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Showing posts for June 2017


27 June 2017

Toshiba Favours Bain Capital-led Group to Purchase its Chip Business

After months of speculation, Toshiba Corp has chosen its preferred bidders for its profitable chip business.

The successful party is a consortium of Bain Capital, a multi-assent investment firm, and a group of investors linked to the Japanese government. They will now move forward and attempt to finalise a deal estimated to be worth £14.2 billion.

Sources close to the matter have told Reuters that Bain Capital is set to be the biggest investor in terms of equity, stumping up a figure believed to be £6 billion.

Interestingly, the consortium’s bid was not the largest on the table. That honour went to the U.S. chipmaker Broadcom and its private equity partner, Silver Lake. However, this union did not have the implicit backing and visible support of the Japanese government, who want to keep the semiconductor technology under domestic control.

Additionally, many analysts believe that any deal could only be completed with the aid of Japanese government due to its complexity.

In a separate statement made earlier, Toshiba said that it would take into consideration concerns relating to the transfer of technology and the job security of its Japanese workforce. These comments gave the impression that Toshiba was willing to prefer a domestic-based buyer, rather than a foreign-based one that might threaten jobs and IP security.

As noted previously, Bain Capital will be the consortium’s largest investor. However, the investment firm is likely to receive some financial assistance from SK Hynix, the South Korean chipmaker.

A spokesperson for SK Hynix, the world’s second-largest manufacturer of flash memory parts, confirmed that the company helped the consortium to ‘seek new business opportunities’ but declined to give further details.

Other known investors include the Innovation Network Corp of Japan, the Development Bank of Japan and the core banking unit of the Mitsubishi UFJ Financial Group.

It is believed that Toshiba wishes to seal an agreement by the end of this month, to coincide with its annual shareholder's meeting.

However, the likelihood of such an agreement being ratified in the short term appears to be slim as Western Digital, an existing partner of Toshiba, has launched a legal challenge in a bid to prevent any deal taking place with its consent.

Toshiba said it was open to discussing the dispute with Western Digital, but insiders believe that it is unlikely to change stance on the status of its preferred bidder.

If those talks are not successful, then it could mean that both Western Digital and Toshiba will have to appear in court. A provision date of July 14th has been scheduled.

The availability of Toshiba’s semiconductors, including its popular lines of memory components, is likely to be static. Unfortunately, though for purchasers around the world, that means those long lead times are going to remain for the foreseeable future.


26 June 2017

Memory shortages to remain until 2018, analysts predict

The global shortage of memory products looks likely to remain in place until late 2018, industry analysts and sources have said.

It is believed that the world’s biggest firms, such as Apple and Samsung (both of whom are believed to be releasing new flagship devices this year), will largely be unaffected due to their exceptionally strong purchasing power.

With Tier One manufacturers being prioritised, this will mean that other companies will see their supply chains become additionally constrained.

LG Electronics, the multinational electronics company, admitted in a statement that they have shifted their purchasing plans, due to current market conditions.

“After the supply shortages emerged we brought forward our procurement decisions….to ensure a stable supply,” the South Korea firm said. It is believed that LG has moved their existing strategy by about a month.

However, simply moving forward purchasing decisions is unlikely to be a fruitful endeavour for the majority of purchasers. Some analysts have predicted that device makers could be forced to reduce the amount of DRAM and NAND chips that their products use if availability does not improve.

“The problem will be more acute for the NAND market,” an anonymous industry source told the Reuters news agency. “

The iPhone remains a critical source of demand given the huge sales volumes and recent moves to increase the storage capacity on the device.”

Apple is believed to be responsible for around 18% of the world’s total supply of NAND chips. In years gone by, many OEMs and distributors had made moves to build up their inventory in the first half of the year to avoid ‘competing’ with Apple, which typically starts manufacturing in the summer for a mid-Autumn product launch.

However, the current shortage situation has caught many people out – including Apple.

Despite not being confirmed, the consensus is that Apple has struggled to source and secure all the parts that they will require for an upcoming production run. This, naturally, has had a knock-on effect on the entire electronics industry.

Although not widespread, signs of supply chains being squeezed to breaking point have started to emerge.

Earlier this year, Huawei was criticised by consumers after it was discovered that it had used a mixture of memory components in its flagship P10 phone, leading to a significant variation in performance from device to device.

In a bid to help improve the availability of key memory components, chip makers have started to allocate additional capital to help increase production. Samsung Electronics, for example, will open a $14 billion facility in South Korea later this year and another memory giant, SK Hynix, will begin to make its new NAND lines in the coming months.

Speaking to Reuters, an official representing SK Hynix admitted that current market conditions were ‘tight’, noting that its own inventory levels at a historic low.

But despite the best efforts of chip manufacturers, industry analysts believe that any meaningful new influx of parts will not arrive on the market until 2018 – at the earliest.

Additional reading

With 177,232 stocked line items available for next-day delivery and access to a further 10 million lines through our global procurement network,

Cyclops Electronics can source the parts you need to keep your production lines running. As well as being a leading independent stocking distributor, we can also help our customers with long-term purchasing plans.

Our dedicated scheduled service can help you secure all the stock you need and release it to suit your production runs.


21 June 2017

EU to Look At The Qualcomm-NXP Deal

Last October, a press release appeared on Qualcomm’s website.

“Qualcomm Incorporated (NASDAQ: QCOM) and NXP Semiconductors N.V. (NASDAQ: NXPI) today announced a definitive agreement…under which Qualcomm will acquire NXP” it began.

However, that deal, struck after months of negotiations, has not yet formally been completed.

Earlier this week, the EU’s competition regulator announced that it will take a closer look at the $47bn takeover.

The reason for the inquiry is that concerns have been raised that the acquisition and subsequent merger of two leading semiconductor manufacturers could be bad for both consumers and innovators.

Margrethe Vestager, the EU competition commissioner, said: “As semiconductors are used in practically every electronic device, we are dependent on them.

“With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices.”

The EU also said, on Friday, that it had fears that the combined Qualcomm and NXP entity could exclude rival suppliers, increase royalties and therefore impose artificial price rises.

This news comes at a bad time for Qualcomm because the San Diego-based company is already fighting one antitrust battle in America with the U.S. Federal Trade Commission over the use of “anticompetitive” tactics. At the same time, Qualcomm has become embroiled with an ongoing legal case with Apple.

A secondary area of focus of the EU Commission is believed to be on the potential for merging Qualcomm’s wireless processors with NXP’s Near Field Communication (NFC) chips, which together are used in mobile payment systems.

Responding to the opening of the investigation, a spokesperson for Qualcomm said that “it is confident that it can address the [EU’s] concerns.”

“The acquisition is complementary, and driven by the belief that the combined efforts of the two companies with produce even greater innovation than they would alone,” Qualcomm added.

Qualcomm believes that the process will be completed by the end of the year, allowing them to formally complete and close their acquisition of the Dutch-based NXP.

The European watchdog aims to make an official decision by October, though, of course, this could get delayed. The American counterpart to the EU’s competition regulator, the Federal Trade Commission, okayed the deal back in April.


13 June 2017

Electronic Component Lead Time News (June 2017)

Generally speaking, lead times have remained constant since our previous update last month with only ST’s product lines increasing across the board. However, upon closer inspection, there has been a number of small but significant fluctuations that could seriously impact supply chains in the medium- and long-term.

Once again, the DSP and Microprocessor sector has seen availability on key product lines continue to contract. Supply constrains remain, with franchise distributors warning that they may be unable to deal with unforcasted demand.

In short

  • Lead times for microcontrollers continue to rise.
  • Availability of Fairchild, Nexperia and ON Semi logic product groups are partially constrained.
  • Micron (DDR3) and Toshiba (all NAND flash) memory remain on allocation.
  • Analysts predict an increase in lead times for ON Semi and ST-manufactured analog parts.

Analog

In our previous lead time update, we noted that industry figures were forecasting that the availability of ST Micro and ON Semiconductor product lines would decrease. Unfortunately, those predictions have turned out to be true as the two manufacturers have both increased lead times (twenty weeks for ST Micro, twenty-six weeks for ON Semiconductor,)

Discretes

There has been a fair amount of fluctuation regarding the lead times and pricing of discrete product groups. Thankfully, though, most of these changes appear to be minimal and should not be a problem to the majority of purchasing departments.

But as there has not been a decrease in lead times, we would advise you to check with independent distributors to secure stock, should it be required for an urgent production run – especially for ON Semiconductor product families as franchise sources are excepting costs to rise in the short-term.

Memory

Once again, all of Toshiba’s NAND Flash products remain on available only through allocation and this situation is showing no signs of changing in the immediate future so plan your purchasing patterns accordingly.

Elsewhere, Micron’s DDR3 lines stay on allocation and these are joined by some DDR2 lines while Microchip has bumped up their lead times for their Eprom and EEprom products to a maximum of seventeen weeks.

Other manufacturers such as Fujitsu, IDT and Samsung have remained stable.

Optical

Lead times for the major opto product groups have remained static since our last update in June.

The main cause for concern in this area is the number of Osram lines that have either remained or been placed on allocation, though according to our information certain product lines will be removed come Q3 2017. This remains scant comfort for those who have been waiting patiently, however.

DSP & Microcontrollers

We have seen that lead times in this area have risen yet again, continuing a trend that dates back to the start of the year. Only Microchip and Texas Instruments have managed to keep lead time stable, with all the other major manufacturers in this sector posting incremental increase to ease existing supply constraints.

The one exception to this is ST Micro, with the Swiss-based company pushing their lead times out to a maximum of twenty-six weeks for their 8-bit, 16-bit and 32-bit product groups.

As per our statement last month, we would advise people to keep a close eye on this area for a sustained period of allocation could be on the cards if current market demand does not ease.

Logic

The logic market has remained stable, with no changes reported to either lead times or price through franchise channels.


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