A <span style='color:red'>Sharp</span>er Price Decline of Nearly 20% Is Expected for 1Q19 in DRAM Market
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A Sharper Price Decline of Nearly 20% Is Expected for 1Q19 in DRAM Market

　　The overall price trend in the DRAM market has been stable in December, showing no noticeable change from November, reports DRAMeXchange, a division of TrendForce. Clients in North America and Europe were taking a break during the year-end holiday season, so the quantities of DRAM products traded in December were too small to be considered in the survey of contract prices. With regard to contract prices of mainstream products, the monthly average of 8GB modules is staying roughly at US$60, while that of 4GB modules is around US$30. However, for both 8GB and 4GB ones, their monthly lows have already dropped below their respective US$60 and US$30 thresholds.　　DRAM suppliers and OEMs have already begun to discuss prices for the first-quarter contracts since last December. Taking account of the high inventory, the weak demand, and the pessimistic economic outlook for the medium to long term, both sides have reached a general consensus that prices of 8GB modules for the first-quarter contracts will be around US$55 or even lower. This implies that the average contract price of 8GB modules will drop by at least 10% MoM in January, and there is a strong possibility that prices will continue to fall in February and March. For the DRAM price trend in 1Q19, DRAMeXchange expects a quarterly decline of nearly 20%, steeper than the previous forecast of 15%, with the most noticeable decline in the segment of server DRAM.　　At present, the biggest problem in the DRAM market is not the growth of the industry’s bit output, but the earlier arrival of the traditional slow season in 4Q18, which has resulted in increasing inventory level earlier than expected. Among the major DRAM suppliers, Micron witnessed the biggest drop in prices in 4Q18, which lowered its inventory level timely. In comparison, South Korean-based suppliers experienced the lowest price fall and thus lower shipments, which may lead to considerable inventory level throughout 1Q19. For the short term, the supply bit growth will remain constantly higher than sales bit growth, so the inventory level will keep rising, and the prices will keep falling. This price downtrend may even last for more than four quarters from 4Q18.　　With oligopoly in DRAM market, module makers will face lower profitability　　Contract prices of DRAM products have turned downward since 2H18, but further price competition in the highly concentrated DRAM market would only harm the suppliers’ high profitability. Therefore, DRAM suppliers have scaled back their CAPEXs for 2019 so as to stabilize the prices and moderate the oversupply.　　It should be noted that the distribution of the profit across the DRAM supply chain has been heavily skewed toward the memory suppliers in 2018. On the whole, the trend of rising prices that lasted for more than two years before 4Q18 has not produced significant gains for clients in the downstream. For memory module makers, most did very well in 2017 because the short-term price surge during the early phase of the price uptrend allowed them to translate their low-price inventories into profits. However, module makers were unable to extract profits from the price differences of memory chips at the start of 2018 because DRAM prices by then had become excessively high. Their profitability became dependent on just the additional processing work. As DRAM prices have now swung downward in 2H18, module makers carrying high inventories have been exposed to losses in each successive month. With revenues dropping, many of them are projecting that their actual profits for this year will shrink to around one tenth of last year’s (some are also expecting an annual loss). Going forward, 2019 will be even more challenging for module makers and the rest of the supply chain.
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Release time：2019-01-16 00:00 reading：1213 Continue reading>>
Foxconn May Use <span style='color:red'>Sharp</span> to Roll out First Chip Fab
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Foxconn May Use Sharp to Roll out First Chip Fab

Foxconn, the main assembler of Apple’s iPhones and iPads, is expected to flex its majority stake in Japan’s Sharp to build its first chip fab, according to analysts.The world’s largest electronics contract manufacturer, also known as Hon Hai Precision, aims to launch a $9 billion fab near southern China’s Zhuhai city, Nikkei reported in late December, following earlier media reports. The total amount of the investment in the project could add up to around 60 billion yuan, or $9 billion, with most of the investment coming from the Zhuhai government. Foxconn did not answer queries from EE Times.Initially, Foxconn is expected to draw on Sharp, which has experience making CCD/CMOS sensors, LCD drivers, game console CPUs and other logic. Japan’s leading LCD TV maker has operated an 8-inch fab in Fukuyama at the 0.13μm process node. Foxconn’s 2016 takeover of Sharp provides the ability to design and produce semiconductors for the first time in Foxconn’s history as it shifts from electronics assembly to higher margin chip production.“One of the Hon Hai group’s goals when acquiring Sharp was to gain semiconductor technology,” Tokyo-based Mizuho Securities analyst Yasuo Nakane told EE Times. “If the overall investment totaled ¥1 trillion ($9 billion), we would expect Hon Hai group and Sharp to pay ¥200 billion and ¥100 billion, respectively.”The plan comes as Foxconn is building a 10.5G LCD plant (90,000/month capacity for a-SI substrates) in the southern Chinese city of Guangzhou, with installation of equipment starting from early 2019 and production starting in the fourth quarter. Foxconn will shoulder about 30% of that investment, according to Nakane. The company will probably use a similar arrangement with China’s central government for the investment in the China fab, he said.Unlike LCD operations, in which local governments are the main investors, chip projects are financed partly by China’s central government, which sees semiconductors as a more important field, Nakane said.After decades of effort, China, with the world’s largest market for semiconductors, still depends on imports for most of its supply. Beijing’s more recent Made in China 2025 industrial policy, aimed at making the nation dominant in high-technology, faces opposition from the U.S. on issues of intellectual property theft.Possible Downgrade of Wisconsin ProjectThe plan to build the fab in China may also signal a downgrading in Foxconn’s project to produce LCDs in the U.S. state of Wisconsin, according to Nakane.“For Sharp, ¥100 billion would be a major investment, but the company looks less likely to invest in a 6G LCD plant Wisconsin (60,000/month capacity for IGZO ‘oxide’ substrates), so we can envision it diverting such funds to semiconductor facilities,” he said.The main hurdle for the China fab project is likely to focus on securing intellectual property and engineers.“If Sharp were to invest in a 12-inch wafer plant in China, we doubt it would begin operations using processes several generations old, and we think it currently lacks enough engineers for the task,” Nakane said.AppleFoxconn may use the project to reduce its reliance on Apple, which accounts for half of its annual revenue of NT$4.7 trillion ($152.65 billion), as the global smartphone market slows, the Nikkei report said.The new fab will initially make chips for ultra high-definition 8K televisions and camera image sensors, as well as various sensors for industrial use and connected devices, the report said. The aim is eventually to expand the 12-inch chip facility in Zhuhai to make more advanced chips for robotics and autonomous vehicles, according to Nikkei.Step by StepFoxconn has made gradual steps into the semiconductor industry in recent years, mainly in the backend assembly and test segment.In 2003, the company acquired the wireless IC module division of Ambit, which was part of the Acer group. The Ambit unit, renamed as Shunsin, now focuses on system in packaging for smartphone power amplifier modules with Apple and Samsung as the two major customers.Over the long term, Foxconn may seek tie-ups with second- or lower-tier foundries as part of the chip fab plan, according to Nakane. One possibility would be Taiwan’s UMC Group, but such an alliance seems unlikely anytime soon, as the U.S. government has charged Taiwan’s second-largest foundry with illegally obtaining DRAM intellectual property, he said. Sharp also faces intellectual property-related constraints as its own library is limited to finished-product knowhow, he added.Foxconn may be swimming upstream with the fab project. Global chip equipment spending in 2019 is projected to drop 8%, a sharp reversal from the previously forecast increase of 7%, according to the latest edition of the World Fab Forecast Report published by SEMI.Plunging memory prices and a sudden shift in companies’ strategies in response to trade tensions are driving rapid drops in capital expenditures, especially among leading-edge memory manufacturers, fabs in China and projects for mature nodes such as 28nm, according to SEMI. Industry sectors expecting record-breaking growth in 2019, such as memory and China, are now leading the decline, the report said.
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Release time：2019-01-02 00:00 reading：1382 Continue reading>>
<span style='color:red'>Sharp</span> to buy Toshiba's PC business and issue $1.8 billion in new shares
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Sharp to buy Toshiba's PC business and issue $1.8 billion in new shares

Sharp said it will buy Toshiba's personal computer business and issue $1.8 billion in new shares to buy back preferred stock from banks, highlighting a swift recovery under the control of Foxconn.The acquisition of the PC business for $36 million marks a return by Sharp to a market it quit eight years ago, even if its comparatively low cost underscores dwindling demand in a world where many consumers spend more money on their smartphones.The Osaka-based electronics maker will be able to use the scale of parent Foxconn, the world's biggest contract manufacturer, to produce PCs more cheaply — just as it has done with TVs."Foxconn is a PC contract manufacturer and has a great deal of expertise and production capacity," said Hiromi Yamaguchi, senior analyst at Euromonitor International."This acquisition will prove a further catalyst for more Sharp and Foxconn synergies."Sharp said it will take an 80.1 percent stake in Toshiba's PC unit on Oct. 1, and will retain its Dynabook brand.Toshiba, which launched the world's first laptop PC in 1985, sold 17.7 million PCs at its peak seven years ago. That has shrunk to just 1.4 million units last year.Bought by Foxconn, known formally as Hon Hai Precision Industry Co Ltd, two years ago, Sharp recently posted its first annual net profit in four years, helped in large part by cost cuts but also by Foxconn's sales network in China.Sharp said it was buying back the preferred shares, which were issued to banks in a return for a financial bailout, to reduce high-interest payments.Although the new issue will result in dilution of more than 10 percent, it is not expected to be as great as any potential dilution that could have resulted had the preferred shares been converted into regular stock.Shares in Sharp pared steep losses after the share issue news to close 4 percent lower, giving it a market value of around $12.8 billion.Sharp was once known as a major supplier of high-end TVs and smartphone displays but struggled to compete with Asian rivals before it was bought by Foxconn.It is now seeking to get back the license of the Sharp brand for TVs in North America it previously sold to China's Hisense Group.Embattled conglomerate Toshiba sold its television business to Hisense and its white-goods business to China's Midea Group as it scrambled for funds to cover billions of dollars in liabilities arising from now-bankrupt U.S. nuclear unit Westinghouse.The $18 billion sale of its chips business to a group led by U.S. private equity firm Bain Capital was completed last week.Toshiba outsourced PC production until 2015, and currently builds PCs at its own plant in China.
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Release time：2018-06-06 00:00 reading：3195 Continue reading>>

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