Additionally, the two large Japanese semi wafer makers are beginning to experience material polysilicon cost increases as their buffers to polysilicon pricing volatility have largely run out. Going forward they expect both Shin-Etsu and SUMCO to pass along the increased cost of polysilicon to their customers, allowing MEMC to raise wafer prices in tandem.
Utilization rates and capacity expansion plans at many solar cell makers continue to be limited by the amount of polysilicon they can acquire. For example, Solar World, which acquired Shell Solar, disclosed in a recent quarterly report that the former Shell facilities operating in the U.S. were only at 50% utilization rates due to a lack of polysilicon.
Overall semi wafer demand has been relatively flat for the past three quarters as declining logic/analog wafer starts offset wafer start growth for memory applications. Firm believes indications of an increase in Back-End utilization rates signals that C1Q07 is the utilization rate trough for the semi industry.
Reiterates OW, and they would be buying now. JPM is raising C07 revenue and GAAP EPS estimates to $2.0bn/$3.25 from $1.9bn/$2.98 and C08 estimates to $2.4bn/$3.80 from $2.32bn/$3.35, primarily on higher gross margins for semi wafers.
Notablecalls: Think the wording is strong enough to create some further buy interest in WFR. Tight leash, as the stock made a nice upward move yesterday and is prone to some profit taking. See archives for further color on WFR.