Mood at Semicon: What analysts are saying

TechOnline India - July 10, 2009

Here's what analysts are saying on the business in general.

SAN JOSE, Calif. -- It's that time of the year again. The Semicon West trade show takes place in San Francisco next week.

So far, it's been a bad year for fab tool makers. So what's the mood going into the show about the fab tool business in general and the various vendors? Here's what analysts are saying on the business in general:

Edwin Mok, analyst, Needham & Co. LLC

''With business conditions improving from very depressed levels, we expect the overall tone at next week's Semicon West to sound more positive. Our checks suggest 2Q '09 orders and revenues are tracking at the higher end of guidance based on stronger TSMC, Nanya/Inotera and UMC orders.

We expect companies to guide for 3Q '09 orders to grow 10-20 percent sequentially, driven by new orders from Samsung, Hynix and UMC. Looking into 2010, we are incrementally more positive based on a foundry driven recovery; however, we remain below consensus estimates on our more cautious outlook on memory spending.''

C.J. Muse, analyst, Barclays Capital

''While attendance will likely be down year-over-year and the volatility market is pricing muted expectations for a move in shares into next week's trade show, we see risk/reward to the upside for the group driven by our expectations for earnings revisions higher this earnings season coupled with growing optimism regarding memory orders, in particular from Samsung and Hynix in 2H '09.

Supported by these spenders, plus ongoing spending by foundries and Taiwan memory, we see orders coming in at the higher end of guided ranges for 2Q09 and then up 10-15 percent Q/Q in 3Q09.

Overall, we expect the tone from management teams to be 'cautiously optimistic' with focus on renewed customer dialogue and expectations that business bottomed in 1Q with outlook from here incrementally better. We continue to look for commentary to focus on the new normal looking more like 2008 ($24 billion wafer fab equipment (WFE)) than 2007($37 billion WFE) but that clearly management teams will think the worst is behind us.''{pagebreak}Here's what analysts are saying about Novellus Systems Inc.:

Edwin Mok, analyst, Needham & Co. LLC

''We expect Novellus to kick off the earnings season with strong results. We are modeling 2Q '09 orders at the high-end of guidance, and expect upside to 3Q '09 guidance based on improved business conditions.''

C.J. Muse, analyst, Barclays Capital

''Novellus is seeing strength from both the industry order pick up and some share gains. If we were to ascribe one reason, it would be the strength of TSMC orders for Novellus both in the Jun Q and in the Sep Q. However, that is not all. Our checks suggest that Novellus may have picked up share in HDP in Samsung (likely from AMAT) and in PECVD at Intel for the advanced patterning film. But in same breath, we also feel that it is too early to see the effect of those share gains and also want to check whether these gains hold.''{pagebreak}Here's what an analyst is saying about KLA-Tencor.:

C.J. Muse, analyst, Barclays Capital

''Our checks suggest orders are tracking to or may exceed $330 million for the June quarter, at or above the high end of guidance of $220-330 million. For the June quarter, the main contributors to orders are TSMC, Intel, Nanya with a little bit of Samsung technology orders.

For the September quarter, we expect Samsung Line 15 orders and System LSI (S1 fab) orders. In addition, in a real sign that the winter for memory orders is thawing, we also see potential for Samsung Line 16 (already certain) and Hynix Wuxi (no P.O.s yet, but will come through). During the Sep quarter, Intel, TSMC, Nanya/Inotera will continue to place orders, and, interestingly, our checks suggest that a small amount of UMC and Toshiba orders might enter the mix.''

{pagebreak}Here's what an analyst is saying about Cymer Inc. and Varian Semiconductor:

C.J. Muse, analyst, Barclays Capital

''We continue to view 2Q as the trough for Cymer's laser shipments, as a pick-up in immersion litho shipments in 2H09 to non-Intel customers should drive both a unit and ASP uptick.''

''While we expect (Varian's) June quarter results to come in in-line with expectations our checks suggest that continued foundry spending coupled with a modest orders from memory makers should drive September quarter guidance.

Having already gained (about) 70 percent of the ion implant market, Varian currently has multiple products in the product development stage or currently being evaluated by customers in areas such as: 1) CMOS image sensors; 2) semiconductor damage engineering; 3) solar (either through cell efficiency improvement or through thinner wafers); 4) Silicon-on-Insulator stacked flash structures); 5) double patterning; and 6) strain engineering. Management is targeting a combined addressable/revenue potential from these opportunities of (about) $200 million by 2011.''

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