Latest news with #Osat
The Star
5 days ago
- Business
- The Star
Trade turmoil weighs on earnings of tech sector
BIMB Research said it was maintaining a 'neutral' call on the technology sector. PETALING JAYA: The technology sector has had a rough start to the year, according to BIMB Research. The research house said earnings for the first quarter of this year (1Q25) were disappointing across all the manufacturing companies under its coverage. BIMB Research added that outsourced semiconductor assembly and test (Osat) companies bore the brunt of cautionary strategies. The research house said Unisem (M) Bhd saw the steepest decline in profit after tax and minority interests, with a drop of 60% year-on-year (y-o-y), while Malaysian Pacific Industries Bhd (MPI) and Inari Amertron Bhd saw earnings contractions of 15% and 18% y-o-y, respectively. 'The weakness was primarily attributed to softer demand and persistent client conservatism in restocking amid ongoing tariff uncertainty,' BIMB Research said, adding it was cautious on the near-term outlook, particularly for Osat companies. It said despite the Semiconductor Industry Association reporting a rise in global semiconductor sales of 18.8% y-o-y in 1Q25, it was mainly driven by the growing demand for AI-related chips. 'Given that local tech players have limited direct exposure to this high-growth segment, it makes them more vulnerable to cyclical volatility in consumer electronics and industrial applications, which are showing signs of a slowdown. 'Rising geopolitical tensions – especially the renewed threat of US tariffs on non-US made chips – are likely to weigh on investor sentiment,' the research house said. However, companies like Dagang Nexchange Bhd managed to recover upward trajectory at a pre-tax profit level on the back of ongoing margin improvements and better product mix at Silterra Malaysia Sdn Bhd. 'Information technology services on the other hand, remained resilient, with MyEG Services Bhd and NexG Bhd posting core profit after tax and minority interest growth of 24% and 19% y-o-y, respectively, underpinned by the accelerating digital transformation and steady demand for their services,' the research house said. BIMB Research said it was maintaining a 'neutral' call on the technology sector, emphasising the divergence between the defensive growth seen in services and the cyclical challenges facing Osat companies. 'We've maintained selective 'buy' recommendations primarily on services, like MyEG at a target price of RM1.54 and NexG at 45 sen. There is a 'buy' on weakness for MPI at RM22.58, 'hold' for Inari at RM2.23, and 'sell' on Unisem at RM1.60. We also maintain our 'buy' call on Dnex at 52 sen for now, pending further review.'
Mint
14-05-2025
- Business
- Mint
New ₹3,700-crore HCL-Foxconn JV to help India localise display manufacturing
NEW DELHI : India's display manufacturing industry received a boost on Wednesday when the Union cabinet approved the India Semiconductor Mission's (ISM) fourth chip-testing facility and the fifth semiconductor project overall. The ₹3,700-crore ($433 million) project, first floated in January 2024, is an outsourced semiconductor assembly and testing (Osat) facility being developed by IT services firm HCL Technologies Ltd in partnership with Taiwanese contract manufacturer Hon Hai Precision Industry Co. Ltd, better known as Foxconn. Also Read: What China's CEO meet means for India's top semiconductor stocks However, the HCL-Foxconn joint venture is the first 'advanced manufacturing Osat" in the country, catering specifically to displays, making it the first chip-testing project of its kind. It will help the country localise the manufacturing of displays used in mobile phones and laptops, a senior official with direct knowledge of the matter told Mint on the condition of anonymity. The facility, likely to become operational by 2027, will target a monthly output of 36 million chips, made from processing 20,000 semiconductor wafers per month. The fifth OSAT in the country, which aims for a $500-billion electronics economy in the next five years, comes as the semiconductor industry awaits cabinet approval for the second tranche of ISM incentives worth up to $20 billion. Mint reported in September 2024 that incentives could focus more on chip and display fabs than on Osat projects. ISM second phase However, the HCL-Foxconn Osat is in line with the overall strategy of the ISM second phase, according to industry stakeholders. While chip-testing plants are typically of low margin and value, 'the ideal strategy to set up Osats in India would either be to partner with a world-class chip and electronics brand that has existing clients and can draw business to the country, or for new forms of technology that will contribute to increasing value addition in new product categories," Jasbir Singh Gujral, managing director of electronics manufacturing firm Syrma SGS Technology Ltd, told Mint. Also Read: Adani plans to invest $3 bn to kickstart semiconductor biz via JVs with two Israeli firms This project, for reference, is the first project that will help India localise displays to a greater extent. This, though, is not the same as a display fabrication plant, which is responsible for the end-to-end manufacturing of the semiconductor components of a display. It is what generates the second-highest percentage of domestic value for products such as smartphones and laptops (apart from the primary processor itself). But, according to the stakeholders, it is also highly complex and expensive to establish. 'More than that, the HCL-Foxconn project is what will produce high-value display driver integrated circuits (DDICs). These are far more complex devices than the general-purpose ICs that projects such as the Tata Electronics Osat are set to produce, which will deliver higher per-chip dollar value," said Ashok Chandak, president of India Electronics and Semiconductor Association (Iesa). 'These projects are what will eventually help India realise its electronics goal, since it will, for the first time, add value to the display sector in all of electronics manufacturing in the country. The demand for display ICs is high, and establishing this project will help India eventually attract a full-scale display fab, or other projects in both upstream and downstream divisions of the Indian semiconductor industry," Chandak added. Also Read: There are no shortcuts to leadership in the field of semiconductors Other Osats being built in India are Tata Electronics' chip-testing plant in Assam, which plans to make 48 million chips per day at a net investment of around $3.2 billion; Kaynes Technology's Osat in Bengaluru, which will produce 6.3 million chips per day at an investment of $388 million; Murugappa Group's CG Semi, in joint venture with Japan's Renesas, targets the production of 15 million chips per day at a net investment of $222 million. Chandak affirmed that while each of these projects will produce more chips, the HCL-Foxconn project's assembly of display chips is the cause for the latter's lower volume, but higher value. The project is being built near Jewar Airport, close to Noida, Uttar Pradesh.
Mint
13-05-2025
- Business
- Mint
Murugappa's chip testing plant to begin supplies next year, says JV partner
The $9-billion Murugappa Group's outsourced semiconductor assembly and testing (Osat) plant, approved in February last year in partnership with Japan's Renesas Electronics, will commence supplying chips to paying clients by the first half of next year, according to a senior executive. 'The trial production, to be sure, will begin as early as the next few months itself," said Malini Narayanamoorthi, India head of Renesas. 'We already have clients to serve out of the Osat, which will commence next year." The Osat plant in Gujarat's Sanand, involving a net investment of around $222 million over five years, is majority owned by CG Semi, a wholly owned subsidiary of Chennai-based Murugappa Group. The factory was among the first to be approved to receive state and central government incentives under the India Semiconductor Mission's first tranche. Renesas, with around 7% stake, plays the role of a technology partner—a mandate set by the Centre's India Semiconductor Mission. Also Read: India fast-tracks $3-billion spy satellite scheme following Operation Sindoor Osat plants are third-party facilities that help chip manufacturers assemble and test processors, before they are 'packaged' into an integrated circuit and placed inside devices such as smartphones, personal computers, internet-enabled infrastructure and everything else that processes data in some form. Three Osat facilities were approved by the ministry of electronics and IT (Meity) under India's first set of semiconductor incentives. These are being built by Tata Electronics and Kaynes Technology, alongside the CG Semi-Renesas joint venture. Renesas ups hiring, eyes new chip design hubs 'We operate as an entity of Renesas' global operations. Joint ventures and partnerships are a part of our operations, but we do not intend to conduct a blanket joint venture strategy for all our operations," said Narayanamoorthi. 'To bolster our position here, we plan to hire 300 people—mostly semiconductor designers—by the end of this year. We also plan to set up two new facilities—in Bengaluru and Hyderabad—also by the end of this year." As part of the company's initiatives, Renesas is designing a cutting-edge 3-nanometre semiconductor chip from India, the patent of which will have anchor customers that already work with Renesas—as well as any other venture commercially in future, she said. Also Read: Satellite internet: Services may finally commence by June 2025 A 3-nanometre chip is currently the world's most sophisticated semiconductor processor found in consumer electronics, such as Apple's latest iPhones. Building sophisticated chips increases India's value in the global chip ecosystem. India's chip design ambition gets 3nm push Union IT minister Ashwini Vaishnaw, speaking at the inauguration of Renesas' new engineering centre in Noida, said that this is 'the first time that a 3nm chip is being designed in India". 'This showcases India's potential to play a crucial role in the global semiconductor and electronics ecosystem, and reflects confidence among global firms to consider India as a high-potential geography for semiconductors," Vaishnaw said. India is already a hub for semiconductor design. The country accounts for almost one-fifth of all semiconductor designers in the world, with companies such as US-based Intel, Advanced Micro Devices (AMD) and Applied Materials, among others, all housing chip designers in the country. Vaishnaw said that Renesas' development of chip design in India 'will be owned by India." Owning patents and IPs in technology drives the highest amount of value in the semiconductor ecosystem. According to an estimate by consulting firm Deloitte in February, the semiconductor market around the world is set to be worth close to $700 billion by December. Also Read: The legacy of 'The Last of Us', a landmark in story mode The chip design patents by the likes of Renesas in India can help India increase its local value addition—a factor that industry experts and analysts peg as the most crucial factor for the country's push to become a $500-billion electronics ecosystem by 2030, said SD Sudarsan, executive director of Centre for Development of Advanced Computing (C-Dac), Bengaluru. 'When such patents are developed, India will have to buy fewer patents when it comes to building a chip and a full integrated circuit—that today works as a conjunction of multiple tech patents around the world," Sudarsan said. 'This is a crucial part for India to make a bigger contribution to the global semiconductor space."
