Tuesday, September 29, 2009

More news on the Grace-Hua Hong merger

I was in China about a week ago and a well informed source close to parties in both firms suggested that the merger is definitely going ahead. The likely CEO of the merged company will be Grace's Schumacher not Hua Hong's TY Chiu. Indeed, the source speculated that TY Chiu would probably leave Hua Hong for a second time because it is too hard to run this state-owned company due to government interference. Supposedly the planned merger will be basically financial with the two companies still maintaining operational independence.

Friday, September 11, 2009

First Solar to China

First Solar, US-based and the world's largest solar panel maker, has been seen as competitive with Chinese imports because it uses thin film (technically speaking it is cadmium telluride) technology. Admittedly this blog has also subscribed to this optimistic point of view (see my Aug. 26 post). However, now First Solar has announced plans to build a 2 GW facility in Ordos, Inner Mongolia (link here). One could decry the offshoring of arguably technology-intensive manufacturing, but the price of silicon, which is the material with which Chinese firms make their solar panels, is falling dramatically. In fact, the price of silicon is falling so fast that some Chinese solar panel firms, such as Trina, claim that their unit costs per kwh will be cheaper than First Solar's by 2010. Thus, First Solar's offshoring is an understandable reaction to these shifting materials costs, but this case provides no reassurance to those who aspire to compete with China-based manufacturing through investments in technology.

Thursday, September 10, 2009

GlobalFoundries and Chartered: Impact on SMIC

The purchase of Chartered by GlobalFoundries should impact the foundry industry for years to come, but is it good or bad for SMIC? Mark Lapedus at EE Times (link here) argues that SMIC is a winner in the wake of this merger because there is one less leading edge foundry firm in the marketplace. I am not convinced the implications are actually so positive for SMIC because the GlobalFoundries-Chartered combination is more formidable than Chartered alone. And let's face it, among the big four foundires, SMIC and Chartered were battling to see who would not end up in fourth place so enhancing Chartereed's competitiveness impacts SMIC more negatively than TSMC or even UMC. With AMD as a steady client, sharing the cost of IBM's licensing fees over a larger scale firm and the deep pockets of Abu Dhabi's Advanced Technology Investment Corporation (ATIC), the merged firm is much more of a threat than Chartered alone despite Singapore's lavish support for the firm over the years. Furthermore, the merger does not seem to consolidate the amount of mainstream CMOS capacity out there since GlobalFoundries did not have much of that prior to the merger.