Japanese semiconductor equipment maker Tokyo Electron (TEL) has raised its profit forecast for the fiscal year 2024 (ending March 2025), expecting an operating profit of JPY 627 billion (approximately USD 4.3 billion), an 8% increase from its previous guidance.

Tokyo Electron contributed the strong growth trend compared to the previous fiscal year, driven by China’s significant investment in mature semiconductor nodes. The company has also raised its sales and profit outlook for the period from April to September.

For the quarter ending in June, Tokyo Electron reported revenue of JPY 555 billion, reversing a declining trend seen since 2022. Operating profit for these three months was JPY 165.7 billion.

Source: TEL

The past year, to Tokyo Electron, has been in turbulence year, as initial optimism from AI demand and the semiconductor manufacturing industry was tempered by U.S. export restrictions.

Regarding the matter, Hiroshi Kawamoto, finance division officer of Tokyo Electron, stated in a conference call that there are currently no signs of the U.S. implementing stricter restrictions on chip-making tools, while the company will continue to closely monitor the situation.

As of the quarter ending in March, over 47% of its revenue came from China due to increased equipment stockpiling in anticipation of potential U.S. sanctions. In the recent quarter, nearly 50% of revenue was generated from the Chinese market.

Source: TEL

Looking ahead to the next fiscal year (FY2025), Tokyo Electron expects double-digit growth, driven by strong demand for AI servers and an increase in AI-enabled PCs and smartphones.

This resurgence in demand is anticipated to boost the market. The company expects further expansion in DRAM production and a recovery in NAND investment due to inventory adjustments. However, investment in advanced logic and foundry services is expected to offset the slowdown in mature process technologies.

China’s two major semiconductor foundries, Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor, released their Q2 2024 financial results on August 8.

Both companies reported sharp declines in net profit. SMIC, the leading foundry, saw its Q2 revenue increase by 21.8% year-over-year to USD 1.901 billion, but its net profit fell by 59.1% to USD 165 million.

Moreover, SMIC’s financial report indicates that the company expects its revenue to increase by 13% to 15% quarter-over-quarter in the third quarter, with a gross margin between 18% and 20%.

SMIC stated that its second-quarter revenue and gross margin both exceeded expectations, driven by an increase in wafer sales. Its revenue grew by 9% quarter-over-quarter to USD 1.9 billion, and the gross margin rose by 0.2 percentage points to 13.9%.

The company shipped over 2.11 million 8-inch equivalent wafers, marking an 18% increase from the previous quarter. However, the average selling price per wafer declined by 8% due to changes in the product mix.

On the other hand, Hua Hong Semiconductor’s Q2 revenue decreased by 24.2% year-over-year to USD 478.524 million, primarily due to a decline in average selling prices, though this was in line with expectations. Net profit dropped by 91.5% to USD 6.673 million. The gross margin stood at 10.5%.

Hua Hong Semiconductor’s financial report projects that third-quarter revenue will be between USD 500 million and 520 million, with a gross margin of approximately 10% to 12%.

Hua Hong Semiconductor’s President, Junjun Tang, further noted that the global semiconductor market is experiencing a gradual recovery from its bottom. After several quarters of sustained weakness, there are signs of stabilization and recovery in certain areas, driven by sectors like consumer electronics. The company’s second-quarter capacity utilization improved further from the first quarter, nearing full production.

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(Photo credit: SMIC)

On August 8th, Japan experienced a magnitude 7.1 earthquake with the epicenter located off the coast of Kyushu, in the sea east of Miyazaki Prefecture, at a focal depth of 30 kilometers. TSMC’s Kumamoto plant (JASM), located in Kumamoto Prefecture, experienced a seismic intensity scale of level 4.

As per a report from Commercial Times, regarding the impact of the earthquake, TSMC stated that the seismic intensity scale at the Kumamoto plant did not reach the evacuation threshold and is not expected to impact operations.

The schedule for its Kumamoto fab to start mass production in the fourth quarter remains unaffected, and construction work on the second plant has already begun. Kumamoto Prefecture Governor Takashi Kimura is scheduled to visit Taiwan at the end of August to actively seek a third plant.

TSMC’s first JASM plant in Kumamoto is set to start mass production in the fourth quarter, focusing on 12nm and 16nm processes. Construction work on the site for the second plant began at the end of the second quarter, with the building scheduled to break ground in the second half of the year.

Notably, Takashi Kimura, who took office in April, stated in an report from Bloomberg on May 11th that he would spare no effort to persuade TSMC to establish a third fab in the region, believing that during the preparations for TSMC’s first fab in Kumamoto, the region already possesses better-quality road and water infrastructure and an education system that better supports international school students, which could be advantageous.

Kyushu is a key region for Taiwan’s semiconductor industry. Recently, ASE Group, a leading packaging and testing company, decided to purchase land and establish a plant in Kitakyushu.

Testing company MA-tek, semiconductor materials distributor Topco Scientific, and Gudeng Precision have all set up bases in Kumamoto, while Gudeng is also planning to establish a new plant in Kurume, between Fukuoka and Kumamoto.

TSMC has indicated that most of its production sites, suppliers, customers, and upstream suppliers of semiconductor manufacturing services are located in areas susceptible to natural disasters.

Thus, to mitigate the risks that could lead to operational disruptions, TSMC has reportedly strengthened its ability to effectively respond to these risks through business continuity management to ensure operational resilience across its supply chain.

Commercial Times reported that from the very beginning of construction, TSMC has been reinforcing building structures, facilities, and equipment, along with implementing preventive measures. This is done to ensure that the plant remains undamaged, with no chemical leaks, equipment displacement, or injuries to personnel.

The evacuation standards for JASM are consistent with those of TSMC’s other plants in Taiwan. The recent earthquake did not meet the threshold for evacuation, so it is not expected to impact operations. This event also served as a stress test before mass production begins, the report noted.

Read more

• [News] TSMC’s Kumamoto Fab 2 Reportedly Begins Land Preparation
• [News] Kumamoto Vying for TSMC’s Third Fab, Looking to Build Semiconductor Hub

(Photo credit: TSMC)

Last week, semiconductor giant Intel reported weak quarterly earnings, with announcements made on a massive 15% cut of workforce and an over 20% reduction on capital expenditures in 2024. Now the company seems to make up its mind on cost-cutting, as it has started notifying attendees that its fall Innovation 2024 trade show has been postponed, according to a report by AnandTech.

The event, which is previously scheduled in late September, is now rescheduled for some time in 2025, according to a message the company posted on the Innovation 2024 website. However, Intel did not provide a clear timeline for when the event will return.

In a message posted on the Innovation 2024 website, Intel confirmed the postponement. Instead of the larger event, it plans to hold smaller developer gatherings.

According to the message, for the remainder of 2024, Intel will continue to host smaller, more targeted events, webinars, hackathons and meetups worldwide through Intel Connection and Intel AI Summit events, as well as have a presence at other industry moments.

According to another report by PCMag, Intel explained the reason for the postponement further, saying that given the company’s financial results and outlook for the second half of 2024, which is tougher than previously expected, it is having to make some tough decisions as it continue to align its cost structure and look to assess how it rebuild a sustainable engine of process technology leadership.

AnandTech further notes that the event, which has been hosting since 2021, is Intel’s regular technical event for developers, customers, and the public, serving as the successor to the company’s iconic IDF (Intel Developer Forum) show. However, without providing a clear timeline for when the Innovation event will return, its future is now uncertain.

In its Innovation event 2023, Intel introduced Meteor Lake, the first chips built on Intel’s 4 process (4nm) with a dedicated AI coprocessor inside.

Now, a few days after Intel revealed the progress on its next-gen 18A process, which is aimed for start production in 2025, the event has been postponed. The move also makes the public wonder about whether its next-gen processors, Panther Lake (AI PC client processor) and Clearwater Forest (server processor), will be released on schedule.

On the other hand, PCMag notes that the Innovation event could have provided Intel executives with a platform to address the controversy surrounding a CPU bug that can permanently damage 13th and 14th Generation Core desktop chips.

Regarding the issue, Intel has now extended the warranty by two full years on 24 different 13th Gen and 14th Gen desktop chips, including Core i5, Core i7, and Core i9 models, after determining that many CPUs based on its Raptor Lake architecture are vulnerable to permanent damage. The problem stems from excessive voltage, causing some CPUs to degrade irreversibly.

Read more

• [News] Intel’s 18A to Start Production in 2025, Featuring Processors for AI PCs and Servers
• [News] Intel’s Earnings Fall Short, Cutting Over 15% of Workforce

(Photo credit: Intel)

The U.S. Department of Labor released data on August 8th showing that initial jobless claims for the previous week stood at 233,000, a decrease of 17,000 from the revised figure of the prior week, and better than the market expectation of 241,000. The four-week moving average was 240,750, an increase of 2,500 from the previous week’s revised average of 238,250.

Meanwhile, continuing claims reached 1,875,000, an increase of 6,000 from the revised figure of 1,869,000 from the prior week.

Amid last week’s weak manufacturing PMI and employment situation data, the market was gripped by fears of an impending economic recession. However, these concerns eased somewhat with the better-than-expected service PMI and jobless claims data. According to FedWatch, the probability of a 50 basis point rate cut at the September FOMC meeting surged from 11% to 85% within a week, before falling back to 56%. It is expected that the market will be highly sensitive to any labor market data leading up to the September FOMC meeting. Therefore, close attention should be paid to whether the job market deteriorates in the coming weeks.

Read more at Datatrack