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SemiWEEK: What happens when it’s over; WFE Outlook

Bracing for a rocky road ahead. Order activity for semiconductor equipment leveled off in the second week of April, hovering at 58 degrees. Although chipmakers and equipment suppliers are expected to post solid results in Q1, the outlook for the remainder of the year remains challenging as the impact of COVID-19 weighs on the demand side.

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SemiWEEK: What happens when it’s over; WFE Outlook

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  1. Semiconductor WEEK: April 17, 2020An overview of results and conclusions from recent reports at VLSI Chip History Center Advantest: What made it a Successful Company Toshio Maruyama, then President & CEO of Advantest Corporation, reflects on the history and future of Advantest and its role in semiconductor ATE, in this historic 2006 Video. The Chip Insider Strategy and Tactics: What happens when it’s over Equipment & Emerging Markets: WFE Outlook Semiconductor Stocks • Semiconductor Stock Index led up 4% by AMD • Semiconductor Equipment Stock led up 5.2% by Advantest • EDA Stock Index was led up 11.7% by Synopsys • Electronics Materials Stock Index led up 0.2% by Tokyo Ohka • Hottest Stocks: AMD, Synopsys, NVIDIA, TSMC, Cadence, and Advantest Chip Market Research Services Bracing for a rocky road ahead • Order activity for semiconductor equipment leveled off in the second week of April, hovering at 58 degrees • Fab Capacity Utilization by Wafer Size Semiconductor Analytics Semi Market results from last week: Semiconductor sales recovered slightly as we moved into the 1st full week of April Semiconductor Sales Nowcast: 2Q20/2Q19 Opened the 2Q20 deeply down • Semiconductor Weather1 Report: Chilly • IC Supply-Demand2 Metrics: Balanced • Electronics Price Trend: Rising Overall Semi Sales Status Trend: Peaked: Mar 18 Cold with Dark Clouds: Sep 18 Freezing: Nov 18 Frozen: Jan 19 Freezing: Mar 19 Cold: May 19 Cool: July 19 Temperate: Oct 19 Sunny: Nov 19 Warm: Dec 19 Flu Chills: Feb 28

  2. The Chip Insider®'s Graphics File • Order activity for semiconductor equipment leveled off in the second week of April, hovering at 58 degrees • Although chipmakers and equipment suppliers are expected to post solid results in Q1, the outlook for the remainder of the year remains challenging as the impact of COVID-19 weighs on the demand side • Overall demand is expected to drop in the coming months due to ongoing global recession and double ordering • The Chip Price Performance Index (CPPI) continued to warn This issue contains the latest forecast. Call us to access more details March 2020 Bracing for a rocky road ahead

  3. The Chip Insider® Graphics Capacity Utilization by Wafer Size: • Utilization rates are falling across the board Fab Capacity Utilization by Wafer Size: Chart gives rolling averages for 300mm, 200mm, and smaller silicon wafers

  4. Semiconductor Analytics Last Week in the Semiconductor Market: Semiconductor sales recovered slightly as we moved into the 1st full week of April and the Supply-Demand situation held. However, sales were still well below the same week in 2019 with DRAM and Auto ICs being hit hardest and S-D in OSATs is a significant concern. Semiconductor Sales Nowcast: 2Q20/2Q19 Opened the 2Q20 deeply down Semiconductor Weather1 Report: 64˚ F Chilly IC Supply-Demand2 Metrics: Balanced Electronics Pricing Trend: Rising Notebooks, Smartphones, and Consumer Electronics have a seasonal inversion driven by WAHE (Work-at-Home Economy) • W/W: Week-over-Week sequential growth W/Q: Week-over-Quarter W/Y: Week-over-Year Thank you for supporting us through this last issue of 2018. Semiconductor Analytics will return January . Overall Semi Sales Status Trend: Peaked: Mar 18 Cold with Dark Clouds: Sep 18 Freezing: Nov 18 Frozen: Jan 19 Freezing: Mar 19 Cold: May 19 Cool: July 19 Temperate: Oct 19 Sunny: Nov 19 Warm: Dec 19 Flu Chills: Feb 28 • 1: Measures Order Activity 2: Measures Pricing Power

  5. 2020 Semiconductor Market Drivers Coronavirus has driven Integrated Circuit sales towards recession: • Certainties: • Coronavirus Pandemic infected economies • Unparalleled Supply and Demand shocks to IC sales of <10% and units of ~20% • Macroeconomic ‘V’acuum or ‘U’ – not ‘L’ • WAHE (Work-At-Home Economy) • 7/10nm and 5/7nm demand ramps • Memory Price Elasticity • 5G: Smartphone, Auto, Industrial • Uncertainties: • Ability of Governments to defibrillate economy out of shelter-in-place • 2020 Elections in U.S.

  6. The Chip Insider®Strategy & Tactics Strategy and Tactics: What happens when it’s over Summaries: What happens when it’s over: I’m sure you’ve seen the bad news: jobless claims in the United States totaled 6.6M last week, which works out to 10% unemployment and is already at peak levels seen in the 2008 Great Recession and this total is likely to get worse before it gets better. Now there are some big differences between now and then: the U.S. is going to inject into the economy amounts that equal 96% of the Government’s budget and is 20% of the real GDP that was expected for 2020. This is far greater than what was spent in 2008 and the money is going to go far better places where it will be spent — not parked like back then. But it’s even bigger than that. The Coronavirus is changing history in ways we haven’t seen since WWII. The difference will be that instead of the auto being at the center of it all, it will be the semiconductor. I show you why in this Chip Insider. Decision Time is Here: April is a very critical month of the year, because OEMs and Fabless companies need to commit to the Christmas build cycle now. So … Coronavirus Semiconductor Sales Watch: … Looking at total quarterly, monthly, and four-week moving averages, it’s clear we’ve moved back into a recession… The bottom line is the Coronavirus has put the semiconductor industry in recession territory. But, while in the range, it will take at least another quarter to turn into a full-blown recession. Important ChipChirps™ Facts from the Far Side of Semiconductors … ChipChirps™ are short notifications from VLSI’s analysts to alert clients about breaking news and events. They are exclusively available on VLSI’s App for Android and iOS. “The only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance” — Franklin D. Roosevelt’s 1933 inaugural address Contact us to get the full report and more

  7. The Chip Insider®Equipment & Emerging Markets WFE Outlook • Scenarios for COVID-19 Recovery • Where is Semi Manufacturing Heading? • Changes since last forecast • WFE recovery is led by lithography • Customer spending outlook • Cyclical long-term growth • VLSI’s view

  8. WFE Takes a Dip on Sales in Middle of 2020In a year when sales would have been exceptional • Declines 2Q20 to 3Q20 • Recovering sales in 4Q20 and continuing to 2021

  9. semiStockWEEK:VLSI's Semiconductor Stock Indices continued to rebound as optimism abounds after talks about reopening the economy have started, though no concrete details have been released. Semiconductors 4%, Equipment 5%, EDA 12%, Electronic Materials 0%.

  10. Semiconductor Stocks: Weekly Growth and Forward P/E Ratios by Company VLSI’s Semiconductor Stock Index was led up 4% by AMD, NVIDIA, and TSMC. IDM +0.6% Foundry & OSAT +6.5% Fabless & Fablite +4.3% AMD AMD Analog Devices ADI AmkorAMKR ASE ASX Broadcom AVGO IBMIBM Infineon IFNNY.PK Intel INTC JCET600584.SSKingpak Technology6238.TWO Micron Technology MU On Semiconductor ON Panasonic PC MagnaChip Semiconductor MX Maxim MXIM MaxLinear MXL MediaTek 2454.TW NVIDIA NVDAQualcomm QCOM Samsung Electronics 005930.KS Silicon Laboratories SLAB Skyworks SWKS SMIC SMI STMicroelectronics STM Texas Instruments TXN TSMC TSM UMC UMC Western Digital WDC Xilinx XLNX

  11. Chip Equipment & Related Stocks:Weekly Growth and Forward P/E Ratios by Company VLSI’s Semiconductor Equipment Stock Index was led up 5.2% by Advantest. WFE +4.5% Test +7.5% Assembly +6.4% Applied Materials AMAT Advantest ATEYY ASM International ASMI ASM Lithography ASML ASM Pacific 0522.HK BE Semiconductor BESIY.PK FormFactorFORM KLA KLAC Kulicke & Soffa KLIC Lam Research LRCX Onto Innovation ONTO Nikon 7731 Teradyne TER Tokyo Electron Limited 8035 Veeco VECO

  12. Electronic Materials Stocks:Weekly Growth and Forward P/E Ratios by Company VLSI’s EDA Stock Index was led up 11.7% by Synopsys and Cadence. VLSI’s Electronics Materials Stock Index was led up 0.2% by Tokyo Ohka. BASF BASFY Cabot Microelectronics CCMPCadence CNDS DNP 7912 DuPont DD JSR 4185 Shin-Etsu 4063 SOITEC SOI.PA Synopsys SNPS Tokyo Ohka 4186

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