, probably they are just putting some feelers out, or more likely just a deal they have to do in return for getting the penang factory expansion. Msia very corrupt, maybe ums need to scratch someones itchy back.

sent from my Galaxy Tab S

CEO Outlook: 2016
What top executives from around the semiconductor industry expect this year.
JANUARY 4TH, 2016 - BY: ED SPERLING
http://semiengineering.com/ceo-outlook-2016/
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A Year in Review: A look back at the top stories from 2015
By Shannon Davis
http://electroiq.com/blog/2016/01/a-year...from-2015/
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Global Semiconductor Sales Dip Slightly in November
WORLDWIDE SALES DOWN 0.3 PERCENT MONTH-TO-MONTH, 3.0 PERCENT YEAR-TO-YEAR; INDUSTRY STILL ON PACE TO NARROWLY EXCEED 2014 SALES TOTAL

Published Tuesday, January 5, 2016 
by Dan Rosso

WASHINGTON—Jan. 5, 2016—The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced worldwide sales of semiconductors reached $28.9 billion for the month of November 2015, 0.3 percent lower than the previous month’s total of $29.0 billion and 3.0 percent down from the November 2014 total of $29.8 billion. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average. 

“Softening demand and lingering macroeconomic challenges continued to limit global semiconductor sales in November,” said John Neuffer, president and CEO, Semiconductor Industry Association. “Despite these headwinds, the industry may narrowly surpass total annual sales from 2014 and is projected to post modest sales increases in 2016 and beyond.”
Regionally, month-to-month sales increased in China (1.0 percent), Europe (1.0 percent), and the Americas (0.3 percent), but decreased in Japan (-0.6 percent), and Asia Pacific/All Other (-2.4 percent). Compared to November 2014, sales were up in China (5.3 percent), but down in Asia Pacific/All Other (-4.1 percent), the Americas (-7.1 percent), Europe (-8.0 percent), and Japan (-8.6 percent).

November 2015 chart and graph

http://www.semiconductors.org/news/2016/..._november/
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Gartner Says Worldwide Semiconductor Revenue Declined 1.9 Percent in 2015 
Mixed Results in All Segments Drove Slow Growth
STAMFORD, Conn., January 7, 2016
http://www.gartner.com/newsroom/id/3182843
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2016 Global Technology Predictions From IHS Analysts 
Wednesday 6th January 2016
http://www.siliconsemiconductor.net/arti...alysts.php
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A wild ride in 2015 – and two steps forward in 2016
By Denny McGuirk, SEMI president and CEO
http://electroiq.com/blog/2016/01/a-wild...d-in-2016/
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Changes In Chip Design
As the IoE kicks into gear and Moore’s Law slows down, what’s next?
JANUARY 7TH, 2016 - BY: ERNEST WORTHMAN
http://semiengineering.com/changes-in-chip-design/
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Rebound seen for global aerospace, defence sector
Nisha Ramchandani
The Business Times, Friday, Jan 08, 2016

Singapore - THE global aerospace and defence (A&D) industry is expected to return to growth in 2016 with total sector revenues to expand 3 per cent, after contracting in 2015.

Factors driving the bullish outlook include a pick-up in defence spend as well as big order books in the commercial aerospace sector, according to the Deloitte Touche Tohmatsu 2016 global aerospace and defence sector outlook.

In contrast, revenues were projected to have declined by 0.5 per cent last year, the report highlighted.

"Strong increases year over year of global revenue-passenger-kilometres are leading to an unprecedented level of aircraft production rates, which in 2015 were about twice the levels experienced 10 years ago," said Tom Captain, Deloitte's global leader for the aerospace and defence segment.

The commercial aerospace sector should see a robust year in 2016, bolstered by record production for next-generation aircraft on order from airlines in the Asia-Pacific and the Middle East. This comes as growing affluence in emerging countries in the two regions drive travel demand - both in the leisure and business travel segments. As at Q3 2015, the world's two biggest commercial planemakers, Airbus and Boeing, had combined orders of more than 12,400 aircraft.

Despite concerns that slower economic growth in China might hit the commercial aerospace subsector, the report highlighted that the market should remain resilient, thanks to cheaper oil prices, government support for the industry in China as well as robust passenger demand.

Commercial aerospace subsector revenues are expected to grow by 3.4 per cent this year, while defence subsector revenues are expected to grow by 2.7 per cent, thanks to the US Department of Defence experiencing a US$13 billion (S$18.6 billion) bump in budget.

The US accounted for the biggest chunk of global military spend in 2014 at US$1,747 billion. But in recent years, there has also been a surge in military sales to foreign countries. For instance, in the US alone, foreign military sales have jumped from US$21.36 billion in FY2010 to US$46.6 billion in FY15 - a trend that is likely to continue.

"Defence budgets in the US, United Kingdom, France, Japan, several Middle Eastern countries, and other nations are increasing at a time when national security threats are being heightened," Mr Captain pointed out.

He added: "Global revenues in the defence subsector are expected to return to growth in 2016, as governments equip their armed forces with modern defence weapons platforms and next-generation technologies, including cyber, intelligence gathering, defence electronics, and precision strike capabilities."

But firms in the global A&D sector will need to be more efficient and keep a tight lid on costs as the sector is expected to experience pricing pressure this year.

http://business.asiaone.com/news/rebound...nce-sector
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2016 Global aerospace and defense sector outlook
Poised for a rebound
By Deloitte 
http://www2.deloitte.com/content/dam/Del...utlook.pdf
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Apple supplier TSMC raises capex at least 10 percent partly on smartphone growth

TAIPEI | BY J.R. WU

 Thu Jan 14, 2016

Apple Inc supplier Taiwan Semiconductor Manufacturing Co Ltd (TSMC) on Thursday said it would raise capital expenditure by at least 10 percent from 2015's four-year low, partly driven by growth in the global smartphone market.

The world's biggest contract chipmaker estimated 2016 capex of $9 billion to $10 billion and said it expects global smartphone shipments to expand 8 percent.

Demand for high-end smartphones has started the year weak, while in other segments there are already signs of upward demand momentum in emerging markets including China, the world's biggest for smartphones, TSMC said.

"While China's smartphone market shows signs of recovery, customers remain cautious in general," said Chief Financial Officer Lora Ho. The capex estimate was "realistic", she said.

Last year's total capex of $8.12 billion came as a slump in the global technology sector and slowing economic growth in China forced many technology companies to scale back spending.

TSMC is one of the world's biggest-spending chipmakers with Samsung Electronics Co Ltd and Intel Corp. It sliced its capex estimate twice last year, but in November said the 2016 amount would be higher.

"Last year was a difficult year," Chairman Morris Chang said at the chipmaker's quarterly earnings conference. "2016 I think will be better than 2015. We are mildly optimistic."

TSMC estimated lower revenue for the current quarter - an off-peak season - compared with three months prior, and said its profit margin would be similar. Revenue for the full year would likely grow 5 percent to 10 percent, versus its industry average forecast of 5 percent.

The estimates came after TSMC reported net profit of T$72.84 billion ($2.18 billion) for the final quarter of 2015, beating the T$68.53 billion average forecast of 23 analysts, according to Thomson Reuters Eikon.

The result was down 3.3 percent from the previous three months and 8.9 percent from the same period a year earlier.

http://www.reuters.com/article/us-tsmc-r...1720160114
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(15-01-2016, 08:15 AM)Boon Wrote: [ -> ]Apple supplier TSMC raises capex at least 10 percent partly on smartphone growth

TAIPEI | BY J.R. WU

 Thu Jan 14, 2016

Apple Inc supplier Taiwan Semiconductor Manufacturing Co Ltd (TSMC) on Thursday said it would raise capital expenditure by at least 10 percent from 2015's four-year low, partly driven by growth in the global smartphone market.

The world's biggest contract chipmaker estimated 2016 capex of $9 billion to $10 billion and said it expects global smartphone shipments to expand 8 percent.

Demand for high-end smartphones has started the year weak, while in other segments there are already signs of upward demand momentum in emerging markets including China, the world's biggest for smartphones, TSMC said.

"While China's smartphone market shows signs of recovery, customers remain cautious in general," said Chief Financial Officer Lora Ho. The capex estimate was "realistic", she said.

Last year's total capex of $8.12 billion came as a slump in the global technology sector and slowing economic growth in China forced many technology companies to scale back spending.

TSMC is one of the world's biggest-spending chipmakers with Samsung Electronics Co Ltd and Intel Corp. It sliced its capex estimate twice last year, but in November said the 2016 amount would be higher.

"Last year was a difficult year," Chairman Morris Chang said at the chipmaker's quarterly earnings conference. "2016 I think will be better than 2015. We are mildly optimistic."

TSMC estimated lower revenue for the current quarter - an off-peak season - compared with three months prior, and said its profit margin would be similar. Revenue for the full year would likely grow 5 percent to 10 percent, versus its industry average forecast of 5 percent.

The estimates came after TSMC reported net profit of T$72.84 billion ($2.18 billion) for the final quarter of 2015, beating the T$68.53 billion average forecast of 23 analysts, according to Thomson Reuters Eikon.

The result was down 3.3 percent from the previous three months and 8.9 percent from the same period a year earlier.

http://www.reuters.com/article/us-tsmc-r...1720160114
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thought apple stock price down due to expectation of slowdown in iphone sales?