Tue, Nov. 17, 10:37 AM
- David Einhorn's Greenlight Capital lowered its Micron (MU +1.2%) stake by 67% in Q3 to 12.4M shares, per Greenlight's Q3 13F.
- Einhorn, whose fund was down 16% YTD through October due to losses taken in SunEdison, Micron, and Consol Energy, had upped his Micron stake to 37.5M shares in Q2, and defended the DRAM/NAND giant his Q2 letter following a major selloff. Micron is currently down 57% YTD.
- Einhorn also liquidated a 1.6M-share position in chip equipment maker Lam Research (LRCX), which in early Q4 announced it's acquiring KLA-Tencor.
- His position in Lam rival Applied Materials (AMAT +0.1%) was lowered to 5M shares from 8.2M. Applied jumped last week after providing better-than-feared FQ4 results, FQ1 guidance, and order data, and forecasting on its earnings call it expects the wafer fab equipment market to be flat or up, better than expectations for a moderate decline.
- A 600K-share position was taken in Garmin (GRMN -0.2%). The navigation hardware maker was hammered in October following a Q3 warning, but has since largely recovered its losses.
Wed, Oct. 21, 11:33 AM
- Up yesterday in response to Intel's flash manufacturing plans, chip equipment makers are higher today after Lam Research (LRCX +5.6%) announced it's buying KLA-Tencor (KLAC +22.5%) for $10.6B, with the goal of creating an industry giant on par with Applied Materials (AMAT +1%).
- In addition to Lam, KLA, and Applied, gainers include ASML (ASML +2.3%), Kulicke & Soffa (KLIC +2.9%), Teradyne (TER +4.6%), Mattson (MTSN +2.6%), and Xcerra (XCRA +2.3%). Ahead of the deal announcement, Tokyo Electron (OTCPK:TOELF) rose 4% in Tokyo, aided by the Intel news and a rally in Japanese equities.
- Lam/KLA assert the deal combines "Lam's best-in-class capabilities in deposition, etch, and clean [equipment] with KLA-Tencor's leadership in inspection and metrology." Gartner estimates Lam and KLA respectively had 9.4% and 6.4% of the 2013 chip equipment market. Applied (competes with both KLA and Lam) had 16.2%, ASML (dominant in lithography) 15.7%, and Tokyo 9.1%.
- Lam is paying the equivalent of $32/share in cash and 0.5 shares (current value of $37) for each KLA share. It plans to finance the deal with $1.9B in cash on hand from both companies, and $3.9B in debt. KLA shareholders can elect to be paid solely in cash, solely in stock, or through a mixture of cash and stock.
- The deal is expected to close in mid-2016. Lam CEO Martin Anstice will run the combined firm.
Wed, Oct. 21, 7:45 AM
- KLA-Tencor (NASDAQ:KLAC) +17.9% premarket after agreeing to be acquired by Lam Research (NASDAQ:LRCX) in a cash and stock deal valued at ~$10.6B.
- The $67.02/share offer marks a 24% premium to yesterday's closing price for KLAC.
- The combined company, to be called Lam Research, will have a market cap of ~$19B and says it will serve 42% of the wafer fabrication equipment market.
- The two companies say they expect to realize $250M/year in cost savings within 18-24 months of the deal's close and generate ~$600M in incremental annual revenue by 2020.
- LRCX -2.2% premarket.
Wed, Oct. 21, 5:52 AM
Tue, Oct. 20, 3:58 PM
- Applied Materials (AMAT +2.3%) and Lam Research (LRCX +3.6%) have rallied after Intel announced plans to make up to $5.5B worth of flash memory manufacturing investments ($3.5B committed) in the coming years at its Dailan, China fab. 3D NAND manufacturing is expected to start in Dailan in 2H16.
- KLA-Tencor (KLAC +1.3%) and Axcelis (ACLS +1.8%), which also have strong memory exposure, are up moderately. The Nasdaq is down 0.5%.
- The group caught a bid last week after Intel cut its capex budget by $400M to $7.3B (+/- $500M), but added capex is expected to rise in 2016. Gartner has forecast moderate 2015 and 2016 declines in industry wafer fab equipment spend, followed by 8%+ growth in 2017 and 2018.
Wed, Oct. 14, 3:10 PM
- Though still well below its May/June highs, the Philadelphia Semi Index (SOXX +2.9%) has reached its highest levels since August following calendar Q3 results from Intel, Linear Technology, and ASML, and reports SanDisk and Fairchild are in buyout talks with potential suitors (respectively Micron/Western Digital and ON Semi/Infineon). The Nasdaq is down slightly.
- Intel (up 1.5%) beat Q3 estimates and provided in-line Q4 guidance. ASP strength and signs of stabilizing PC demand are overshadowing a full-year guidance cut for Intel's server CPU division, Linear (up 4.6%) posted mixed FQ1 results and issued above-consensus FQ2 guidance.
- Lithography equipment giant ASML (ASML -0.4%) beat Q3 EPS estimates and posted nearly in-line sales, but also guided for Q4 revenue of €1.4B ($1.61B), below a $1.77B consensus. Soft demand from foundry clients is blamed. Credit Suisse and Cowen argue ASML is hurt by a lack of exposure to the 3D NAND flash ramp.
- Aside from Linear and companies associated with the SanDisk/Fairchild reports, chipmakers seeing big gains include NXP (NXPI +4.6%), Freescale (FSL +3.6%), Himax (HIMX +4.2%), Qorvo (QRVO +4.9%), Cypress (CY +6.9%), AppliedMicro (AMCC +4.9%), and Linear/Fairchild peers Semtech (SMTC +4.7%), MangaChip (MX +4.6%), Diodes (DIOD +4%), and Power Integrations (POWI +4.2%). Chip packaging/testing firms ChipMOS (IMOS +3.8%) and Amkor (AMKR +5.9%) are also rallying.
- With much already priced in, chip equipment makers are also doing well, in spite of ASML's guidance, a fresh $400M cut to Intel's 2015 capex budget (to $7.3B), and a Gartner forecast for global wafer fab equipment spend to drop 0.5% in 2015 and 2.5% in 2016 before returning to growth.
- Chip equipment gainers include Lam Research (LRCX +3.6%), KLA-Tencor (KLAC +1.6%), Kulicke & Soffa (KLIC +3.3%), and Teradyne (TER +1.9%). Possibly helping: Intel stated on its earnings call its capex will rise in 2016 from 2015's depressed levels.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Thu, Jul. 16, 12:40 PM
- Applied Materials (AMAT -3.6%), ASML (ASML -4.9%), Lam Research (LRCX -4.2%), KLA-Tencor (KLAC -4.4%), Ultratech (UTEK -4.8%), Rudolph (RTEC -3.1%), Mattson (MTSN -2.4%), Advantest (ATE -2.6%), Teradyne (TER -0.9%), and Kulicke & Soffa (KLIC -1.2%) are lower (in spite of a 1.1% Nasdaq gain) after Intel cut its capex budget for the third time this year, this time by $1B to $7.7B (+/- $500M). The chip giant spent $10.1B on capex in 2014, and $10.7B-$11B in 2011-2013.
- Also: Intel disclosed it now expects to bring its first 10nm CPUs to market in 2H17, breaking with its historical 2-year manufacturing process upgrade pace and leading some to wonder if Moore's Law is proving harder to maintain. Intel's first 14nm CPUs (based on the Broadwell architecture) arrived last September.
- Separately, TSMC (cut its capex budget in April) provided cautious remarks about global chip demand. The world's biggest foundry expects 3% 2015 chip industry growth and 6%-10% foundry market growth.
- The selloff comes shortly after Applied and Lam provided aggressive 3-year EPS growth targets (I, II) at investor meetings held during the chip industry's Semicon West conference. ASML rallied yesterday following a Q2 beat and positive 2H15 outlook.
Tue, Jul. 14, 6:27 PM
- At an investor meeting held at the chip industry's annual Semicon West conference, Lam Research (NASDAQ:LRCX) provided calendar 2015/2016 revenue and EPS target ranges of $5.8B-$6.3B and $6.00-$6.75. The FY16 (ends June '16) consensus is at $5.73B and $5.78.
- 2017 revenue/EPS target ranges are at $6.5B-$7B and $7.00-$7.75. For 2018, they're at $7B-$7.5B and $8.00-$8.75.
- As expected, Lam continues to argue its strong exposure to chip manufacturing tech "inflections" (e.g. 3D NAND, FinFET logic ICs, DRAM multi-patterning, next-gen chip packaging) will allow it to outgrow the industry: The company forecasts a ~32% share of wafer fab equipment (WFE) spend in 2018, up from 29% in 2015 and 26.5% in 2013.
- Lam estimates it had a high-30s 2014 share of the deposition equipment market, a low-mid 50s share of the etch equipment market, and a high-teens share of the clean equipment market. Deposition and etch share gains were recorded last year.
- Shares rose 0.7% in regular trading, matching the Nasdaq's gain.
- Investor meeting slides (.pdf)
- Earlier: Applied Materials' FY18 forecasts
Mon, Jul. 13, 4:32 PM
- "When the company announced a confusing merger with Alcatel-Lucent ... we used the opportunity to exit with a healthy gain," writes David Einhorn in his Q2 letter, explaining Greenlight Capital's unloading of its Nokia (NYSE:NOK) position.
- Regarding his decision to exit EMC, Einhorn cites "the reduced odds of any favorable change to the corporate structure and increasing concerns about a lack of growth in the storage business." EMC is 4 months removed from formally stating it doesn't plan to spin off its 80% VMware stake.
- Regarding Marvell (NASDAQ:MRVL), a position held for years, Einhorn cites weak PC demand as a reason for exiting following a 15% compounded annual return. His disclosure comes on a day Marvell rose 5.4% thanks to a report of buyout interest from a Chinese investment firm.
- Echoing the bullish arguments he has made for rival Lam Research (NASDAQ:LRCX), Einhorn says he took a small position in Applied Materials (NASDAQ:AMAT) out of a belief AMAT's core etch/deposition equipment markets will outgrow the broader chip equipment industry "due to the increased use of 'multi-patterning' to produce chips at geometries below [20nm]." He predicts results will improve as management turns its attention from the abandoned Tokyo Electron merger towards "growth and cost savings opportunities." With Einhorn's help, AMAT rose 2.9% today.
- "It's a cyclical business and, regrettably, we missed the turn of the cycle," says Einhorn about Micron (NASDAQ:MU), Greenlight's biggest Q2 loser. However, he still thinks the DRAM industry is acting more rationally following consolidation, notes shares trade at "less than 12x annualized trough earnings and less than 5x prior peak earnings," and predicts future cycles will have higher peaks and troughs.
- Over the long run, Einhorn expects Micron ($19.1B market cap) to be worth more than Netflix (NFLX - $42.9B market cap), whose recent surge he considers quite unjustified. "In today's market, the best performing stocks are companies with exciting stories where accountability is in the distant future." He adds Season 3 of House of Cards "appeared to be scripted to compete with Ambien,"
- Worth noting: While Einhorn has a good track record going long, his short picks have been more hit-and-miss.
Tue, Apr. 21, 12:24 PM
- ASML (ASML +1.5%), ASM International (ASMI +2.4%), Axcelis (ACLS +5.2%), and Rudolph Technologies (RTEC +2.3%) have joined Applied Materials and KLA-Tencor in trading higher after fellow chip equipment maker Lam Research (LRCX +8.2%) beat FQ3 estimates and provided strong FQ4 sales, EPS, and shipment guidance.
- On its CC (transcript), Lam mentioned demand from DRAM clients - Axcelis has strong exposure to them - remains solid thanks to 20nm process investments, and that it expects growing 2H15 3D NAND flash investments.
- Foundry equipment spend is expected to be down slightly Y/Y in 2015 - TSMC recently cut its capex budget - and logic spend roughly flat in spite of Intel's capex budget cut. In spite of the Intel/TSMC cuts, Lam is maintaining its general outlook for chip equipment spend.
- CEO Martin Anstice argued Lam will be competing for over 30% of chip equipment spend by 2017 (up from 28.5% today) as tech "inflections" related to multi-patterning, 3D chips, and advanced packaging - Lam claims to have a 50%+ share in these areas - drive share gains in the broader deposition, etching, and cleaning equipment markets.
- ASML remains below where its traded before the company slightly missed Q1 estimates, reported soft bookings (-26% Q/Q to €1.03B), and offered light Q2 guidance (revenue of €1.6B vs. a €1.69B consensus) on April 15. The photolithography equipment giant remains cautious about the adoption of EUV tools at the 10nm node (set to ramp in 2016/2017), but adds its "confidence has gone up" thanks to the improved performance of its 3300 series EUV systems.
Tue, Apr. 21, 9:22 AM
Mon, Apr. 20, 5:38 PM
Mon, Apr. 20, 4:52 PM
- In addition to beating FQ3 estimates, Lam Research (NASDAQ:LRCX) is guiding for FQ4 revenue of $1.46B (+/- $50M) and EPS of $1.46 (+- $0.07), above a consensus of $1.39B and $1.35.
- Shipments are expected to rise to $1.6B (+/- $50M) from FQ3's $1.497B (+20% Q/Q and topping a guidance midpoint of $1.45B). CEO Martin Anstice sings a well-known refrain. "Our differentiated products and services are directly addressing the market driving technology inflections of multi-patterning, 3D device architecture and advanced packaging."
- The deferred revenue balance rose 30% Q/Q to $485.2M. Gross margin (non-GAAP) fell 70 bps Q/Q and 80 bps Y/Y to 44.7%. Operating expenses rose 11% Y/Y to $355M. $124.9M was spent on buybacks.
- Shares have risen to $77.52 AH; the all-time high is $85.70. Goldman's table-pounding was well-timed.
- Peers are getting a lift: Applied Materials (NASDAQ:AMAT) is up 1.6% AH to $22.11, and KLA-Tencor (NASDAQ:KLAC) is up 1.1% to $59.20. KLA reports on Thursday.
- FQ3 results, PR
Mon, Apr. 20, 4:08 PM
Tue, Apr. 14, 5:23 PM
- Intel has used its Q1 report to cut its 2015 capex budget by $1.3B to $8.7B (+/- $500M). The midpoint of the guidance range implies a 14% drop from a 2014 level of $10.1B, which itself was below 2011-2013 levels of $10.7B-$11B.
- Several chip equipment makers are lower AH in response. Applied Materials (NASDAQ:AMAT) -1.4%. KLA-Tencor (NASDAQ:KLAC) -1.5%. Lam Research (NASDAQ:LRCX) -1.4%. Kulicke & Soffa (NASDAQ:KLIC) -0.8%.
- In January, TSMC set an aggressive 2015 capex budget of $11.5B-$12B; Samsung is also expected to spend heavily this year. Between them, Intel, TSMC, and Samsung account for roughly half of all chip equipment capex.
Mon, Apr. 6, 2:34 PM
- Though "there has been a steady stream of cautious news from the semi sector over the past few weeks," there has also been positive news for Lam Research (NASDAQ:LRCX), argues Goldman's James Covello, reiterating a Conviction Buy and $91 target in response to Lam's March selloff.
- Specifically, Covello notes chip equipment giant Tokyo Electron (set to merge with Applied Materials, regulators willing) has pre-announced strong sales, and that Disco (a Japanese chip equipment firm that sells to Lam's top customers) posted better-than-expected earnings.
- Aside from the Japanese news, which Covello thinks helps offset negative news from Intel, Micron, SanDisk, and TSMC, Lam is expected to benefit from a 2H15 pickup from NAND flash clients (ramping 3D NAND investments). Cowen argued last week Lam and Applied Materials would benefit as 3D NAND manufacturing cost declines compelled manufacturers to boost their investments. "We believe that NAND revenues for LRCX could potentially increase by 3x (or $1.5 bn per year) as 3D NAND accelerates."
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