1 / 80

Value Chain Assignment Continued October 1, 2008

Value Chain Assignment Continued October 1, 2008. 2008 MBA/ENG 290G International Competition in Technology. Team 1. Semiconductor Foundries: Industry Analysis. MBA 290G.1 Oct. 1, 2008 Franck Formis , Robert Kong, Vincent Ng, Jameson Slattery & Chuohao Yeo. PC Market.

kin
Download Presentation

Value Chain Assignment Continued October 1, 2008

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Value Chain Assignment Continued October 1, 2008 2008 MBA/ENG 290G International Competition in Technology

  2. Team 1

  3. Semiconductor Foundries:Industry Analysis MBA 290G.1 Oct. 1, 2008 Franck Formis, Robert Kong, Vincent Ng, Jameson Slattery & ChuohaoYeo

  4. PC Market 1Q 2008 Global PCMarket Share Source: Gartner and Team 1 estimates

  5. Other Semiconductor Markets Mobile Phones Digital Cameras Sources: Deutsche Bank and Lyra Research

  6. Market Analysis • Slowing global PC shipment growth • Developed markets nearly fully reliant on replacement sales • Room for growth remains in developing economies • Mobile phone shipments totaled >1B in 2007 • Slowing growth (5-10% per year) through 2010 • Emphasis on cost reduction for emerging economies • Consumer electronics revenue to grow 6.1% in 2008 • Medical devices market shows strong growth • Top 25 companies reported 9.7% revenue growth in 2007 (sales of $173.5 billion) • E.g. Sales of electronic handheld blood pressure devices to reach $793 million by 2010

  7. Foundry Industry Background (1) • Semiconductors are critical components in many electronics • Highly competitive • Pure-play: TSMC, UMC, SMIC, Chartered • Integrated: TI, IBM • Cyclical nature of industry • Y2Y Growth: 2003: 18%, 2004: 28%, 2005: 7%, 2006: 9%, 2007: 3% • Economic conditions • Seasonal demands • Customer shifts between internal and outsourcing

  8. Foundry Industry Background (2) • Substantial fixed-capital expenditures • Cost of new fab about $3-$5 billion • Dependent on financing ability to implement growth plan • History of loss, Question in profitability, and high level of debt makes financing not easy • Need to maintain high fab utilization, overcapacity during downturn hurts net income • Dependent on technology partner to advance technology • TI: Analog and Mixed signal technology development remain in-house, Exit process development, and rely on Foundry partners instead • UMC: In-house R&D augmented by patent cross-licensing agreements with other companies • Dependent on small amount of customers

  9. Major Customers • TSMC • Fabless: Altera, Broadcom, Marvell, Microsoft, nVIDIA, Qualcomm, etc ~67% • Integr. Dev. Manuf.: Adv. Micro Devices, Analog Devices, Freescale, etc. ~33% • UMC • Infineon, LSI Logic, STMicroelectronics, TI, AMD etc • Top 10 accounts for 60%, top 2 accounts for ~13.5% each • SMIC: TI, IBM, Broadcom, Infineon, Samsung, Toshiba • 5 largest customers account for ~60% of revenue • Chartered • Broadcom and AMD each contributes more than 10% • Top 10 accounts for 72%, top 5 accounts for 61% • Texas Instrument • Nokia, L.M. Ericsson

  10. Geographic Breakdown TSMC UMC SMIC Chartered TI

  11. Major Suppliers • TSMC (silicon wafers) • Shin-Etsu Handotai and SUMCO Corporation (JA), Siltronic (GE), MEMC Electronic Materials (US), and Formosa SUMCO Technology (TW) ~90% • UMC (silicon wafers, equipments, chemicals) • Silicon wafer: Shin-Etsu, MEMC Electronic Materials, Inc. • SMIC (silicon wafers, gases, chemicals) • Largest supplier ~14% and top 5 suppliers ~48% of all raw materials purchases • Chartered • Limited number of suppliers, lead time of ~ 15 months • Technology partners: IBM, Infineon, Samsung, Freescale, Toshiba, ST Micro. • Texas Instrument • Toppan (photomask), Siltronic (bare wafers), Varian Semiconductor Equipment Associates (ion-implanters)

  12. Financial Ratios

  13. Profitability Analysis

  14. Financial Data

  15. Team 2

  16. Disk Drive Industry Analysis Industry Statistics • Global Computer Storage and Peripherals - $135.9 billion. Storage - $80. • US Computer Storage and Peripherals - $60.3 billion in 2008. • Hard Disk Drives - $24.3 billion. • External drives is the fastest growing segment - $3.5 billion in 2007 to $9.8 billion in 2012. Major Players • Seagate (Maxtor), Western Digital. • Captive suppliers - Hitachi, Fujitsu, Samsung. New Markets • Communications equipment - $125 billion. • Consumer electronics - $264 billion. Changes in Industry • Commodity product, constant innovation. • SG&A ↑, R&D ↑, COGS ↑, Rev ↑, G Margin ↑.. • Move to consumer electronics & data security. • Move from PC solutions to mobile solutions. Major Customers

  17. Financial Model • Western Digital growing faster and with higher margins. They have also taken less debt • Very similar cash cycle. • Inventory better managed by Western Digital • Current Market Price: Seagate = $12.12 and Western Digital = $21.32

  18. Financial Model for Next Year • Source: Google Finance, Yahoo Finance, Seagate & WD 2008 Quarter • results & MarketWatch Analyst estimates • Industry is not growing! • Poor results for Seagate estimated, Western Digital stays stable.

  19. Team 3

  20. Team 4

  21. Graphics/Display Chips Industry Analysis Christian Huth Lakshmi Jagannathan Christopher Quek Daisuke Tanaka John Michael Wyrwas

  22. Market analysis for graphic/display chips shows a stable market dominated by big players Use of graphic chips in a broad spectrum of products Strong R&D leads to continuous improvement of chip performance Cost effective manufacturing Reduced sales and general expenses Overall stable market size with strong volume growth and declining prices GPU chips are increasingly used in other applications CAGR(05-07) 19% CAGR(05-07) 15% Overall decreasing prices Changes in industry lead to cheaper chips with higher performance and an overall very competitive situation Source: Jon Peddie Research; team analysis

  23. Geographic Breakdowns, Suppliers, and Customers SuppliersGeographic Breakdown Customers

  24. Financial Analysis

  25. Team 5

  26. PC Value Chain:Flash Memory Group 5: Varun Boriah Sonia Fereres Dilip Joseph Brendan Quinn Ada Zheng

  27. Flash Memory Industry Size 2007 $14b 1. NAND : Data Storage 12.5% growth $8b 2. NOR : Program Execution SanDisk : $3.9b,19% growth in 2007 Grew 41% in 2006 and 30% in 2005 $22b Intel 9% Samsung 32% Spansion 10% Hynix 13% Toshiba 20% Assembly & Testing Distri-bution Services Semi- conductor R & D OEM Major Customers Major Suppliers Mobile Phone, audio/video players & digital camera makers Ericsson, Sony, Microsoft, Kodak End Users Retail is 2/3 of SanDisk revenues WalMart : 19.6% of Lexar sales BestBuy : 11% of SanDisk sales Memory Wafers Toshiba, Ardentec StatsChipPac, SPIL, United Test, Flextronics Apple : 3rd largest OEM buyer of Flash memory ($1.2b) Geographic Spread Controller Wafers TSMC,SMIC, Tower, UMC $3.4b EMEA APAC & rest US Japan • Reactions • Pursuing future growth opportunities • Mobile Phones, Video players, E-books, GPS, NetBooks • SSD replacing HDD • Developing regions • Consolidation • Micron > Lexar • Samsung > SanDisk (trying) • Joint Ventures • Micron+Intel, SanDisk+Toshiba • Move mfg to lower cost locations • Move up value chain • 2008 is projected to be a bad year. Pressures: • Rapidly declining Price/MB due to commoditization & excessive competition • Competing standards • R&D is expensive and risky SanDisk slotMusic

  28. Intel 9% Samsung 32% Spansion 10% Hynix 13% Toshiba 20% Flash Memory Market Q3 2007 Flash Memory Market Share • Types • NAND Flash (Storage) $13.9b revenue 2007 • Samsung, Toshiba, Hynix(Intel + Micron), Sandisk • NOR Flash (Mobile Devices) $8b revenue 2007 • Spansion,Samsung, Numonyx (Intel+STMicroelec.) • Market Growth: one of the fastest semiconductor growing segments • New Market Perspectives:consumer electronics (Sandisk’s SlotMusic, audio players, Livescribe's Pulse smartpen, GPS traffic navigation, game consoles, ebooks), portable computing (PDAs, Netbooks), replacement for HDD (SDD), multifunction mobile phones. • Major Customers (SanDisk): OEM/ODMs (Mobile Phone, audio/video players & digital camera makers: Siemens, Ericsson, Sony, Microsoft, Matsushita, Kodak), Retailers worldwide. • Apple (flash-memory based iPods): world's 3rd largest OEM buyer of NAND flash memory in 2007, • purchases of $1.2 billion, representing 13.1 percent of the global market • Major Suppliers (SanDisk):Memory Wafers (Samsung, Hynix), Controller Wafers (UMC, Towers, SMIC, TSMC), Sort & Test (Toshiba, Ardentec), Assembly (SanDisk, Silicon Precision Industries), Final Test (SanDisk, Flextronics, SPIL). • Pressures: Rapidly declining ASP/MB (3rd year of 60% annual ASP decline), economic slowdown, cyclic semiconductor industry downturns, commoditization and fierce competition. • Latest News: • Projected flat revenue growth for 2008 (slowdown from 2007) • Samsung recently tried to buy SanDisk, who rejected the offer despite plummeting stock prices

  29. Detailed Slides

  30. Assembly & Testing Semi- conductor R & D OEM Distri-bution Services Flash Memory Value Chain • § PC Market Industry Size, Growth, Competitor Concentration • § New market industry size and growth (Cell phones, MP3 players, pdas, servers etc.) • § What changes are going on in the industry and what areas are facing pressures (compare SG&A, R&D and COGS for year over year trends). • § Major customers for each company • § Geographic breakdown (US, EMEA, Asia) for each company • § Major suppliers to the industry

  31. Market Size & Growth NAND Flash = one of fastest. Application: storage. NAND = Samsung, Toshiba, Hynix (Intel + Micron) Revenue 2007: $13.9b NOR flash = flat & declining revenues. Application: program execution, key component in mobile phones. NOR = Spansion, Intel, Samsung, ST (ST + INTel = Numonyx) Revenue 2007: $8b MARKET PROJECTION/GROWTH Semiconductor /memory chip index: “Statement” : As 2008 shapes up to be a poor year for NAND, suppliers are likely to look back at 2007 with nostalgia. In 2007, NAND flash memory revenue grew by 12.5 percent to reach $13.9 billion. Six of the Top-8 suppliers achieved revenue growth for the year. Along with Intel and Micron, Toshiba and STMicroelectronics managed to outgrow the market and gain share Ref : http://www.isuppli.com/news/default.asp?id=8805

  32. Macronix Silicon Storage Tech Sharp Micron ST Samsung Intel 9.1% 32.2% 10.1% Spansion 19.7% 13.3% Toshiba Hynix Competition Q3 2007 Flash Memory Market Share Total Q3 07 Revenue = $6.06b % growth from Q3 06 = 24.9% Src: iSuppli Flash Memory Market Shares, 2008

  33. Competition – Comparing with SanDisk HDDs Semiconductor Manufacturers Seagate, Western Digital, Hitachi Toshiba, Hynix, IM Flash, Micron, Samsung, STMicro New Storage Technologies phase-change technology, charge-trap flash, millipedes/probes Memory Card & USB drive Manufacturers A-Data, Buffalo, Chips and More, Dane-Elec, Elecom, FUJI, Hagiwara, Imation Corporation, or Imation, Memorex, I/O Data, Kingmax, Kingston, Kodak, Lexar, Panasonic, Netac, PNY, RITEK, Samsung, Sony, Toshiba, Tradebrands, Transcend, Verbatim Content Services iTunes, Rhapsody Digital Audio/Video Players Apple, ARCHOS, Creative, Microsoft, Samsung and Sony

  34. New Growth Markets Consumer Electronics GPS : On-board GPS will be a multi-billion dollar industry Video Players : More memory required as video players gain popularity E-Books : a new market Digital Interactive TV Intelligent pens Portable Computing Emerging NetBook category : Sales predicted to rise too 18m in 2009 from 0.5m in 2007 (Src: Taiwan MIC) PDAs Multifunction Mobile Phones Smart phones = 28% of US shipments 80% of cell phones will have memory slots by 2012 (Gartner) $8b for NOR flash SSD as replacement for HDD 10% share of HDD market = huge rise in Flash demand 1 in 5 computing devices to have SSD by 2011/12 (Gartner) In both servers (better R/W speeds) and laptops (lighter) Developing countries Rising demand for consumer electronics from 1b strong middleclass in 10 years OLPC

  35. Pressures Rapidly declining Price/MB Commoditization & excessive competition Supply glut 3rd year of 60% annual ASP decline Production savings cannot keep up Slowing economy Falling US consumer confidence Cyclic semiconductor industry downturns Competing standards R&D is expensive and risky Expiry of key patents New technology crucial to decrease costs and overcome commoditization Consolidation Micron acquired Lexar Samsung trying to acquire SanDisk Joint Ventures Micron-Intel IM Flash JV SanDisk JV with Toshiba Capital efficient model for capacity expansion to drive scale R&D co-development reduces cost Shift to low cost locations For example, away from Japan Move up the value chain Avoid depending on OEMs like Apple and Sony for hit products Sansa MP3 players SanDisk slotMusic – SD cards preloaded with music albums Changes

  36. Major Customers Retail OEMs & ODMs Mobile Phone, audio/video players & digital camera makers: Siemens, Ericsson, Sony, Microsoft, Matsushita, Kodak North America : BestBuy, CircuitCity, Walmart, Costco Europe & Asia : Duttenhofer, Hama, Nokia, Ericsson, Twinmos, Zenitron Common Apple (world’s 3rd largest OEM buyer of Flash memory, $1.2b, 13.1% of global market) buys directly from semiconductor manufacturers like Samsung, Hynix BestBuy accounts for 11% of sales Retail is 2/3 of SanDisk’s total revenues WalMart accounts for 19.6% of sales Sells cards under Kodak Brand Src: iSuppli OEM Semiconductor Spend Analysis tool. SanDisk & Lexar 10-K

  37. 2007 2007 Including subsidiary 2005 Revenues by Geography ($m) $3444m $5688m * Includes Micron DRAM sales $852m

  38. Major Suppliers Detailed information about Lexar’s suppliers was not available in the Lexar/Micron 10-Ks or online

  39. Micron

  40. Products Our products Removable cards USB drives Embedded Digital media players slotMusic Primary Markets Consumer Mobile phones Digital Audio and Video players Computing Sales Channels Retail – Americas, Europe, Middle East and Africa, APAC, Japan OEM – manufacturers of mobile phones, digicams, PCs, GPS, gaming devices. 190% increase in no of MB sold., 60% reduction in ASP/MB Unit sales increase 75% in 2007. Strongest unit growt coming from mobile cards. Retail – Mobile cards and USB flash drivees.

  41. Team 6

  42. PC Market: Dell, HP, Acer, Lenov, Asus Team 6 Ankit Gupta Wan-Lin Tseng Toru Yamagishi Nuttapong Chentanez Jim Miller

  43. Market Size & Growth $32.8B in 2008, with 7.2% growth 2007-2008 >50% from HP, Dell, Acer, Lenovo New markets: Net-books, WiMAX, 3.5G phones, Advanced LED Changes: Major customers: Mostly business-business Geographics breakdown: Major suppliers: CPU: Intel, AMD Logic IC: Winbond, Newland Graphics: NVIDIA, AMD, Intel, Sis PCG: NPC, Yahsin Conectors Foxconn, AMP DRAM: Winbond, Qimonda, Hynix, NPC Monitor: Samsung, LG PC Market I

  44. Financials

  45. Team 7

  46. Dell, HP, Acer, Asus, and Lenovo Value Chain (cont.) KC Chen, Anthony Goodrow, Andrew Liao, Piyapat Tantiwong, Sha Tao (Team 7)

  47. PC Market Size and Growth Changes and Pressure New Market- Handset • New Market- WLAN • Increased COGS ratio • 1. Price cut to maintain the market share when PC industry gets mature • 2. Increased operation costs running cutting edged fab • Increased COGS, R&D and SG&A ratios • 1. Price cut to gain market share • 2. Increased operation costs running cutting edged fab • 3. More R&D and marketing resources allocated to new products • Increased R&D and SG&A ratio • 1. More R&D and marketing resources allocated to new products, eg. EEE PC CPU • 2. COGS ratio stable probably because of fabless model

More Related