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(26-09-2013, 07:47 AM)HitandRun Wrote: [ -> ]KopiKat San

I used to work in the semiconductor industry X number of years ago.

At that point in time, TEL is rarely, if ever, a competitor of AMAT. AMAT's bigger competitors would be KLA-Tencor or Lam Research. Therefore, anyone working in the industry will know that such a combination (if merged successfully) between AMAT and TEL is highly complementary.

However, this does not mean that it will be positive for UMS. TEL has its own ecosystem and supporters such as Hermes-Epitek. Whether UMS can dislodge or replace TEL's ecosystem, or it gets displaced, only time will tell.....

Thanks for sharing!

Another good site for semicon related news,

https://www.vlsiresearch.com/public/press_release.html

They have a report on the top semicon eqpt suppliers for 2011 but not 2012 (only have ranking in terms of service),

2011 Top Semiconductor Equipment Suppliers

[Image: fkpi7s.jpg]

From the earlier Bloomberg link someone else has posted, it'd appear that AMAT is now No.1 with TEL No.2... A merger of giants!

It is still too early to talk about the impact to UMS, but I think it should be positive so long as AMAT did not dispose the interests in UMS. I hope the board could stand out to give a statement on this and to clear the investors from speculating the future of the company.

(no action taken, remain vested)

UMS has manufacturing facilities in Singapore and USA (California and Texas) to support AMAT. The facility in Singapore is just next to AMAT’s Asia operation hub. I do not know how close their facilities are in USA.

It looks like TEL has no semi-tools manufacturing facilities in Asia (ex-Japan) and Hermes Epitek (HE) has only business presence in Asia but not in Japan.

Without having business presence in Japan, how could HE provide support to TEL, in the same way UMS is supporting AMAT ? Hence, the relationship between TEL and HE must be vastly different from that between AMAT and UMS.

TEL (Semiconductor Equipment Manufacturing locations)
- Japan (Predominantly)
- USA (3 locations)
- EU ( 1 location – not sure if it is for semi-tools)
- Asia (ex-Japan) - none

From page 11 of TEL Factsheet
http://www.tel.com/about/document/corpor...e_2013.pdf

Hermes Epitek: (Global Locations)
- Taiwan (Global HQ)
- China
- Malaysia
- Singapore

http://www.hermes.com.tw/Ch/About/location.php

(Vested）

Well, some analysts expressed concerns that the merged super-sized giant (AMAT + TEL) may use its dominant position in pricing against the customers. Therefore, skeptics predict that the whole deal may be under an official anti-monopoly investigation for as long as one year.

In the meantime, it is business as usual – the race to provide better performance chips continues. Is the “breather” over by now ? I would hope so.

TSMC stepping up purchases of 20nm manufacturing equipment
Patty Wang, Taipei; Jessie Shen, DIGITIMES [Thursday 26 September 2013]

Taiwan Semiconductor Manufacturing Company (TSMC) has stepped up its purchases of manufacturing equipment for its 20nm process which is slated to enter volume production in the first quarter of 2014, according to sources at fab-tool suppliers.
TSMC's investment in 20nm manufacturing equipment for the fourth quarter of 2013 is expected to outpace that allocated for the third quarter, said the sources. In addition, shipments of equipment for TSMC's 16nm HKMG process have kicked off, the sources noted.
TSMC at its most-recent investors meeting revealed that the company had raised its capex target for 2013 to a record US$9.5-10 billion. While tripling production and revenues from 28nm wafers in 2013 compared with 2012, the foundry will also step up efforts to bring newer-process capacity online.
TSMC expects to initiate volume production of 20nm chips in early 2014 followed by volume production of 16nm FinFETs in about one year.
In other news, capacity ramps for advanced processes at IC foundries have given a boost to Hermes Microvision's (HMI) sales, according to market watchers. HMI's e-beam inspection tools have reportedly been adopted by TSMC, Globalfoundries and Samsung Electronics.

http://www.digitimes.com/news/a20130926PD205.html
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Samsung to build 20nm foundry capacity, sources say
Josephine Lien, Taipei; Jessie Shen, DIGITIMES [Monday 23 September 2013]

Samsung Electronics plans to build up foundry capacity of 30,000 wafers operating at 20nm, signaling that it is joining rival TSMC in the process race, according to industry sources.
Samsung has stepped up the development of its 20nm process node, and already shifted a portion of R&D resources from 14nm to 20nm, said the sources. Samsung is looking to start offering 20nm process technology in early 2014, the sources indicated.
The sources did not identify how many options Samsung will offer at 20nm.
The current yield rate of Samsung's 20nm is estimated to be as low as 10%, the sources noted. At TSMC, its 20nm facilities are operating at 20-30% yield rates, the sources said.
TSMC has disclosed plans to initiate volume production of 20nm chips in early 2014. The foundry will offer only one process at the node

http://www.digitimes.com/news/a20130923PD215.html

vested）

UMS (UMSH SP) Buy (Maintained)
Technology - Semiconductors Target Price: SGD0.71
Market Cap: USD142m Price: SGD0.52
Major Event Opens Up Opportunities
OSK DMG Company Update, 26 September 2013

We believe Applied Materials (AMAT)’s acquisition of Tokyo Electron
Ltd (TEL) will make it a dominant industry player, which will in turn
benefit its suppliers. While we do not expect UMS to immediately gain
from this, we see it as the sole Singapore proxy to ride on this
landscape-changing event. Maintain BUY, with our DCF-based TP
unchanged at SGD0.71 (WACC: 10.9%, terminal growth: 0%).

 Largest customer makes major move. UMS’ largest customer AMAT,
which contributes close to 90% of the group’s revenue, has made a
major move by acquiring its rival, TEL. Gartners ranks AMAT and TEL
No.1 and No.3 respectively in the semiconductor manufacturing
equipment industry in terms of worldwide market share last year. The
combined entity could potentially boast a market share of 25.5%, twice
as much as that held by AMAT’s second largest competitor, ASML. The
deal is expected to wrap up in the middle or second half of 2014, subject
to regulatory approvals.

 Boosting demand for UMS’ components. The deal will enlarge
AMAT’s customer base, drive product innovation and give rise to cost
saving opportunities, thus helping it to achieve its ambitious profit growth
target. This is likely to benefit UMS in view of the duo’s co-relation in
terms of financial performance. We expect this to boost demand for
UMS’ components as: i) overall demand for AMAT products will naturally
increase, and ii) UMS has cost advantage over Japanese component
suppliers.

 Endura likely to stay relevant. One concern is whether UMS’ assembly
of AMAT’s Endura system would be disrupted in view of the potential
overlapping in AMAT and TEL’s product lines. We view this as unlikely
since TEL’s CEO Tetsuro Higashi has said that there is limited
overlapping in both companies’ products. Secondly, while both
companies have their respective wafer deposition products – eg TEL’s
Triase+ vs AMAT’s Endura system – a key competency of AMAT is its
wafer handling platform, which is also UMS’ sole product line. As such, it
is likely that UMS’ wafer handling platform will be refined and kept in
AMAT’s future product innovations.

(Vested)

2013 Global Manufacturing Competitiveness Index: by Deloitte

http://www.deloitte.com/assets/Dcom-Unit...132012.pdf

USA, Singapore and Japan are ranked No: 3 , No: 9 and No: 10 respectively.

Since labour costs are much higher in USA/Japan than in Singapore, chances are more work would be outsourced from Japan to Singapore, if regulators approves the merger - positive for UMS.

(Vested)

Boon san

I am less optimistic than you are, i.e. I think the chances are even that UMS might strengthen, stay the same or weaken under the combined entity. Only time will tell.

A case in point: HP, Foxconn and Flextronics. Prior to Mark Hurds joining HP, Foxconn was just another contract manufacturer of HP. After Mark Hurds came on board, he gave the bulk of the business to Terry Gou of Foxconn, partly on account of their relationships. As a result, Flextronics lost a huge chunk of HP's business to Foxconn. And I can assure you that it is not from a lack of investment in facilities specifically catered for HP.

There's a short article in TheEdge this week on UMS with focus on this AMAT-TEL merger. Nothing new that's not discussed here. Only point of possible interest is CEO will be going to AMAT US for meeting in coming weeks, possibly to look for new biz, as mentioned in another earlier Edge article...

This may explain the sudden interest at 52ct, but, also got big seller (s) around...

(27-09-2013, 07:38 AM)HitandRun Wrote: [ -> ]Boon san

I am less optimistic than you are, i.e. I think the chances are even that UMS might strengthen, stay the same or weaken under the combined entity. Only time will tell.

A case in point: HP, Foxconn and Flextronics. Prior to Mark Hurds joining HP, Foxconn was just another contract manufacturer of HP. After Mark Hurds came on board, he gave the bulk of the business to Terry Gou of Foxconn, partly on account of their relationships. As a result, Flextronics lost a huge chunk of HP's business to Foxconn. And I can assure you that it is not from a lack of investment in facilities specifically catered for HP.

Hi “HitandRun”

Thanks for sharing. Honestly, I know nothing about the case of HP/Foxconn/Flextronics. But you have a good point.

I agree totally with you – at times, relationship could be the factor that makes a difference in deals making - have seen many cases in real life.

On the same note, had it not been for the relationship between Higashi (CEO of TEL) and Dickerson (CEO of AMAT), the proposal for merger between the two companies would probably not have been initiated by Higashi. http://online.wsj.com/article/SB10001424...54220.html

That said, relationship alone would not help if one is not qualified to do the job in the first place.

The ecosystems/business model of TEL might be different to that of AMAT. For whatever UMS is doing now for AMAT – the equivalent scope of work could be done differently in TEL:

a) It could be done totally in house in TEL.
b) It could be done exactly the same way as AMAT – outsourced i.e. TEL has an “UMS equivalent supplier” in Japan.
c) It could be done by more than one supplier/subcontractors
d) Any other ways.

What I meant earlier on Hermes Epitek (HE) was – it appears to me that the scope of work that UMS is doing for AMAT is different to what HE is doing for TEL, by virtue of the fact that one pair is situated next to each other, and the other are miles apart from each other.

IMO, being a component supplier to a semi-tools OEM client, one could possibly be situated far apart from the client. But being a system integrator and assembler of a modular equipment of a client, one has to be close to the manufacturing plant of the client, as in the case of UMS. These differences in geographical locations of their manufacturing facilities did not seem logical to me if both were having more or less the same scope of works for thier respective clients. Hence, I was doubtful if they have much in common in their respective areas of works and expertises. Having said that - I could be completely wrong as I am not an expert on this.

However, on further research, what I have found on HE are:

1) It is a full service value added house that provides the tools, processes, and productivity enhancing after sales services to get fab gear up, running and continue to run at maximum efficiency.
2) It acts as a sales agent to many semiconductor products.
3) Its Chairman and CEO – Archie Hwang – was the first Chinese to sit on the board of SEMI – hence I believe he has strong connections in the industry
4) Its group member, AIBT, produces ion implant equipment (for doping)
5) Its group member, Hermes Microvision, produces electron beam (e-beam) wafer inspection equipment.
6) Overall, I think its capabilities and areas of expertise and specialization are somewhat different to UMS. Hence, lacking qualification to unseat UMS.

I think the “potential UMS replacer” within the ecosystems of TEL is residing in Japan – working either in the capacity as an in-house team or as “UMS equivalent supplier”. As I have mentioned before, due to the high cost structure in Japan, and if substantial cost saving could be achieved by outsourcing some works from Japan to Singapore, chances are it would likely to happen, and I remain optimistic on this.

Again – I could be totally wrong - as no one could predict the future – I agree with you – Only TIME will tell.

Speaking of which, in terms of TIME line, assuming the merger deal gets approved by regulators, possible impacts on UMS would be:

In 2014 : neutral (no change) ; or positive (more work for UMS from Japan)
In 2015 : neutral (no change) ; or positive (more work for UMS from Japan)
In 2016 : neutral (no change) ; or positive (more work for UMS from Japan)
In 2017 : neutral (no change) ; or positive (more work for UMS from Japan) ; or negative (manufacturing rights expired and not renewed)

UMS’s manufacturing rights for key system (Endura) of AMAT had been extended for another 5 years in 2012 – presumably, up to end of 2017. If the combined entity (AMAT + TEL) ever decided to replace UMS - I supposed, they could only do so at the expiry of the contract, therefore, leaving plenty of time for observations and evaluations on the likely impacts to UMS, as things unfold with the passing of TIME.

(Vested)
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Investment in Asia boosted by Abenomics
ReutersFriday, Sep 27, 2013

http://business.asiaone.com/news/investm...-abenomics

UMS share price shot up to $0.57 during the last 15 mins of trading today.