As I posted before, the presence of Glabalfoundries is a big threat to existing players in the market. (More details here http://mycroeconomics.blogspot.com/2009/07/if-you-are-shareholders-of-chartered.html)
In an investor conference call 30/July/2009, TSMC Chairman and CEO said that "We consider GF to be a formidable competitor. I really think that the battle will be a high casualty one. My job is to minimize the casualties on my side. Casualties will be represented by money."
Morris is a veteran in the industry, and I really respect him for his foresight, sharpness, openness to investors and readiness to fight the war.
Unfortunately here in Chartered, we see no such urgency. It is funny, considering that the most competitive, the strongest, and the healthest company in the industry is seeing danger. The company takes no effort to educate investors on imminent crisis. And the investors are probably still indulged in the recent bull run.
Time is not on your side.
Showing posts with label Tech. Show all posts
Showing posts with label Tech. Show all posts
Sunday, August 9, 2009
Thursday, July 30, 2009
STMicro first customer for Globalfoundries
As I mentioned in my previous post (http://mycroeconomics.blogspot.com/2009/07/if-you-are-shareholders-of-chartered.html), Globalfoundries was to announce its first non-AMD customer. And the answer is ... STMicroelectronics.
Globalfoundries does not need to be successful to create harm to Chartered. Its sheer existence will bring the burdens described in previous posting.
Furthermore, Globalfoundries announced that they will produce STMicro product based on 40nm (lower better) Low Power technology in 2010, while Chartered is currently at 65nm. Looks like Chartered would be lagging behind the technology race.
# Quote - Globalfoundries Press Release 29/Jul/2009 #
SUNNYVALE, CA – July 29, 2009 – GLOBALFOUNDRIES today announced a strategic customer relationship with STMicroelectronics (NYSE: STM). One of the world’s leading suppliers of semiconductor solutions, ST will partner with GLOBALFOUNDRIES to produce products based on 40nm Low Power (LP) bulk silicon technology. The 40nm LP process is ideal for the next generation of wireless applications, handheld devices, and consumer electronics, which require excellent performance and long battery life. First tape out and production of ST products by GLOBALFOUNDRIES is planned to start in 2010.
# Quote - Chartered Semicon Press Release 13/Jul/2009 #
SINGAPORE - July 13, 2009 - Chartered Semiconductor Manufacturing (Nasdaq: CHRT and SGX-ST: CHARTEREDSC), one of the world's top dedicated foundries, today announced the general availability of an enhanced version of its 65-nanometer (nm) low-power (LP) process, called 65nm LPe. The 65nm LPe process utilizes innovative leakage-reduction techniques to significantly improve system-on-chip (SoC) standby power consumption by up to 50 percent. The result is a lower-power process especially suited for battery-operated and cost-sensitive mobile applications that require active standby conditions, such as mobile handsets, multimedia players or personal internet devices. The process is also supported by a robust range of IP specifically optimized for the lower leakage capabilities.
Globalfoundries does not need to be successful to create harm to Chartered. Its sheer existence will bring the burdens described in previous posting.
Furthermore, Globalfoundries announced that they will produce STMicro product based on 40nm (lower better) Low Power technology in 2010, while Chartered is currently at 65nm. Looks like Chartered would be lagging behind the technology race.
# Quote - Globalfoundries Press Release 29/Jul/2009 #
SUNNYVALE, CA – July 29, 2009 – GLOBALFOUNDRIES today announced a strategic customer relationship with STMicroelectronics (NYSE: STM). One of the world’s leading suppliers of semiconductor solutions, ST will partner with GLOBALFOUNDRIES to produce products based on 40nm Low Power (LP) bulk silicon technology. The 40nm LP process is ideal for the next generation of wireless applications, handheld devices, and consumer electronics, which require excellent performance and long battery life. First tape out and production of ST products by GLOBALFOUNDRIES is planned to start in 2010.
# Quote - Chartered Semicon Press Release 13/Jul/2009 #
SINGAPORE - July 13, 2009 - Chartered Semiconductor Manufacturing (Nasdaq: CHRT and SGX-ST: CHARTEREDSC), one of the world's top dedicated foundries, today announced the general availability of an enhanced version of its 65-nanometer (nm) low-power (LP) process, called 65nm LPe. The 65nm LPe process utilizes innovative leakage-reduction techniques to significantly improve system-on-chip (SoC) standby power consumption by up to 50 percent. The result is a lower-power process especially suited for battery-operated and cost-sensitive mobile applications that require active standby conditions, such as mobile handsets, multimedia players or personal internet devices. The process is also supported by a robust range of IP specifically optimized for the lower leakage capabilities.
Monday, July 27, 2009
Dell - Lawsuit risk could propogate along the supply chain
According to report, Dell has mispriced some products on its online shop, and refused to honor it. The consumers in return sued it, and frozen its bank account temporary, thus affecting in turn affecting Dell's payment to its suppliers.
This is quite surprising, considering that the amount involved is pretty small. In Tech space, many companies are involved in multiple lawsuits, particularly in IP litigations. If the bank accounts could be frozen easily, it could mean that many Tech companies at the downstream of suppliers could be affected negatively.
Dell account frozen over pricing mishaps
Publication Date：07/24/2009
Source： China Times
U.S. Computer giant Dell Inc. reportedly faces a charge of price fraud with its Citibank account frozen temporarily by court order, sources said.
Dell’s online shopping Web site in early July mislabeled Latitude E4300 laptops and other products at very low prices. As a result, 26,000 consumers made orders via the Internet within a week, but Dell only agreed to compensate laptop buyers with coupons for NT$20,000(US$610) each, and purchasers of other products with coupons for NT$1,000 each.
This response dismayed several big consumers, who reportedly ordered computers and monitors worth a couple of million NT dollars at the mislabeled prices, and transmitted money to Dell’s bank account. They sued Dell for price fraud because the company would not fill the orders. The Chungli Criminal Police Bureau accepted the case and submitted it to the court, which then ordered a freeze on Dell’s Citibank account in Taiwan.
Compal Electronics Co. Ltd and Foxconn Technology Group, two major product suppliers for Dell, reportedly were affected financially by the account-blocking.
According to a local supplier for Dell, only a small part of Dell’s cash flow in its Taiwan account comes from online orders. Most of the capital is remitted by company headquarters to pay panel providers. Local provider companies, worried that they would not receive payment, reportedly called Premier Liu Chao-shiuan for help after they learned of the account-freezing.
Some argued that a consumer dispute should not be exaggerated into an online fraud case, especially when online orders for Dell products in Taiwan are usually at a very low volume.
Francis Huan, public relations manager of Dell Asia Pacific and Japan, would not comment on the account-freezing incident, but stressed “it has all passed now.” Dell’s operations in Taiwan have returned to normal, although Huan believes that “no ordinary consumer would place such a large order.”
Dell will refund money to all online purchasers who have already made payments, Huan said. But as many of them use pseudonyms to order and only leave cell phone numbers, it will take some time before all refunds can be made. (TYH-THN)
This is quite surprising, considering that the amount involved is pretty small. In Tech space, many companies are involved in multiple lawsuits, particularly in IP litigations. If the bank accounts could be frozen easily, it could mean that many Tech companies at the downstream of suppliers could be affected negatively.
Dell account frozen over pricing mishaps
Publication Date：07/24/2009
Source： China Times
U.S. Computer giant Dell Inc. reportedly faces a charge of price fraud with its Citibank account frozen temporarily by court order, sources said.
Dell’s online shopping Web site in early July mislabeled Latitude E4300 laptops and other products at very low prices. As a result, 26,000 consumers made orders via the Internet within a week, but Dell only agreed to compensate laptop buyers with coupons for NT$20,000(US$610) each, and purchasers of other products with coupons for NT$1,000 each.
This response dismayed several big consumers, who reportedly ordered computers and monitors worth a couple of million NT dollars at the mislabeled prices, and transmitted money to Dell’s bank account. They sued Dell for price fraud because the company would not fill the orders. The Chungli Criminal Police Bureau accepted the case and submitted it to the court, which then ordered a freeze on Dell’s Citibank account in Taiwan.
Compal Electronics Co. Ltd and Foxconn Technology Group, two major product suppliers for Dell, reportedly were affected financially by the account-blocking.
According to a local supplier for Dell, only a small part of Dell’s cash flow in its Taiwan account comes from online orders. Most of the capital is remitted by company headquarters to pay panel providers. Local provider companies, worried that they would not receive payment, reportedly called Premier Liu Chao-shiuan for help after they learned of the account-freezing.
Some argued that a consumer dispute should not be exaggerated into an online fraud case, especially when online orders for Dell products in Taiwan are usually at a very low volume.
Francis Huan, public relations manager of Dell Asia Pacific and Japan, would not comment on the account-freezing incident, but stressed “it has all passed now.” Dell’s operations in Taiwan have returned to normal, although Huan believes that “no ordinary consumer would place such a large order.”
Dell will refund money to all online purchasers who have already made payments, Huan said. But as many of them use pseudonyms to order and only leave cell phone numbers, it will take some time before all refunds can be made. (TYH-THN)
Friday, July 24, 2009
Chartered shareholders - watch out Globalfoundries!
If you are a shareholders of Chartered Semicon, I really think you should be concern of this development. Globalfoundries, a spin off of AMD, is going to announce its first non-AMD customer in a month time.
And it has huge implication.
Before Globalfoundries, the wafer foundry market is basically dominated by TSMC, with spill over to smaller wafer foundries, like UMC and Chartered. TSMC is leading at all aspects, it has the technology, and process capability, and is able to exercise customer selection. Strictly speaking it is very difficult for the remaining to survice. Luckily TSMC has not expanded too aggressively, and to some extents, large customers would not want to see a monopoly.
This will change with Globalfoundries. Well I believe TSMC will still be the number 1. However, Globalfoundries will clear preferred choice for the number 2 candidate. I would believe that the customers would like to see a worthy opponent for TSMC, and clearly UMC and Chartered have failed them in this aspect.
Specifically what does this mean to Chartered?
1) Lower ASP (average selling price) - With the announcement of Globalfoundries in a month time, you can expect many of Chartered customers would go to Chartered and threaten to move the business to Globalfoundries. I believe an erosion on ASP is unavoidable.
2) Higher cost of sales - With such a big competitor fighting for resources (raw material, equipment), the bargaining power of these suppliers will be enhanced significantly.
3) Lower utilization - Obviously when some of the business is pulled away, the utilization will be lower. And you must remember that Chartered is still struggling to meet their own goal of breakeven at 75% utilization.
4) Loss of good quality customers - The customers always like to have dual source. I cannot see any reason why they would not choose Globalfoundries. Yes, may not be immediate, but it is inevitable.
5) Harder to find technology partners with customers - When there is good solution out there, I suspect customers will be less likely to invest in technology partnership with Chartered.
In summary, shareholders please watch Globalfoundries with respect.
And it has huge implication.
Before Globalfoundries, the wafer foundry market is basically dominated by TSMC, with spill over to smaller wafer foundries, like UMC and Chartered. TSMC is leading at all aspects, it has the technology, and process capability, and is able to exercise customer selection. Strictly speaking it is very difficult for the remaining to survice. Luckily TSMC has not expanded too aggressively, and to some extents, large customers would not want to see a monopoly.
This will change with Globalfoundries. Well I believe TSMC will still be the number 1. However, Globalfoundries will clear preferred choice for the number 2 candidate. I would believe that the customers would like to see a worthy opponent for TSMC, and clearly UMC and Chartered have failed them in this aspect.
Specifically what does this mean to Chartered?
1) Lower ASP (average selling price) - With the announcement of Globalfoundries in a month time, you can expect many of Chartered customers would go to Chartered and threaten to move the business to Globalfoundries. I believe an erosion on ASP is unavoidable.
2) Higher cost of sales - With such a big competitor fighting for resources (raw material, equipment), the bargaining power of these suppliers will be enhanced significantly.
3) Lower utilization - Obviously when some of the business is pulled away, the utilization will be lower. And you must remember that Chartered is still struggling to meet their own goal of breakeven at 75% utilization.
4) Loss of good quality customers - The customers always like to have dual source. I cannot see any reason why they would not choose Globalfoundries. Yes, may not be immediate, but it is inevitable.
5) Harder to find technology partners with customers - When there is good solution out there, I suspect customers will be less likely to invest in technology partnership with Chartered.
In summary, shareholders please watch Globalfoundries with respect.
Chartered Semicon - a big cash outflow burden
Based on Chartered 2008 annual report, it has almost $3 billion contractual obligation over next 5 years.
Just how big is $3 billion? As a reference, GlobalFoundries is building a brand new 12" Fab in New York at a cost of $4.2 billion ($3.4 billion excluding construction cost), designed to ramp at 28nm and subsequently 22nm technology nodes, with a capacity of 35k 12" wafer per month.
Chartered total capacity per quarter is about 640k 8" equivalent wafer, or 213k per month, and that should equivalent to about 95k 12" equivalent wafer per month.
In other words, Chartered is carrying the cash outflow obligation equivalent to building 1/3 of its current capacity.
As of 30/June/09, Chartered has a current asset of about $1.25b, about $0.8b is cash or equivalent (remember the $0.3b cash call?). With the $800m obligation (see picture) and the latest $500 capex plan announced, it certainly seems very stretched for Chartered, even though it is expected to have positive operating cashflow.
We shall see how it resolves this ... very soon.
Thursday, July 23, 2009
An apple a day ... well what if you lose the apple?
It is reported that a 25 year old Chinese worker killed himself after he found a prototype of a new Apple iPhone model went missing. The worker worked for Foxconn, to which Apple outsources the munufacturing of iPhone. It was alleged that he was brutally treated and detained by Foxconn security. Apple is well known in the industry for the way they keep things secret, sometimes to the extent of leaking false information intentionally so to trace the source. You can imagine the pressure on Foxconn on having such a customer.
If the allegation is true, it is really sad that a young life is lost this way. Sometimes people or even organization sinks so much into the work or business that they forget there is life out there.
http://www.telegraph.co.uk/technology/apple/5885923/Chinese-worker-kills-himself-after-Apple-iPhone-prototype-goes-missing.html
If the allegation is true, it is really sad that a young life is lost this way. Sometimes people or even organization sinks so much into the work or business that they forget there is life out there.
http://www.telegraph.co.uk/technology/apple/5885923/Chinese-worker-kills-himself-after-Apple-iPhone-prototype-goes-missing.html
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