On Semiconductor is evaluating its product portfolio, looking to allocate capital and R&D resources to “accelerate growth in high-margin products and end-markets by moving away from non-differentiated products” with lower gross margins, said the company’s 10-K report Tuesday at the SEC. The aim is to reduce complexity, streamline the organization and improve operating efficiencies, it said. The company’s focus is on gross margin expansion and achieving significant revenue growth in its automotive, industrial and communication infrastructure segments while being “opportunistic” in other end markets, it said. On shipped about 64.3 billion units last year, compared with 66.2 billion units in 2019, a 3% drop year on year. New CEO Hassane El-Khoury plans to take a surgical knife to product sectors that aren't in “strategic alignment” with the company’s “growth margin expansion initiatives,” he told investors this month (see 2102010020).

The global shortage of semiconductors is “one of the central motivations” for the executive order President Joe Biden will sign “in the coming weeks” to begin a “comprehensive review of supply chains for critical goods,” White House Press Secretary Jen Psaki told a media briefing Thursday. The review will focus on “identifying the immediate actions we can take, from improving the physical production of those items in the U.S. to working with allies to develop a coordinated response to the weaknesses and bottlenecks that are hurting American workers,” she said. The administration is “currently identifying potential choke points in the supply chain and actively working alongside key stakeholders in industry and with our trading partners to do more now,” said Psaki. Her disclosure of a coming EO on the semiconductor shortage came the same day top U.S. chipmakers wrote Biden urging his support for tax credits to fund U.S. manufacturing and R&D (see 2102110023). The Semiconductor Industry Association, which orchestrated the letter to the White House, didn’t comment Friday.

The White House has “an historic opportunity” to fund initiatives in U.S. semiconductor manufacturing and research, 21 Semiconductor Industry Association board members wrote President Joe Biden Thursday. “Include in your recovery and infrastructure plan substantial funding for incentives for semiconductor manufacturing, in the form of grants and/or tax credits, and for basic and applied semiconductor research,” asked the executives from the who’s who list of major U.S. chip companies. “Bold action is needed to address the challenges we face. The costs of inaction are high.” U.S. share of global semiconductor manufacturing declined to 12% from 37%, they said. “This is largely because the governments of our global competitors offer significant incentives and subsidies to attract new semiconductor manufacturing facilities, while the U.S. does not.” The U.S. is “uncompetitive in attracting investments in new fab construction and our technology leadership is at risk in the race for preeminence in the technologies of the future, including artificial intelligence, 5G/6G, and quantum computing,” they said. The White House didn’t comment.

Though S&P expects the global semiconductor shortage to be “temporary,” it's already “troublesome” for many companies in the automotive sector, reported the ratings service Wednesday. "We estimate that so far, the overall impact of shortages related to publicly announced production shutdowns equates to under 5% of global quarterly production," said analyst Nishit Madlani. "Some automakers could face up to a 20% production shortfall in the first half of 2021, as many plants are operating at lower utilization, and many more could be affected over the next quarter or two before supply normalizes." Though S&P projects a “large chunk” of the lost production will be recovered in the second half, “we still expect this could result in a net loss of production of up to 3 million units (roughly 3-5% of global production) in 2021,” it said. Recovery of lost production will depend “on new capacity that will come online and the willingness of automakers to pay higher prices for chips,” it said. “The risk of increased cost pressure will add another challenge to the industry, the margins of which have already been battered by erosion linked to increased costs related to the electrification of vehicles.”

The situation with the global chip shortage is “very fluid,” said General Motors Chief Financial Officer Paul Jacobson on a Q4 call Wednesday. “You've seen that from various manufacturers across the board.” GM will prioritize production amid the shortage toward vehicles “that have higher margins and provide better contribution for us,” he said. “Where we are taking chips from are vehicles where we either have a little bit more inventory” or where there are “production gaps in the back half of the year or capacity to be able to make that up,” he said.

Cirrus Logic’s “engineering progress continues to be really positive” on a power component it’s developing for introduction later in 2021, said CEO John Forsyth on a quarterly call Monday. “We continue to be very excited about the journey we're on with our customer,” he said in obvious reference to Apple. “We are optimistic about our ability to execute on this strategic plan,” he said. “While we understand there is intense interest related to our largest customer, in accordance with our policy, we do not discuss specifics about our business relationship.” Apple didn't respond to questions Tuesday. Cirrus Logic stock closed down 8.1% on $89.98.

Sensor supplier Ams is sampling ambient light sensors designed for smartphone camera image correction. The sensors can be positioned at the gap between the display screen and the phone’s chassis to stretch edge to edge with no aperture, said the company. The higher-end version includes flicker detection for artificial light sources such as LEDs, enabling a phone’s camera to eliminate banding and other flicker-generated artifacts that distort images, said the company.

Newly named On Semiconductor CEO Hassane El-Khoury “hit the ground running” after joining from Cypress Semiconductor in December and plans to take a surgical knife to product sectors that aren't in “strategic alignment” with the company’s “growth margin expansion initiatives,” he said Monday on an investor call, his first in the new role.. “I don’t have all the answers to what the future strategy and direction of the company will be,” said El-Khoury, promising to reveal a comprehensive plan at On’s Aug. 5 analyst day conference. “We are ready to make substantial changes in our strategy, business and organization,” he said. “We have begun the process of reevaluating our current product portfolio and our investments across the board.” The objective will be to excise products and markets that “have had a historically low margin profile,” he said. “If we are creating products in low-margin businesses or in markets that are not our strategic markets, then those investments are going to stop.” That will “release capital for us to reinvest” in more lucrative opportunities by “doubling down” in R&D, he said. There are “multiple ways” of “defocusing” products with low potential for revenue or margin upside, said El-Khoury. “If there is a business that we believe has value for somebody outside of On Semiconductor, we will monetize it through a divestiture.” The company also will weigh “shrinking our manufacturing footprint from where we are today,” he said. It will try to strike a “balance” between “what we need to manufacture internally” versus outsourcing production to foundries “that do a better job at manufacturing than we do,” he said. On Semiconductor management will “make the best decision for our company that drives shareholder value,” El-Khoury said when asked about federal incentives under the National Defense Authorization Act to promote U.S. semiconductor manufacturing and public-sector investments in semiconductor R&D (see 2101030002). “We’re not going to make a short-term decision” about U.S. semiconductor production “based on politics that will hinder us from potentially achieving our maximum value creation,” he said. “If at the end of that first tranche of decisions, there is alignment with where the administration is going or what state we are in, that’s great.” The stock closed 6.4% higher Monday at $36.71.

Global semiconductor sales reached $439 billion in 2020, up 6.5% from 2019, reported the Semiconductor Industry Association Monday. Sales of $117.5 billion in Q4 were 8.3% higher than the 2019 quarter and up 3.5% sequentially. Sales in 2020 were up “moderately” from 2019, “weathering a challenging macroeconomic environment brought on by the pandemic and other factors,” said SIA CEO John Neuffer. Though global semiconductor demand is on the rise, U.S. share of worldwide chip production declined to 12% in 2020, from 37% in 1990, he said: “That disparity will only intensify without U.S. government action to level the global playing field. It’s imperative the federal government fully fund incentives for domestic chip manufacturing and investments in chip research.”

Silicon Labs and Edge Impulse are collaborating to develop and deploy machine learning (ML) on the chipmaker’s EFR32 wireless SoCs and EFM32 microcontrollers, they said Wednesday. Edge’s tool enables complex motion detection, sound recognition and image classification on low-power, memory-constrained and remote edge devices, they said. Device developers will be able to generate and export the ML models directly to the device or via Silicon Labs’ Simplicity Studio to implement machine learning “in minutes.” Adding ML into edge devices will enable new user experiences in commercial applications including predictive maintenance, asset tracking, monitoring and human detection, said Matt Saunders, vice president-IoT, Silicon Labs.