February 2022 Update

I can't believe that it is already the last Friday in February and so time for my monthly update post where I collect mini-posts that don't justify a whole post of their own.

Global Semiconductor Sales, Units Shipped Reach All-Time Highs in 2021 as Industry Ramps Up Production Amid Shortage

That is the title of the Semiconductor Industry Association release that went out on Valentine's Day. The opening paragraph has all the amazing up-and-to-the-right numbers:

The Semiconductor Industry Association (SIA) today announced global semiconductor industry sales totaled $555.9 billion in 2021, the highest-ever annual total and an increase of 26.2% compared to the 2020 total of $440.4 billion. The industry shipped a record 1.15 trillion semiconductor units in 2021, as chip companies ramped up production to address high demand amid the global chip shortage. Global sales for the month of December 2021 were $50.9 billion, an increase of 28.3% compared to the December 2020 total and 1.5% more than the total from November 2021. Fourth-quarter sales of $152.6 billion were 28.3% more than the total from the fourth quarter of 2020 and 4.9% higher than the total from third quarter of 2021.

Cadence and Dassault

Cadence announced a significant and important agreement with French-based Dassault Systèmes. From the press release:

Cadence Design Systems and Dassault Systèmes today announced a strategic partnership to provide enterprise customers in multiple vertical markets, including high tech, transportation and mobility, industrial equipment, aerospace and defense, and healthcare, with integrated, next-generation solutions for the development of high-performance electronic systems.

The two companies have combined Dassault Systèmes’ 3DEXPERIENCE platform with the Cadence Allegro platform in a joint solution that enables companies to master the multidiscipline modeling, simulation and optimization of complex, connected electronic systems. With this new multidisciplinary solution, customers can now accelerate their end-to-end system development process while optimizing their design for performance, reliability, manufacturability, supply resilience, compliance, and cost.

As it happens, I've had dealings with Dassault and EDA before. I was on the board of Tuscany Design Automation, and eventually exited by selling the company to Dassault. We had a product called PinPoint that could be used to keep management appraised on the state of a semiconductor project. We liked to make the analogy to a general sitting on a horse on a hill surveying the battlefield.

Intel Acquires Tower Semi

Tower (that used to be called TowerJazz) has been around since 1993 when National Semiconductor got rid of its Israel fab. In 2008, it merged with Jazz Semiconductor. Jazz was a spinout from Conexant, which was a spinout from Rockwell. They then did a joint venture with Panasonic involving 3 Japanese fabs. Next, they acquired Maxim's fab in Texas. Just last year, they did some sort of joint deal with ST Microelectronics over their fab in Agrate (Milan, Italy) to share a fab. None of these fabs are leading edge, but they have both a wide range of trailing edge and niche technologies such as silicon-germanium (SiGe), photonics, power ICs, RF, and so on. Since several of the Tower fabs are joint ventures, they get customers as well as manufacturing capacity and process technology. For example, Panasonic is about a quarter of Tower's revenue. These fabs are what the big foundries call "specialty" technologies, since "trailing edge" has less positive connotations.

Anyway, on February 15th, Intel announced that it was acquiring Tower for $5.4B.

Intel Corporation (Nasdaq: INTC) and Tower Semiconductor (Nasdaq: TSEM), a leading foundry for analog semiconductor solutions, today announced a definitive agreement under which Intel will acquire Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand.

AMD and Xilinx

Also on Valentine's Day, AMD announced that it had completed its acquisition of Xilinx. This was originally announced way back on October 27th and has been going through regulatory approval for 4 months. As we have just seen with NVIDIA/Arm, this is not automatic.

The big question is what will AMD "do" with Xilinx, beyond just keeping the running business going. Obviously, one big synergy is using Xilinx arrays to build accelerators for datacenters. Potentially, this could involve putting Xilinx fabric onto the same die as AMD microprocessors, although I think it is more likely to be implemented using the 3D packaging approach that AMD pioneered a few years ago. That means that the two technologies don't have to be on precisely the same process.

Vodaphone Portugal

A piece of security news that doesn't seem to have made many waves outside Portugal itself. On 7th February, the entire Vodaphone network was taken down by a cyberattack. There doesn't seem to have been any ransom demand, and it is unclear who is behind it, nor what is the motivation—It's not as if it's the sixteenth century when Portugal was one of the world's great powers. A summary of the situation is:

Vodafone Portugal is slowly working to recover following a "deliberate and malicious cyberattack" that brought down services used by millions of people and businesses in that country, including those for ambulances and other emergency services.

Vodafone Portugal—a subsidiary of UK-based Vodafone Group with 4.3 million cellphone subscribers and 3.4 million fiber subscribers—said in a statement that the attack began on Monday evening. The attack quickly took down the subsidiary's 4G and 5G networks and halted fixed voice, television, SMS, and voice and digital answering services.

One theory I have seen a few times is that this is a practice run on a soft target before attacking some more significant mobile network...maybe the one you use...have a nice day!

Automotive Profit

Due to semiconductor (and other components) shortages, most automotive manufacturers have had to make serious cuts in the number of vehicles they have produced. So their profits must be way down, right?

No, it turns out that their profits are way up. It seems that this is because demand outstrips supply and so manufacturers have not needed to do major costly promotions ($2000 cash back...zero-percent financing...) and have cut back on the amount of advertising they do since they can sell every vehicle anyway. For example, take Ford:

It’s a situation that some auto executives such as Ford Motor CEO Jim Farley have pledged to continue when the industry is not in a time of crisis because of the higher margins for the automaker as well as its dealers.

“This is a better way to run our business,” Farley told investors earlier this year. “We have the most complicated go-to-market system I think on planet Earth. We could simplify all of that with tighter inventories.”

Dealerships are even more profitable since they are just jacking up the price that they can sell. In normal times, people negotiate with dealers and vehicles sell for less than the manufacturer's recommended selling price (MSRP). Now they are selling for much more.

According to the National Automobile Dealers Association, the average U.S. dealership recorded a net pretax profit of about $3.4 million through October — more than double the $1.6 million reported for the first 10 months of 2020.

So it seems that we in the semiconductor ecosystem can take credit for boosting the automotive ecosystem's profits!

US 5G is "Far Behind"

On February 17th, the Wall Street Journal published an opinion piece by Graham Allison (professor of government at Harvard) and Eric Schmidt (used to be CEO of Google). You should read the whole piece, but I'll give you a flavor of how critical it is by giving you the opening paragraph:

At this point, football fans have seen so many ads from AT&T and Verizon claiming to have the fastest and most reliable 5G service on the planet that those without a 5G smartphone might think they are really missing something. Don’t be misled. Unless you are traveling internationally, you won’t enjoy faster speeds with a new 5G-enabled smartphone than you’d get on a 4G phone streaming games from New York, Los Angeles, or many other U.S. cities. AT&T’s and Verizon’s new 5G networks are often significantly slower than the 4G networks they replace. America is far behind in almost every dimension of 5G while other nations race ahead.

I knew the situation in the US was bad, but I didn't realize just how bad. Some of this is because the US government (primarily the military) is sitting on most of the mid-band spectrum, as I've written about before. This means that 5G is sharing its spectrum with 4G. As it says in the article, one industry analyst says that US 5G networks are "just 4G with sprinkles on".

Read the whole thing. WSJ has a paywall so you may need a subscription, or perhaps you get a few free articles per month.

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