Ultratech Grinding Out Progress
Stephen Simpson, CFA
Stephen Simpson, CFA
Ultratech Still Predictably Unpredictable, But Orders Are Improving
Stephen Simpson, CFA
Stephen Simpson, CFA
Thu, Oct. 20, 9:01 AM
Wed, Oct. 19, 5:30 PM
Thu, Jul. 21, 9:03 AM
Wed, Jul. 20, 5:30 PM| Wed, Jul. 20, 5:30 PM | 13 Comments
Fri, May 20, 10:56 AM
- Lam Research (LRCX +4.1%), KLA-Tencor (KLAC +2.3%), ASML (ASML +2.2%), Axcelis (ACLS +3.9%), Kulicke & Soffa (KLIC +3%), Ultratech (UTEK +3.5%), Teradyne (TER +2.3%), Rudolph Technologies (RTEC +2.6%), and Xcerra (XCRA +2.7%) are outperforming after Applied Materials (AMAT +13.2%) beat FQ2 estimates, provided FQ3 guidance that was well above consensus, and reported FQ2 orders rose 52% Q/Q and 37% Y/Y to $3.45B. The Nasdaq is up 1.2%.
- Applied's order growth was fueled in large part by display equipment orders totaling $700M, up sharply from $183M in the prior quarter and $120M a year ago. On its earnings call, AMAT said display order strength is likely to continue "over the rest of 2016," and is being driven by mobile-related OLED investments - many reports have indicated Apple plans to bring iPhones sporting OLEDs to market next year.
- OLED materials/IP provider Universal Display (OLED +5.2%) is rallying. As are display panel makers LG Display (LPL +6.5%) and AU Optronics (AUO +3.2%), each of which have been stepping up their OLED investments, and industrial laser maker Coherent (COHR +2.5%), which has recently seen an OLED-related order surge.
- Also: Applied's NAND flash-related orders more than doubled Y/Y to nearly $1B thanks to its customers' 3D NAND investments. That more than offset softer DRAM and foundry-related chip equipment demand. On the call, Applied suggested NAND orders will slow a bit in the second half of FY16, but remain strong overall. Foundry demand is expected to grow somewhat this year, with Applied gaining share. Industry wafer fab equipment demand is expected to be flat to slightly up.
- B. Riley has upgraded Applied to Buy, and several firms have hiked their targets. Cowen's Tim Arcuri thinks $3 in annual EPS is now possible. Credit Suisse's Farhan Ahmad: "AMAT is clearly outgrowing peers this year, driven by favourable mix shift within WFE (NAND/Foundry increasing, DRAM declining) and strong growth in Display (China/OLED investments)."
Thu, Apr. 21, 9:04 AM
- Ultratech (NASDAQ:UTEK): Q1 EPS of -$0.04 in-line; Non-GAAP EPS of $0.10.
- Revenue of $45.21M (+7.9% Y/Y) beats by $6.11M.
Wed, Apr. 20, 5:30 PM
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Thu, Feb. 4, 9:05 AM
- Ultratech (NASDAQ:UTEK): Q4 EPS of -$0.14 beats by $0.04.
- Revenue of $28.3M (-41.3% Y/Y) misses by $5.45M.
Wed, Feb. 3, 5:30 PM
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Fri, Jan. 15, 2:26 PM
- Up strongly yesterday as markets rallied and TSMC set a 2016 capex budget of $9B-$10B (up from 2015 capex of $8.12B), a slew of chip equipment makers are seeing big losses amid a 3.3% Nasdaq drop after Intel (NASDAQ:INTC) used its Q4 report to disclose its 2016 capex budget has been cut by $500M to $9.5B (+/- $500M). That's still up by $2.2B at the midpoint from 2015's $7.3B, but lower than the $10.1B-$11B spent annually from 2011-2014.
- On Intel's earnings call (transcript), CEO Brian Krzanich indicated the budget cut is related to logic (i.e. CPU) capex, and insisted no specific major factor was responsible. "As we went from the investor meeting into the actual firm forecast for 2016, the team has just sharpened down all the numbers and went through it in more detail."
- Major decliners: Applied Materials (AMAT -4.3%), Lam Research (LRCX -6.5%), KLA-Tencor (KLAC -3.8%), ASML (ASML -6.3%), MKS Instruments (MKSI -3.9%), Ultratech (UTEK -4.9%), Teradyne (TER -3.1%), Advantest (ATE -4.6%), and Ultra Clean (UCTT -5.2%).
- Stifel's Patrick Ho argues the selloff is a buying opportunity. "[W]e have already seen positive preannouncements with two of our names (Ultra Clean, Axcelis) and we expect more upside surprise than those on the downside ... We believe 3D NAND momentum continues to build while there has been some initial buying for 10nm logic (Intel) and foundry (TSMC). We maintain our industry thesis that 3D NAND spending will be the largest incremental driver for spending in 2016, with upside potential from the foundries in 2H16 related to 10nm investments." He likes Applied, Lam, Teradyne, and MKS.
- Credit Suisse's Farhan Ahmad notes Applied, ASML, and Lam have relatively low Intel exposure, and that a Korea Times report indicates DRAM/NAND flash maker SK Hynix's capex might increase in 2016. On the other hand, he's worried current expectations for EUV system shipments (important for ASML) are too optimistic.
- Samsung (OTC:SSNLF), another top-3 chip equipment buyer, reports after the Jan. 21 close. Citi's Atif Malik sees Samsung cutting capex due to lower DRAM-related spending. "We think Samsung moderating memory spend, particularly DRAM, would improve memory supply-demand balance and sustainability of memory equipment spend in C16."
Thu, Jan. 14, 1:48 PM
- In its Q4 report, TSMC (a top-3 chip equipment buyer, along with Intel and Samsung) set a 2016 capex budget of $9B-$10B, a healthy increase over reported 2015 capex of $8.12B. The spending will help finance TSMC's 16nm manufacturing process ramp and the start of production (towards the end of 2016) for its 10nm process.
- A slew of chip equipment makers are outperforming amid a 1.8% Nasdaq gain. The list includes Applied Materials (AMAT +4.3%), ASML (ASML +3%), Teradyne (TER +2.4%), Axcelis (ACLS +6.6%), Xcerra (XCRA +5.5%), Ultratech (UTEK +4%), Advantest (ATE +2.2%), and merger partners Lam Research (LRCX +4.1%) and KLA-Tencor (KLAC +2.9%).
- Rudolph Technologies (RTEC +11.5%) is benefiting from an upgrade to Buy from Sifel's Patrick Ho. He cites strong advanced chip packaging exposure, a new CEO, an improved ability to land repeat orders, and a belief Rudolph is an attractive M&A target.
- 2016 industry expectations have been low - Gartner recently forecast wafer fab equipment spend would drop 2.5% this year to $31.1B due to weak DRAM capex, after staying roughly flat in 2015 amid Intel/TSMC capex budget cuts. 8.1% and 9.1% growth is respectively forecast for 2017 and 2018.
- Intel reports after the bell. In November, the CPU giant set a 2016 capex budget of $10B (+/- $500M), up from 2015's depressed $7.3B (+/- $500M).
- Update (4:35PM ET): Intel has used its Q4 report to cut its 2016 capex budget by $500M to $9.5B (+/- $500M). Some chip equipment markers are down fractionally after hours.
Oct. 22, 2015, 10:20 AM
- Along with its Q3 results, Ultratech (UTEK +2.6%) announces it has cut 10% of its workforce due to a weak chip equipment demand environment. The move comes in a year that has seen both Intel and TSMC make multiple capex budget cuts.
- Helping EPS beat estimates in spite of a revenue miss: Gross margin rose to 42.6% from 40.2% a year ago, and SG&A spend fell by ~$700K to $11.1M. R&D spend rose by ~$400K to $8.5M.
- Ultratech ($436M market cap) ended Q3 with $259.4M in cash, and just $5.1M in notes payable.
- Q3 results, PR
Oct. 22, 2015, 9:02 AM
- Ultratech (NASDAQ:UTEK): Q3 EPS of -$0.05 beats by $0.10; GAAP EPS of -$0.15.
- Revenue of $33.1M (-2.2% Y/Y) misses by $2.55M.
Oct. 21, 2015, 5:30 PM
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Jul. 23, 2015, 9:03 AM
- Ultratech (NASDAQ:UTEK): Q2 EPS of $0.06 beats by $0.07.
- Revenue of $45.9M (+24.6% Y/Y) beats by $1.35M.
Jul. 16, 2015, 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.