Displaying items by tag: SemiConductor

Under the watchful gaze of Samsung Electronics security personnel, health and safety staffer Ko Jee-hun stood outside his semiconductor plant, handing out leaflets touting the benefits of joining a trade union.

For almost 50 years the firm avoided unionisation of its employees -- sometimes adopting ferocious tactics according to critics -- while rising to become the world's largest smartphone and semiconductor manufacturer.

It is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates, known as "chaebol", that dominate the world's 11th-largest economy.

But last week local authority officials in Suwon, where the chipmaker is headquartered, certified the National Samsung Electronics Union.

It is affiliated to the powerful Federation of Korean Trade Unions umbrella group (FKTU), and analysts say the move could spell trouble down the line for the firm. Ko is the union's deputy general secretary. "What's at stake here is more than wages," he said as he mounted a recruitment drive this week. "We demand communication and to have our voices heard. Because we are not just components."

The leaflets he handed out showed a series of cartoon characters complaining about issues from holidays and lunch breaks to forced early retirement and unexplained bonus reductions. "The real union has arrived," it proclaimed, with a link and QR codes for employees to sign up. 

The security guards would not let him stand directly outside the factory gate in Hwaseong, about 50 kilometres (30 miles) south of Seoul, forcing him to take up a position at the next intersection -- but almost all passers-by took a copy.

"The fight has just only begun," Ko said. Ahead of its formal establishment the union registered 400 expressions of interest from Samsung Electronics employees, the FKTU says.

The new group has set itself a goal of signing up 10,000 members – almost 10 percent of the workforce -- which analysts say could see it demand a right to collective bargaining.  

Samsung's founder Lee Byung-chul, who died in 1987, was adamantly opposed to unions, saying he would never allow them "until I have dirt over my eyes". 

Internal documents from 2012 obtained by a South Korean MP instructed managers to control "problematic personnel" seeking to establish unions. 

"To avoid claims of unfair labour practices, dismiss key organisers before the launch of a union," it read, among other recommendations.

But organisers have seized the opportunity presented by the left-leaning government of President Moon Jae-in -- a former rights lawyer who represented trade unions -- and controversy around the bribery trial of the company's vice-chairman Lee Jae-yong, the founder's grandson.

It also faces challenges from the US-China trade war and export restrictions imposed by Tokyo on key supplies as part of a dispute with Seoul over wartime forced labour. "The level of repression is much weaker now than before," said the union's Ko. "I think the company is being cautious over possible repercussions." Samsung Electronics declined to comment to AFP.

Samsung's share price soared in 2016-7 and a staffer who asked to be identified only as Kim welcomed the union's establishment personally, hoping for higher year-end bonuses and other benefits. 

But the global chip market has since seen a prolonged downturn and Kim also feared the union's possible impact when even small production delays "could result in a significant loss of market share".

"Waging a collective strike could be fatal," he added.

Samsung Electronics' no-union policy was "anachronistic", but it could now end up following "in the footsteps of Hyundai Motor embroiled in strikes every year", the Korea Times warned in an editorial. 

Higher labour costs could also impact its business model, which is based on large-scale, long term investments, said Sejong University business professor Kim Dae-jong.

"With the labour union, it could find it much harder to carry out large investments with finances diverted to pay for increased wages," he said.

Three unions were set up at Samsung last year, but none of them had the backing of a bigger federation and fizzled after attracting only a handful of members. 

Samsung needed to move with the times and acknowledge that standards had changed since its founder's time, said Chun Soon-ok, a labour campaigner and former MP whose brother burned himself to death in 1970 in protest at brutal working conditions in the textile industry. Unions also needed to move on from previous militancy, Chun added. 

In the past, unions and management "saw each other as competitors to knock down in a boxing ring", she said. "But the 21st century requires them to dance together in partnership."

Published in Reports

Broadcom proposes to acquire Qualcomm for $130 billion

Written on Monday, 13 November 2017 12:30

US semiconductor firm Broadcom has proposed to acquire all of the outstanding shares of Qualcomm for per share consideration of $70 in cash – a transaction valued at $130 billion. The proposal was made on Nov. 6, and represents a 28 percent premium over the closing price of Qualcomm common stock on Nov. 2, the last unaffected trading day prior to media speculation of a potential transaction.

The Broadcom proposal stands whether Qualcomm's pending acquisition of NXP is consummated on the currently disclosed terms of $110 per NXP share or the transaction is terminated. The proposed transaction is valued at approximately $130 billion on a pro forma basis, including $25 billion of net debt, giving effect to Qualcomm's pending acquisition of NXP on its currently disclosed terms.

The proposal comes after Qualcomm recently posted discouraging financial results which were negatively impacted by its ongoing dispute with Apple. Qualcomm reported revenues of $5.9 billion for Q4 2017 compared to $6.2 billion in Q4 2016 – a 5 percent drop. Qualcomm has been hit by antitrust fines, such as an $868 million fine imposed by the Korea Fair Trade Commission in the first quarter, and more.

“Our proposal provides Qualcomm stockholders with a substantial and immediate premium in cash for their shares, as well as the opportunity to participate in the upside potential of the combined company," said Hock Tan, President and Chief Executive Officer of Broadcom.

"This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products. We would not make this offer if we were not confident that our common global customers would embrace the proposed combination,” Tan added.

Qualcomm's cellular business is highly complementary to Broadcom's portfolio, and the combination will create a strong, global company with an impressive portfolio of technologies and products, the company said in a press release.

Broadcom also maintains that the combined company will have an enhanced financial profile, benefiting from Broadcom's operating model with “industry-leading margins”. The combined Broadcom and Qualcomm, including NXP, will have pro forma fiscal 2017 revenues of approximately $51 billion and pro forma 2017 EBITDA of approximately $23 billion, including synergies. 

“Following the combination, Qualcomm will be best positioned to build on its legacy of innovation and invention,” said Tan. “Given the common strengths of our businesses and our shared heritage of, and continued focus on, technology innovation, we are confident we can quickly realize the benefits of this compelling transaction for all stakeholders. Importantly, we believe that Qualcomm and Broadcom employees will benefit from substantial opportunities for growth and development as part of a larger company.”

Broadcom's proposal was unanimously approved by the Board of Directors of Broadcom. Broadcom said it’s prepared to engage immediately in discussions with Qualcomm to work toward a mutually acceptable definitive agreement and said it’s ready to devote all necessary resources to finalize the necessary documentation on an expeditious basis.

The proposed transaction will not be subject to any financing condition, the company said. BofA Merrill Lynch, Citi, Deutsche Bank, J.P. Morgan and Morgan Stanley have advised Broadcom in writing that they are highly confident that they will be able to arrange the necessary debt financing for the proposed transaction. 

Silver Lake Partners, which has served as a strategic partner to Broadcom in prior transactions, has provided Broadcom with a commitment letter for a $5 billion convertible debt financing in connection with the transaction. Broadcom expects that the proposed transaction would be completed within approximately 12 months following the signing of a definitive agreement.

“The Broadcom business continues to perform very well. Broadcom has completed five major acquisitions since 2013, and has a proven track record of rapidly deleveraging and successfully integrating companies to create value for our stockholders, employees and customers,” said Thomas Krause, Broadcom Chief Financial Officer.

“Given the complementary nature of our products, we are confident that any regulatory requirements necessary to complete a combination with Qualcomm will be met in a timely manner,” Krause added. “We look forward to engaging immediately in discussions with Qualcomm so that we can sign a definitive agreement and complete this transaction expeditiously.”

Published in Finance

Qualcomm reports $5.4 billion in quarterly revenues

Written on Wednesday, 26 July 2017 08:30

Qualcomm reported revenues of $5.4 billion for the three months to 25 June in 2017 and highlighted better than expected results in its semiconductor business. Due to Apple’s ongoing licensing dispute with Qualcomm, the company’s revenue was down 11 percent year on year, but CEO Steve Mollenkopf remains positive.

Mollenkopf said the company “retained the high ground” and said the long-term outlook for the licensing segment of its business “remained strong”. The company did, however, offer a warning in its earnings statement that the dispute with Apple could negatively affect its results for fiscal Q4.

“As you know, we have a strong relationship with Apple for many years and they have been a standing and value partner,” said Mollenkopf. “We intend to continue to provide them with our industry leading products and technologies as we always have, and do our best to remain a good supplier to Apple even while the dispute continues.”

Apple’s contracted manufacturers have withheld royalty payments to Qualcomm; therefore the company did not post specific device-related figures for the period. On the other hand, Qualcomm’s subsidiary that deals with chip sales generated a generous 58 percent year on year increase in pre-tax earnings to $575 million.

“We delivered better than expected results in our semiconductor business this quarter, which drove EPS above the midpoint of our expectations versus our April updated guidance,” said Mollenkopf in a statement.

“Our products and technologies continue to enable the global smartphone industry, and we are expanding into many exciting new product categories, including automotive, mobile computing, networking and IoT. We believe that we hold the high ground with regard to the dispute with Apple, and we have initiated new actions to protect the well-established value of our technologies.”

The dispute between Apple and Qualcomm over licensing terms have been going on since January and seen lawsuits launched by both sides. Qualcomm filed a complaint with the United States International Trade Commission (ITC) earlier this month alleging that Apple has engaged in the unlawful importation and sale of iPhones that infringe one or more claims of six Qualcomm patents covering key technologies that enable important features and functions.

Qualcomm requested that the ITC institute an investigation into Apple’s infringing imports and ultimately issue a Limited Exclusion Order (LEO) to bar importation of those iPhones and other products into the United States to stop Apple’s “unlawful and unfair use of Qualcomm’s technology”.

The company is seeking the LEO against iPhones that use cellular baseband processors other than those supplied by Qualcomm’s affiliates. Additionally, Qualcomm is seeking a Cease and Desist Order barring further sales of infringing Apple products that have already been imported and to halt the marketing, advertising, demonstration, warehousing of inventory for distribution and use of those imported products in the United States.

“Qualcomm’s inventions are at the heart of every iPhone and extend well beyond modem technologies or cellular standards,” said Don Rosenberg, executive vice president and general counsel of Qualcomm. “The patents we are asserting represent six important technologies, out of a portfolio of thousands, and each is vital to iPhone functions.  Apple continues to use Qualcomm’s technology while refusing to pay for it. These lawsuits seek to stop Apple’s infringement of six of our patented technologies.”

Published in Finance

The European Commission has opened an “in-depth” investigation to assess the proposed acquisition of NXP by Qualcomm under the EU Merger Regulation. The Commission has concerns that the transaction could lead to higher prices, less choice and reduced innovation in the semiconductor industry.

Commissioner Margrethe Vestager, in charge of competition policy, said: “We use our electronic devices every day - mobile phones or tablets. As semiconductors are used in practically every electronic device, we are dependent on them in those devices. With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices."

The proposed transaction involves the acquisition of the whole of NXP by Qualcomm and would combine two of the leading players in the semiconductor industry. More specifically, Qualcomm develops and supplies baseband chipsets (both standalone and integrated with an application processor) enabling cellular telecommunications standards such as UMTS and LTE. NXP is an important provider of semiconductors, in particular for the automotive industry. With respect to mobile devices, NXP is a leading provider of near-field communication ("NFC") chips and secure elements ("SEs").

The Commission's initial market investigation raised issues relating in particular to semiconductors used in mobile devices, such as smartphones, and in the automotive industry. The Commission is concerned that the merged entity would hold strong market positions within both baseband chipsets and NFC/SEs chips, and would have the ability and incentive to exclude their rival suppliers from these markets through practices such as bundling or tying.

The Commission is also concerned that the merged entity would have the ability and incentive to modify NXP's current intellectual property licensing practices, in particular in relation to NFC technology, including by bundling the acquired NFC intellectual property to Qualcomm's patent portfolio. The Commission will investigate whether such conduct could lead to anticompetitive effects, such as increased royalties for customers and/or exclusion of competitors.

The Commission claims the merger would remove competition between companies active in the markets for semiconductors used in the automotive sector and, in particular, in the emerging Vehicle-to-Everything ("V2X") technology, which will play an important role in the future development of "connected cars".

The transaction was notified to the Commission on 28 April 2017. The Commission now has 90 working days, until 17 October 2017, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.

Published in Government

Qualcomm has signed a strategic cooperation agreement with the Government of China's Guizhou Province and unveiled a joint venture, the Guizhou Huaxintong Semi-Conductor Technology Co, capitalized to $280m, 55 percent owned by the Guizhou provincial government's investment arm and 45 percent by a subsidiary of Qualcomm.

Published in Telecom Vendors