July 2011 Issue

Your monthly digest which aims to provide you a round up of the semiconductor headlines with a special focus to the Asian arena - direct to your inbox. Simply click on the relevant links provided to get the details.

Key Take-Away

Local Asia-Pacific News

Industry Headlines

Financial Watch

Mergers, Acquisition, Joint Ventures,

Spin-offs and People

Market Outlook

Views and Opinions

Stock Watch

Hi, A quick download of this month’s snippets…. There are mixed signals and should I say, indicators of growing uncertainty, in the market. In the Wall Street speak, “noting a sharp deceleration in semiconductor order trends in the second quarter, while inventories in the chip sector are normalizing, continued concerns about the slowdown in PC sales and broader economy are likely to weigh on the sector”. In the Asian region, there has been a mix of expansions and shutdowns. While several companies (Mitsubishi, Corning, Altair, Bosch, ON etc.) expanded their operations in Asia, Renesas announced the closure of its assembly and test divisions. Taiwan now boasts the world’s largest LED capacity in 2011. While it possesses a major advantage in LED manufacturing, China possesses the market and the capital. On the 3D front, Elpida, PTI and UMC entered into a three-way collaboration to deliver 3D IC integration technologies for advanced manufacturing processes including 28nm. With the gaining importance of software in the Mobile Internet Devices (MIDs), hardware’s role as a differentiating factor is indeed diminishing. And with that, so do the profit margins for the chip industry incumbents. So, how are the chipset players reacting to survive, if not thrive, in this evolving market? Qualcomm shows a recent example. The fabless company is working towards enhancing hardware access to web based applications. Also fresh from its $3.1b Atheros acquisition, Qualcomm has picked up assets of Rapid Bridge – a company with a niche in metal programmability. On a market outlook, TI has slashed its guidance. The silver lining in the guidance adjustment was that it is associated mostly with a product that TI is winding down, basebands. The company’s CEO, Rich Templeton said that while the company is focused on its National Semiconductor purchase and isn't actively going after further analog acquisitions, he believes analog is "one of

the best value-generating sectors" of the semiconductor industry. If you have any thoughts on the above & would like to share them with me and your industry colleagues through this e-newsletter, please email me at meenu@asic-vlsi.com. Have a great month ahead! Best Regards Meenu Ps: If you see a need for

Training for your engineers Detailed research and an in-depth analysis for your specific market intelligence requirements, Do let me know; we can value-add. Visit www.asic-vlsi.com for details or simply drop me an email

LOCAL ASIA-PACIFIC NEWS

Chinese firm takes MIPS into Android tablets Source: Richard Wilson, Electronics Weekly – 30th June 2011

MIPS Technologies is working with Ingenic Semiconductor, a China-based mobile processor firm, to port the Android tablet OS, known as Honeycomb, to Ingenic’s MIPS-based processor. Through its partnership with Ingenic, MIPS is already seeing its first design wins in smartphone and tablets in China.

Renesas closes assembly, test division Source: EE Times – 29th June 2011 Renesas Electronics plans to close Renesas Eastern Japan Semiconductor’s Tokyo Device Division. The closure is expected to be completed by March 2012. Among the measures that need to be done would be transferring the production volume from the Tokyo Device Division to other Renesas manufacturing sites and discontinuing some of the products. Altair Semiconductor opens regional headquarters in India Source: EE Times – 29th June 2011 The leading developer of LTE chipsets announced the opening of a new office in India. Indian carriers poised to launch LTE services include Reliance Industries, Bharti Airtel, Aircell and Tikona, among others. Spreadtrum targeted by Muddy Waters report Source: Peter Clarke, EE Times – 29th June 2011 The brokerage company, Muddy Waters analyst Carson Block raised nine points that question the management, business practices and financial details of the company since the departure of founder Ping Wu. Elpida tips 4 layer mobile DRAM package

KEY TAKE-AWAY

From the Asian arena Taiwan topped the list of world’s largest LED capacity in 2011, Altair, ON, Corning, Bosch expanded their operations in the region and the Indian government is looking for potential technology providers and investors to set up semiconductor fabs in India Q1 results and financial health ST-Ericsson and Acer are cutting jobs as a part of their cost saving plans. Companies are slashing or re-adjusting their guidance while foundries are treading with caution. Acquisitions Acquisitions were a galore – ARM (buys Obsidian), Intel (SiPort), Ansys (Apache Design), Spreadtrum (stake in MobilePeak), Qualcomm (assets of RapidBridge) – to cite a few

Source: James Montgomery, Electroiq – 24th June 2011 Elpida Memory has come up with what it says is the thinnest available DRAM device, a new 0.8mm four-layer package of 2GB DDR2 mobile RAM chips, assembled using package-on-package. Volume production ramp is slated for 3Q11. Government calls for EoI to set up semiconductor fab plant Source: Yahoo Finance – 23rd June 2011 The Empowered Committee set up by the government of India invites a preliminary Expression of Interest (EoI) from potential technology providers and investors for setting up of semiconductor fabs in India, an advertisement by the Department of Information Technology said. Bosch plans solar manufacturing site in Malaysia Source: Electroiq – 22nd June 2011 The Bosch Group will build a solar cell manufacturing plant in Penang, Malaysia, investing about EUR520 million. The site will produce silicon ingots through solar cells and modules. Mitsubishi launches auto infotainment venture in China Source: EE Times – 21st June 2011 Mitsubishi has announced that it concluded an agreement with QiMing Information Technology, a subsidiary of China FAW Group to establish a joint venture company to develop, manufacture and sell car multimedia products in China. The new company will be established in Changchun, Jilin Province this August and will begin operating in January 2012. Corning opens design hub in Taiwan Source: ELPort.News – 15th June 2011 Corning has more than 40 years of business development experience in Taiwan, largely through the growth of the company's display technologies business segment. China startup crafts “unified” multicore processor Source: EE Times – 9th June 2011 ICube, the fabless start-up from Shenzhen, China believes that its Harmony Unified Processor is the first ever architecture developed to handle both logic and graphics processing in a single core and in each of multiple processing pipelines. Aiming at a 2012 roll out, it has already received 65nm silicon of the first instantiation of Harmony, the dual-core IC1, back from its foundry supplier. Taiwan boasts world’s largest LED capacity in 2011; 27 new LED fabs going up in Asia this year Source: SEMI – 8th June 2011 LED application products are fueling the rapid rise and proliferation of Taiwan

based LED businesses. Corporations like AU Optronics, TSMC and CHIMEI have all crossed over into the LED industry, forging yet another trillion dollar industry. ON opens Singapore distribution hub Source: Business Wire – 2nd June 2011 ON Semiconductor has opened its new Singapore hub for global distribution. This facility is now the largest distribution facility serving the semiconductor industry located in Singapore. Elpida, PTI, UMC join forces for TSV tech Source: EE Times – 2nd June 2011 The three companies have finalized a three-way collaboration to deliver 3D IC integration technologies for advanced manufacturing processes including 28nm. The companies said they would make use of Elpida's strengths in DRAM, UMC in logic and PTI in assembly to develop logic-plus-DRAM components. Back to top

INDUSTRY HEADLINES

Ultrasonic payment service Zoosh bridges NFC gaps Source: Jeff Hughes, Yahoo News – 21st June 2011 A company called Naratte uses ultrasound tones and phones’ existing microphone and speaker to do the same thing as NFC but less exclusive. Capacitive touch technology works with gloved hands Source: Richard Wilson, Electronics Weekly – 16th June 2011 Zytronic has announced a range of sensors for capacitive touch displays which employs deposited tracks of transparent Indium tin oxide (ITO) as the sensing medium. The result is the ITO-based sensors are designed to detect touch through thick glass and even gloved hands, claimed the supplier Apple eclipses HP as biggest chip buyer buoyed by iPad sales Source: Hugo Miller, Bloomberg – 9th June 2011 Apple has bought $117.5b worth of chips for its devices in 2010 and is expected to exceed Hewlett-Packard’s outlay by $7.5b this year, up from $2.4b in 2010. Qualcomm APIs enhance web apps Source: EE Times – 8th June 2011 The fabless company hopes to unite the currently fragmented native mobile environments with a set of APIs for geo-location, sensors, cameras, audio, augmented reality and its AllJoyn peer-to-peer networking technology, that claim

enhanced hardware access to web based applications. Steve Jobs uses iCloud to pick apart industry he helped form Source: Adam Satariano & Peter Burrows, Bloomberg – 8th June 2011 By introducing a service that shares files across different internet-linked devices, Apple’s CEO takes another step toward side-lining the PC industry he pioneered. Aggressive new LED lighting roadmap target of 8x cost drop by 2015 counts on innovation in manufacturing technology Source: Paula Doe, SEMI – 7th June 2011 This year’s roundtable of experts gathered by the U.S. Department of Energy to review its industry roadmap decided last year’s ambitious goal of 10X cost reduction by 2020 in packaged LED die still won’t be enough. They now think an 8X reduction by 2015 will be needed to create a solid state lighting industry that can compete with fluorescents. Rudolph debuts TSV inspection tool Source: Business Wire – 7th June 2011 The leading provider of process characterization equipment and software for wafer fabs and advanced packaging facilities, announced the availability of the new NSX® 320 Automated Macro Inspection System designed specifically for advanced packaging processes that use through silicon vias (TSV) to connect multiple die in a single package. Phase change memory module debuts at DAC Source: Electroiq.com – 3rd June 2011 University of California, San Diego faculty and students, with industry partners Micron Technology, BEEcube and Xilinx, created a phase-change memory (PCM) solid-state storage device (SSD) with 7x speed improvement over current SSD technology. Silicon Labs bids to simplify solar energy design Source: Richard Wilson, Electronics Weekly – 3rd June 2011 The company’s reference design consists of a solar-powered wireless sensor node that measures temperature, light level and charge level, using a Si10xx wireless MCU to control the sensor system and transmit data wirelessly and a thin-film battery to store harvested energy. Analyst: Qualcomm in, Intel out of iPhone5 Source: Dylan McGrath, EE Times – 3rd June 2011 Qualcomm has snagged the baseband socket on the next Apple iPhone, displacing Intel, according to Craig Berger, an analyst with FBR Capital Markets Corp. The incumbent iPhone baseband supplier was the Infineon wireless unit, which was acquired by Intel last year. Qualcomm already supplies the baseband to the CDMA version of the iPhone 4, but not the original GSM version of the device.

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FINANCIAL WATCH

Soitec announces EUR 150m IPO Source: Telecom Paper – 29th June 2011 Soitec announces the launch and main terms of a €150 million rights issue with preferential subscription rights for existing shareholders, to finance its industrial growth strategy in electronics and energy. China white-box market down, manufacturers face challenges Source: Peter Clarke, EE Times– 24th June 2011 According to Nomura Equity Research, China's white-box (unbranded) handset market is in decline as recent profit warnings show manufacturers are faced with structural issues. ST-Ericsson announces new cost savings plan Source: Reuters – 23rd June 2011 The company announced that due to recent changes in the business environment and reduced demand for legacy products at certain customers, it will launch a cost savings plan to achieve about $120 million of annualized savings by the end of 2012. This includes a global workforce review that may affect up to 500 employees worldwide Acer to cut 300 jobs in Europe Source: Charles Arthur, Guardian – 15th June 2011 The second-biggest PC maker in the world will cut 300 jobs in Europe and has slashed its full-year shipment target for tablets by almost 60% to around 3m units. The company also said it expects lower notebook shipments this year as it struggles to clear excess inventory. TSMC’s May sales up 6.3% on year Source: Peter Clarke, EE Times– 10th June 2011 Net sales for May 2011 on an unconsolidated basis were approximately NT$35.96 billion (about $1.25 billion), a decrease of 0.7 per cent over April 2011 and an increase of 6.3 per cent over May 2010. Revenues for January through May 2011 totalled NT$174.74 billion (about $6.07 billion), an increase of 12.2 per cent compared to the same period in 2010. UMC’s May sales fall 6.8 percent Source: Reuters – 8th June 2011 The Taiwanese foundry had sales of T$9.40 billion ($327.9 million) last month, compared with T$10.09 billion in May last year

Texas Instruments slashes outlook, faults Nokia Source: Sinead Carew, Reuters – 8th June 2011

TI had warned in April that revenue from wireless baseband had been hurt by weak sales at its biggest client Nokia, which has had a tough time competing in advanced phones. Barring the hit from Nokia, everything else remained on track for a strong second half.

Qualcomm invests in MEMs firm Source: EL.Port News – 7th June 2011 Cavendish Kinetics has closed a financing round of $10 million, adding Qualcomm to its current investor group. As a fabless chip company, Cavendish Kinetics will use the funds to produce RF tuning products based on its NanoMech MEMS platform. Q1 DRAM revenue drops due to softer ASPs Source: Dylan McGrath, EE Times – 3rd June 2011 A report released by IHS iSuppli has revealed that global DRAM revenue in the first quarter dropped 5.6 per cent to $8.3 billion from the fourth quarter of 2010. The market research firm blamed weak pricing for the decline. MStar shares boosted by buyback plan Source: Focus Taiwan – 1st June 2011 Triggered by the company's announcement that it will buy back 6 million shares at NT$200-300 each, shares of integrated circuit designer MStar Semiconductor rose sharply the next morning. Back to top

MERGERS, ACQUISITIONS, JOINT VENTURES, SPIN OFFS AND PEOPLE

Ansys to buy Apache Design for $310m Source: Reuters – 30th June 2011 San Jose, California-based Apache, which in part competes with traditional chip-design software makers like Synopsys and Cadence, had filed for an initial public offering of $75 million in March. ARM acquires Obsidian software Source: Dave Neal, The Inquirer – 17th June 2011 ARM has acquired Obsidian Software, a developer of verification and validation software used in the design of processor chips. Silterra, ProMOS partner for advanced HV tech

Source: ELPort.News – 16th June 2011 Small panel LCD driver ICs for smartphones may soon be manufactured at ProMos Technologies' 12" fabrication facilities at Taichung, Taiwan using Silterra Malaysia's advanced 0.13µm and 0.11µm HV process technology. This follows the successful completion of the two companies' first joint technology development project. Qualcomm buys assets of Rapid Bridge Source: Mike Freeman, Sign On San Diego – 10th June 2011 Rapid Bridge’s San Diego design team and San Diego and Bangalore engineering services operations will be integrated into Qualcomm Code Division Multiple Access (CDMA) Technologies group. Rapid Bridge’s San Diego design team and San Diego and Bangalore engineering services operations will be integrated into Qualcomm Code Division Multiple Access (CDMA) Technologies group. Spreadtrum acquires stake in MobilePeak Source: PRNewswire– 9th June 2011 The fabless company from China has acquired approximately 48.44% of the total outstanding shares of MobilePeak, a privately held fabless semiconductor company based in Shanghai and San Diego that specializes in the design of highly integrated UMTS/HSPA+ modem chipsets. Tektronix buys 5 Teradyne systems for ASIC/FPGA test Source: Electroiq – 7th June 2011 Tektronix Component Solutions announced the investment in five new Teradyne J750EX semiconductor test systems to allow screening of a wider variety of complex ASICs, increase test capacity and enable faster development of new test programs. Moog buys MEMS device maker Crossbow Technology for $32m Source: Marketwire – 6th June 2011 Moog, a designer, manufacturer and integrator of precision control components and systems has acquired Crossbow Technology which designs and manufactures acceleration sensors for inertial navigation units and guidance systems. End-use sectors include aerospace, defence and transportation. Intel acquires SiPort Source: Sam Rosen, ABI Research – 3rd June 2011 Intel acquired the key HD Radio chipset manufacturer, SiPort. Intel would be wise to put this digital radio receiver into Atom products targeted at Automotive and In Vehicle Entertainment, as well as to continue supporting it as standalone silicon for other products. Mentor Graphics works with Tezzaron and MOSIS on 3D-IC prototyping service Source: Business Wire – 3rd June 2011

Mentor Graphics announced a cooperative effort with Tezzaron Semiconductor and MOSIS to provide IC designers with a way to economically develop and manufacture 3D-IC prototypes on multi-project wafers (MPWs). The process enables designs using tens of millions of through silicon vias (TSVs) with dimensions as small as 1.2 x 6 microns and a pitch of 2.4 microns, producing up to 300,000 vertical interconnects per square millimetre. Back to top

MARKET OUTLOOK

LED driver market to show 12% CAGR Source: Peter Clarke, EE Times– 28th June 2011 Sales of LED drivers for LEDs for LCD backlights will dominate through the period, with growth from edge-lit TVs and monitors. LED lighting applications promise to be "next big thing." Image sensors will gain most from 3D media, says In-Stat Source: Electroiq – 22nd June 2011 Image sensors are a key enabling component for 3D consumer entertainment. As mobile devices -- handheld game consoles, smartphones, and tablets -- move to 3D platforms, image sensor demand will rise 130% by 2015, says In-Stat. Taiwan LED revenues in 2012 may break a new record, predicted by Taiwan Pida Source: LEDinside – 22nd June 2011 According to Taiwan's Photonics Industry and Technology Development Association (PIDA), due to a high-growth market demand worldwide, Taiwan's LED industry revenues are likely to reach $6.8 billion in 2012 from this year's projected $5.2 billion revenues, surging by 32 per cent. This is double than last year's first-ever $3.4 billion turnover. China fabless market set to double by 2015, says IHS iSuppli Source: EDA Cafe – 16th June 2011 According to the report, operations by fabless semiconductor companies in China will generate $10.7 billion in revenue in 2015, up from $5.2 billion in 2010. The growth comes on top of a 23.6 per cent expansion in 2010, with revenue rising from $4.2 billion in 2009. Revenue will reach $5.74 billion in 2011, up 11.3 per cent from 2010 Gartner boosts 2011 semi equipment forecast Source: Dylan McGrath – 15th June 2011 Worldwide semiconductor capital equipment spending is on track to rise 10.2 per cent to reach $44.8 billion in 2011, before declining in 2012, according to the latest forecast from Gartner.

WSTS forecast update: moderate growth, OSD and Europe happy Source: Solid State Technology – 13th June 2011 No big changes in the WSTS' final 2010 figures from its last November update; everything's generally less than 1% rewritten either up or down. The new forecast represents "moderate growth" for this year, adding $16.1B from 2010's actual results ($298.3B). Look for a little better growth in 2012 (but still in single-digits), and retreating back to 2011 levels in 2013, for a three-year CAGR of 6.13%. TSMC: Global semiconductor growth slower than expected Source: The China Post – 9th June 2011 TSMC’s Chairman Morris Chang said that the pace of growth of the global semiconductor sector appears slower than expected. However, remaining upbeat about TSMC’s earnings outlook, he said he has faith that TSMC will be able to reach its goal of posting a 20 per cent increase in U.S. dollar-denominated sales for 2011. LTE subscriptions boom at 3400% growth until 2015 Source: Mike Howard, iSuppli – 9th June 2011 According to the In-Stat report, between mobile applications, data, voice, and streaming and broadcast video, global wireless bandwidth usage has increased ten-fold since 2008, and there are no signs of it stopping. Tablet DRAM demand explodes in 2011 as market expands beyond iPad Source: Mike Howard, iSuppli – 9th June 2011 Tablets this year will consume 333.7 million gigabits of DRAM, up from 37.3 million gigabits in 2010. DRAM demand from tablets then will vault to 1.1 billion gigabits in 2012 and continue to climb by leaps and bounds during the next four years, reaching 5.8 billion gigabits by 2015. Touch mania swipes across markets Source: Colin Johnson, EE Times – 7th June 2011 According to DisplaySearch, shipments of touchscreen tablets are forecast to reach 60 million units in 2011 and could top 260 million units by 2016. Add to that the more than 400 million mobile phone touchscreens predicted by IHS iSuppli and the total market could top $10 billion this year China fabless firms revenue to grow to $10.7b in 2015 Source: Electroiq – 5th June 2011 These will double their last year’s earnings of $5.2 billion earnings. According to IHS, last year's nearly 60 percent surge in shipments of China-designed mobile handsets, coupled with the booming demand for semiconductors used in cellphones, benefitted China's fabless companies in 2010. Automotive semiconductor market driving toward 15% growth Source: Suzanne Deffree, EDN – 5th June 2011

IC Insights has raised its forecast for average semiconductor content per automobile to $350 in 2011, a 15% increase from the $305 average in 2010. The market research company reported that semiconductor content per vehicle is expected to increase an average of 9% annually between 2010 and 2014, growing to $425 per vehicle at the end of the forecast period. 3D TV penetration to grow 50% in 2013 Source: Electroiq – 5th June 2011 Spurred by rapid consumer acceptance, the 3D TV’s market penetration is projected to exceed 10 percent in 2011 and 50 percent in 2013, overtaking connected or Internet TVs. Consumer demand has also prompted local technology companies in Taiwan to develop and release new lines of 3D and Internet-enabled televisions in the second half of this year. SIA April numbers: growth plods along Source: Electroiq.com – 3rd June 2011 Worldwide sales of semiconductors slipped 2.2% in April to $24.7B. Despite the decline, the SIA still expects moderate growth through the rest of the year -- though adds the caveat about consumer discretionary spending habits being affected by higher food and fuel costs, affecting overall spending for US manufacturing, including semiconductors. Average IC content per car now $350, says IC Insights Source: David Manners, Electronics Weekly – 3rd June 2011 The growth trend from 2010 to 2014 is 9% leading to an average $425 of IC value per car in 2014. Growth drivers include the convergence of communications and entertainment features, safety and telematics, and green initiatives. Back to top

VIEWS AND OPINIONS

Texas Instruments would consider analog deals: CEO Source: Shara Tibken, MarketWatch – 2nd June 2011 Chief Executive Rich Templeton said the chip maker could look to expand its analog portfolio through further acquisitions, though he doesn't believe there will be large-scale consolidation in the sector. Back to top

STOCK WATCH

Source: NASDAQ

1 month chart for Intel, TSMC, TI, Broadcom, STM, Xilinx, KLA-Tencor, Qualcomm, LSI, UMC, Applied Materials, Teradyne, Toshiba

and Infineon

INTEL

TSMC

TI

BROADCOM

STM

XILINX

KLA-TENCOR

QUALCOMM

LSI

UMC

APPLIED MATERIALS

TERADYNE

TOSHIBA

INFINEON

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