Semi Equipment Stocks Up on Intel Spending Plans

Semiconductor equipment stocks are flying higher Wednesday, getting a lift from Intel’s (INTC) comments yesterday about its 2008 capital spending plans. Kind of ironic: Intel’s 2008 outlook for its own results were below expectations, and have knocked the crap out of its own shares. But the chipmaker also said its cap ex in 2008 would be $5.2 billion, give or take, or about 5% higher than 2007. Citigroup’s Timothy Arcuri notes that Intel’s spending plan is about 5%-10% higher than he had expected. “Virtually nobody expected INTC to guide capex up so soon,” he wrote. And he notes that there was similarly upbeat news from Samsung on their capital spending plans. Samsung expects cap ex to be about flat; there had been expectations that the company might cut spending in the face of sharply falling prices for memory chips.

Expectations for a soft year in semi cap equipment remain; but Arcuri says the stocks were already discounting a worst-case scenario of down 25%.

Ergo, the sector Wednesday staged an impressive rally:

• Applied Materials (AMAT) is up 47 cents, or 2.8%, to $17.42
• Novellus (NVLS) is up $1.09, or 4.7%, to $24.37.
• KLA-Tencor (KLAC) is up $2.19, or 5.3%, to $43.62.