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(10-06-2014, 09:13 PM)yenyenpark Wrote: [ -> ]

(10-06-2014, 08:49 PM)NTL Wrote: [ -> ]

(10-06-2014, 08:39 PM)yenyenpark Wrote: [ -> ]Applied Material and UMS had joined hand since 2003!!! Applied Material hold it till now and they sold just a little bit and we are so worried?

Hi yenyenpark,

Once they falls below 5%, we will not know if they will be continue to sell. As this is just the first quarter, will have to wait for another 3 more quarters to look at the annual report to know exactly how much more shares they will be left holding till then.

If they maintain their holdings above 5%, I am definitely not as worry as now.

AM had invested and hold on those shares since 2003! If they cash out, I also think it's reasonable, and this doesn't mean they will stop working with UMS..

in business, we talk business, UMS has worked decade with AM, and similarly AM also holding small shares in many small companies like UMS.. thus probably they are encash their investment, but as long as UMS continue doing a good job, and secure more customers if possible.. I don't think UMS can't survive.. even AM doesn't hold any share in UMS doesn't mean that they will not want UMS as their supplier..

well, this morning I was very worried as well.. and about to divest all my holding (just short of clicking SELL at 0.650) and got a small profit instead of all profit wiped out at the end of bell.. but I was not that worried now, after I had read that AM and UMS had worked together since 2003... UMS had been there even way before dot com bubbles, and I see the logic is this probably one of the golden chance of en cash their shares if I were AM too.. for Andy, I hope he can't do more to boost the business if he wants to have higher price for his remaining 20%... lol..

Hi Bro yenyenpark, i happen to see your posts here. How are you? Don't know if u still remember me. Hehe. Anyway, i am vested in UMS too.

If both AMAT and Andy selling because of the endura issues, i see no reason why the insiders are not selling AMAT shares as well.

(10-06-2014, 10:29 PM)valuebuddies Wrote: [ -> ]If both AMAT and Andy selling because of the endura issues, i see no reason why the insiders are not selling AMAT shares as well.

No one is saying " AMAT and Andy selling because of the endura issues"

What I am saying is, come 2017 when the contract is due for renewal, if Endura still remain its relevance in the market, chances are contract would be renewed if cost is not an issue (UMS is still entitled to the "loyalty margin")

If cost is an issue (UMS no longer entitled to enjoy the "loyalty margin"), "margin squeeze" would likely to be the outcome rather than non-renewal of manufacturing contract.

If Endura has lost its relevance in the market by then - there would be no contract needed to build endura.

According to the following report : Endura is poised to remain relevant for a long time to come
(vested)
________________________________________________________________________________________________________________

UMSH is near-exclusive assembler of Endura system. UMSH generates revenue from Applied Materials in two key ways, namely: i) the manufacturing of metallic components used in the assembly of Applied Materials’ semiconductor equipment as well as consumables for its customers, and ii) acts as the near-exclusive assembly and testing services provider for Applied Materials’ popular Endura system (90% global market share). These are subsequently sold to integrated device manufacturers (IDMs) such as Intel, front-end wafer manufacturers such as TSMC, and back-end packaging and testing services providers such as STATS ChipPAC, which use them in the manufacturing of integrated circuits, memory chips and the like. These are all core components of personal computers (PCs), laptops, smartphones, tablets and other mobile devices

Endura, backbone of the semiconductor sector. The Endura system is the semiconductor industry’s leading “metallisation” platform, whose function is akin to those of a robotic arm in the manufacturing space. According to Applied Materials, the vast majority of microchips made over the last two decades were created by the 4,500 Endura platforms used by over 100 global semiconductor manufacturers. Its integrated multistep process sequence allows for large quality yield and the system is currently unmatched by any other in the market.

Endura to endure. Moving forward, it is highly likely that Endura will continue to be a popular system and will probably be used in conjunction with other systems by front-end wafer manufacturers that are currently striving for smaller node sizes. For example, the Endura Amber Physical Vapour Deposition (PVD) system is able to overcome electroplating difficulties faced by other processes when wafer nodes drop below 20 nanometres (nm). Given that smaller wafer nodes of such size are needed for the increasingly popular smartphones and tablets, and that equipment using Endura can facilitate the manufacturing process of these nodes, Endura is poised to remain relevant for a long time to come.

http://research.osk188.com/attachments/5...a38e82.pdf

(10-06-2014, 10:29 PM)valuebuddies Wrote: [ -> ]If both AMAT and Andy selling because of the endura issues, i see no reason why the insiders are not selling AMAT shares as well.

It is too fat fetched to correlate selling of AMAT shares due to possible Endura issue and hence selling of UMS shares. The Endura platform has been around for years and selling well.

The worst scenario that can happen is of course that AMAT has found a 2nd vendor to outsource Endura's assembly and testing operations and hence reduce the orders placed to UMS. The other scenario that is not as bad but still detrimental to UMS profit margins is AMAT negotiating for a lower price with their supreme bargaining power as UMS' biggest customer (close to 90% revenue?).

(10-06-2014, 11:19 PM)Boon Wrote: [ -> ]

(10-06-2014, 10:29 PM)valuebuddies Wrote: [ -> ]If both AMAT and Andy selling because of the endura issues, i see no reason why the insiders are not selling AMAT shares as well.

No one is saying " AMAT and Andy selling because of the endura issues"

What I am saying is, come 2017 when the contract is due for renewal, if Endura still remain its relevance in the market, chances are contract would be renewed if cost is not an issue (UMS is still entitled to the "loyalty margin")

If cost is an issue (UMS no longer entitled to enjoy the "loyalty margin"), "margin squeeze" would likely to be the outcome rather than non-renewal of manufacturing contract.

If Endura has lost its relevance in the market by then - there would be no contract needed to build endura.

According to the following report : Endura is poised to remain relevant for a long time to come
(vested)
________________________________________________________________________________________________________________

UMSH is near-exclusive assembler of Endura system. UMSH generates revenue from Applied Materials in two key ways, namely: i) the manufacturing of metallic components used in the assembly of Applied Materials’ semiconductor equipment as well as consumables for its customers, and ii) acts as the near-exclusive assembly and testing services provider for Applied Materials’ popular Endura system (90% global market share). These are subsequently sold to integrated device manufacturers (IDMs) such as Intel, front-end wafer manufacturers such as TSMC, and back-end packaging and testing services providers such as STATS ChipPAC, which use them in the manufacturing of integrated circuits, memory chips and the like. These are all core components of personal computers (PCs), laptops, smartphones, tablets and other mobile devices

Endura, backbone of the semiconductor sector. The Endura system is the semiconductor industry’s leading “metallisation” platform, whose function is akin to those of a robotic arm in the manufacturing space. According to Applied Materials, the vast majority of microchips made over the last two decades were created by the 4,500 Endura platforms used by over 100 global semiconductor manufacturers. Its integrated multistep process sequence allows for large quality yield and the system is currently unmatched by any other in the market.

Endura to endure. Moving forward, it is highly likely that Endura will continue to be a popular system and will probably be used in conjunction with other systems by front-end wafer manufacturers that are currently striving for smaller node sizes. For example, the Endura Amber Physical Vapour Deposition (PVD) system is able to overcome electroplating difficulties faced by other processes when wafer nodes drop below 20 nanometres (nm). Given that smaller wafer nodes of such size are needed for the increasingly popular smartphones and tablets, and that equipment using Endura can facilitate the manufacturing process of these nodes, Endura is poised to remain relevant for a long time to come.

http://research.osk188.com/attachments/5...a38e82.pdf

Hi Boon,

Does the near exclusive contract guarantee UMS a minimum amount of orders? Cos if not, it's possible that AMAT is free to channel more orders to another vendor?

Based on my experience, there is nothing proprietary in the assembly and testing operations of the Endura system. AMAT just outsourced the entire operations that was originally located in the AMAT US plants to UMS. All the IPs related to the Endura platform belong to AMAT. UMS is just providing a service. Even the parts supplied by UMS to AMAT are supposedly based on specs provided by AMAT. I do not know what is the context of the contract between UMS and AMAT. Shareholders should dig out more details on the contents of the "near exclusive" contract during the AGM. Especially when AMAT is almost the sole revenue source for UMS. If UMS does not own any IP ties AMAT to UMS, then AMAT can easily outsource a portion of Endura's of the orders to other vendors?

^^^ u have echoed my thoughts previously

Discussions in this thread has generally been pretty constructive. Allow me to answer my own question on what possibly has changed:

1) contract will not be renewed in 2017 and volume will be scaling down next 3 years.

2) merger with Tokyo electron provides a new supplier

3) model transitions,may or may not be related to 18" migration

Actually there is precedent of major shareholder and CEO selling a very successful company at a very wrong time: ASM Pacific (522 HK). The diff is however ASMI parent did not sell.

(06-06-2014, 11:33 AM)specuvestor Wrote: [ -> ]Just my simple thoughts:

Agree the stake is immaterial to sell. So why did they bother to buy in the first place? IMHO it is a strategic stake in a supplier, not so much about PnL... so what do you think has changed after 12 years?

I agree with Boon that AMAT is not going to cancel their contract. But strategic stakes are not looking at next year anyway, if you get my drift. Will your view chage if AMAT sells down their stake to below 5%?

On 450mm there are many conflicting views because end of the day it is still R&D stage. If it cannot be commercialised you have to abort it. IMHO however I think it probably needs to go on because the node shrinkage is finally reaching a dead end beyond 10nm. Moore's law has already been slowing down dramatically in past few years. I am not unaware of the progress that semicon has made over past 50 years that "nothing is impossible" but the next step is likely to be a revolutionary change as significant as the shift from vaccuum tubes to transistors. There is that much you can improve on vacuum tubes, and I think the point has come for node shrinkage. Material science can only go that far to fit an atom width.

That's why the "easier" step is likely to increase the wafer size rather than shrink node further to cut costs until the next techological replacement is found. But I think we can live pretty comfortably next 2 decades with the die size we have now

I'm enjoying the robust discussion. No ill will intended

(11-06-2014, 12:39 AM)specuvestor Wrote: [ -> ]^^^ u have echoed my thoughts previously

Discussions in this thread has generally been pretty constructive. Allow me to answer my own question on what possibly has changed:

1) contract will not be renewed in 2017 and volume will be scaling down next 3 years.

2) merger with Tokyo electron provides a new supplier

3) model transitions,may or may not be related to 18" migration

Actually there is precedent of major shareholder and CEO selling a very successful company at a very wrong time: ASM Pacific (522 HK). The diff is however ASMI parent did not sell.

Hmm... From now till 2017 is 3yrs. It just nice for the technology knowhow transfer, which took 2yrs for UMS, and 1yr to get everything in good order.

However, why will the volume be scale down in next 3yrs? The new supplier is not ready yet.

A side thought. If this is the case, will AMAT assist Andy to get into Tokyo Electron? Or will AMAT throw him aside after 14yrs of cooperation? Or Andy will intend to retire in 2017 and leave UMS with nothing?

With all these selling going on in past few days, will there a new major shareholder appearing?

Rather than taking 2 years for UMS to acquire the technology know how, it probably take about 2 years for UMS supplied parts and Endura system to pass the clean room qualification criteria as the Enduta system and the parts shipped from UMS had to be proven to be not generating foreign particles that are going to end up as killer defects on customers' wafers. The testing system are copied direct from AMAT plants and any engineer trained by AMAT can easily perform the assembly and testing operations. AMAT probably has other vendors supplying the same Endura components and consumables so those parts are already qualified. What I'm saying is that any other existing vendor that's already supplying the parts can easily carry out the assembly and testing operations on the Endura. There are many Taiwanese and Korean companies that are capable of performing such operations. These vendors purchased 2nd hand semiconductor systems to refurb and final test these tools to re sell them to the wafer fabs.

I guess that UMS is supplying parts like the Endura mainframe and chambers as it's not cost effective to ship them from elsewhere. UMS probably also supply other components like skit valves and other moving parts made of aluminum as UMS has the expertise to machine these parts. That explains why their revenue consisted not only of assembly and testing services but also Endura parts and consumables.

In summary, what I'm saying is that the entry barrier is low for existing competitors in the Semicon industry, especially when the IP and specs of the manufactured parts belong to AMAT. So why does AMAT gives most of the orders to UMS in the past and not split the orders among different vendors? Perhaps it's because of Andy's relationship with AMAT senior management, or AMAT does not trust the Taiwanese and Koreans (there are OEM parts available from Korean and Taiwanese suppliers). Perhaps that's why UMS is enjoying a "loyalty margin".

Guys, one naive thought: if any of the above is true then this would definitely be a material non public information meaning that AMAT and Andy recent sells are inside trading which is strictly forbidden and they can be sued for that. It means they need to release this information before making any investment decisions based on this information.
Really don't think they would take such a big reputational and legal risk especially AMAT!

Save for the 193 lots sold by AMAT above 90ct, the rest of the sale by both SSH was abt 67-69.5ct. Why didn't they sell those shares at highest point above 90ct during CB? Possible reason is that they want the bonus shares n stay vested in UMS. The bonus shares when credited to their accounts will replenish to some extent what they sold. So could it be just some profit-taking which also results in increase in shares held by others beside the 2 SSH? Due to the small float of shares, a new SSH may emerge but a co is required by sgx to announce changes in SSH interest only a few days later?