Yesterday, 3:07 PM
- With the Nasdaq down 0.6%, the number of tech companies posting outsized declines easily surpasses the number posting significant gains.
- Chinese firms are well-represented on the ranks of notable decliners. In addition to Alibaba, the list includes CDN owner ChinaCache (CCIH -4.6%), mobile app developer Cheetah Mobile (CMCM -9.8%), solar module vendor Yingli (YGE -4%), polysilicon provider Daqo (DQ -5.1%), real estate sites SouFun (SFUN -4.5%) and Leju (LEJU -4.3%), and data center owner 21Vianet (VNET -2.9%).
- Other decliners include chip equipment giant Applied Materials (AMAT -4.2%), seismic tech provider Geospace (GEOS -4.9%), VoIP infrastructure hardware/software firm Sonus (SONS -4.7%), IT services firm WidePoint (WYY -3.7%), auto site TrueCar (TRUE -7.4%), and online grocery coupon provider Coupons.com (COUP -5.2%).
- SouFun fell hard yesterday following news 58.com is buying real estate site Anjuke. Many Chinese tech firms sold off last Friday as the yuan made 3-year lows against the dollar.
- Previously covered: Seagate/Western Digital, Micron, Overstock
- Notable gainers: Veeva, Gogo, Vringo, Finjan, Aviat
Thu, Feb. 19, 11:54 AM
- South Korea's Fair Trade Commission plans to conditionally approve Applied Materials' (NASDAQ:AMAT) merger with Tokyo Electron (OTCPK:TOELF +5%). The regulator adds it's talking with peers in six countries (inc. the U.S. and Japan) to nail down details for approving a deal.
- A government official says Applied/Tokyo have agreed "not to launch combined chemical vapor deposition (CVD) and atomic layer deposition (ALD) businesses in Korea," and to also "establish new entities for fair competition, if necessary."
- The announcement comes after Samsung and SK Hynix had voiced objections to the deal, which stands to create a colossus possessing ~25% of the global chip equipment market. The DOJ was reported in December to be vetting a buyer for assets Applied/Tokyo plan to divest to win U.S. regulatory approval.
- Separately, Applied has filed proxy materials for its 2015 annual meeting (set for April 2). The company discloses CEO Gary Dickerson's compensation rose 59% in 2014 to $16.4M, thanks in part to a cash grant meant to avoid an excise tax that would apply to stock option awards following the closing of the Tokyo Electron deal.
Wed, Feb. 11, 6:25 PM
- Though it beat FQ1 revenue estimates and posted in-line EPS, Applied Materials (NASDAQ:AMAT) is guiding for FQ2 revenue to be flat to up just a couple percent Q/Q, and for EPS of $0.26-$0.30. That's below a consensus for 5% Q/Q revenue growth and EPS of $0.32.
- FQ1 orders totaled $2.27B, +1% Q/Q and -1% Y/Y, and below revenue of $2.36B (negative book-to-bill). Chip equipment orders +7% Q/Q to $1.43B, with DRAM/NAND growth offsetting logic and foundry declines. Global services -8% to $690M due to lower chip services and 200mm wafer equipment orders. Display -18% to $107M due to lower TV equipment orders, and energy/environmental (solar) +14% to $50M. Forex adjustments contributed to a 5% drop in backlog to $2.78B.
- Gross margin fell to 42.3% from 44.2% in FQ4 and 42.5% a year ago. Operating expenses (non-GAAP) rose less than 1% Y/Y to $552M, in spite of 8% revenue growth.
- AMAT -1.7% AH to $23.86. KLA-Tencor provided soft guidance last month.
- FQ1 results, PR
Wed, Feb. 11, 4:15 PM
Tue, Feb. 10, 5:35 PM
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Fri, Jan. 30, 4:50 PM| Comment!
Fri, Jan. 23, 2:25 PM
- Applied Materials (AMAT -1.7%) and ASML (ASML -1.5%) are off moderately after chip equipment peer KLA-Tencor (KLAC -7.1%) offered soft guidance (for the third quarter in a row) to go with an FQ2 beat. The Nasdaq is up 0.3%
- On the CC (transcript), CEO Rick Wallace stated KLA has seen orders from both foundry and logic clients for sub-20nm manufacturing equipment "pushed to later in the calendar year." KLA thinks the delays "reflect yield and process stability issues associated with bringing these advanced device architectures to market."
- In July and October, KLA primarily referenced foundry clients when explaining its light guidance. The logic client reference could be about Intel (by the far the biggest of them), which provided a conservative 2015 capex budget last week.
- Wallace also mentioned some orders related to "trailing-edge" manufacturing processes have been "a bit elusive," and that (notably) KLA thinks this is due to "some competitive dynamics in terms of second source strategies and so on."
- Analysts pressed KLA regarding its foundry-related issues, given TSMC is spending heavily and ASML reported strong Taiwanese foundry bookings (presumably from TSMC) earlier this week. On the other hand, memory was a strong point for both KLA and ASML in calendar Q4, respectively accounting for 44% and 27% of the companies' bookings.
Fri, Jan. 16, 7:17 PM
- A day after some industry names outperformed modestly following news TSMC (NYSE:TSM) set a high 2015 capex budget of $11.5B-$12B, chip equipment makers generally traded in-line with a rising tech sector after another one of their big-3 customers, Intel, set a conservative 2015 capex budget of $9.5B-$10.5B.
- TSMC's 2015 budget is well above a 2014 capex level of $9.52B; the world's biggest foundry is both trying to keep up with rising mobile chip orders, and investing heavily to roll out its 16nm FinFET/FinFET+ processes to counter Samsung and Globalfoundries' 14nm FinFET rollouts.
- The midpoint of Intel's 2015 budget is slightly below 2014 spending of $10.1B, which itself was below prior guidance of $10.5B-$11.5B. It's also below 2011-2013 spending of $10.7B-$11B.
- Some cautiousness from Intel might have been expected: Gartner recently forecast industry capex would rise just 0.8% this year to $65.8B, albeit with wafer fab spend rising a healthier 6.7% to $33.7B. Gartner forecast memory capex would rise 13.5% and foundry capex 4.8%, but predicted logic capex (much of it from Intel) would decline 5.3%.
- Also: TSMC has disclosed it sold the 21M-share stake it took in ASML in 2012 for $1.5B, booking a $660M profit along the way. TSMC, Intel, and Samsung each invested in ASML with the goal of accelerating its EUV lithography R&D efforts (viewed as necessary to maintain Moore's Law long-term).
- Between them, Intel, TSMC, and Samsung account for over half of industry capex.
- Chip equipment firms: AMAT, KLAC, LRCX, TER, KLIC, ACLS, UTEK, RTEC, MTSN, ATE, XCRA, OTCPK:TOELF
Tue, Jan. 6, 1:36 PM
- Up 30% in 2014, the Philadelphia Semi Index (SOXX -2.2%) has fallen over 4% thus far in 2015. Today's decline comes as the Nasdaq drops 1.6%.
- Many names are posting 3%+ losses. SWKS -4.2%. QRVO -5.8%. AMAT -3.4%. KLAC -3.1%. SYNA -5.4%. IPHI -9%. ARMH -5.4%. SIMO -4.5%. MCRL -3.9%. AMCC -3.9%. CODE -5.1%. CY -4.6%. QUIK -7.9%.
- This morning, Gartner estimated global chip sales rose 7.9% in 2014 to $339.8B, a little less than the 9.4% recently estimated by IHS. Sell-side firms have forecast industry growth will fall to the ~5% range in 2015.
- Gartner thinks memory sales rose 16.9%, fueled by a 31.7% increase in DRAM sales. All other chip markets rose by 5.4%, a marked improvement from 2013's 0.8%. Intel (15% share) and Samsung (10.4%) claimed over a quarter of industry sales between them. Qualcomm (5.6%), Micron (4.9%), and SK Hynix (4.7%) rounded out the top-5.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Dec. 18, 2014, 10:34 AM
- Citi has added Applied Materials (AMAT +1.5%) its Focus List, and hiked its target all the way to $36. Meanwhile, Applied rival/David Einhorn favorite Lam Research (LRCX +2.1%) has been upgraded to Buy, and chip test equipment maker Teradyne (TER -0.1%) to downgraded to Neutral.
- Citi thinks Applied could deliver over $2.50/year in EPS once the Tokyo Electron (OTCPK:TOELF) merger closes - well above the $1.80 forecast in October by BofA. Regulators are still vetting the deal.
- Meanwhile, Japan's semi equipment trade association (SEAJ) has reported (.pdf) a November rolling 3-month book-to-bill of 1.33 for local equipment makers. That's well above October's 1.11 and September's 0.93.
- AMAT and LRCX are following markets higher - the Nasdaq is up 1.5% - while Teradyne is underperforming.
- Previous: Berenberg bullish on Applied and Lam, cautious on KLA and ASML
Dec. 3, 2014, 1:48 PM
- The Philadelphia Semi Index (SOXX +1.7%) is making fresh highs after Microchip (MCHP +4.1%) slightly upped its calendar Q4 guidance, and stated it continues to "see an improvement in our bookings and billings since our earnings call on October 30, 2014."
- Chip stocks had also jumped following that earnings call, during which Microchip said it believed the inventory correction that triggered an Oct. 9 warning (and a major chip stock selloff) was mostly over. While a slew of chipmakers provided soft Q4 guidance after Microchip's warning, fears of a major correction didn't pan out.
- The group outperformed a bit yesterday after Cypress (CY +2.9%) announced it's merging with Spansion (CODE +2.5%), continuing the chip industry's consolidation wave. Several firms have upgraded Cypress and/or Spansion in response, praising the deal's cost synergies.
- Notable gainers include not only chipmakers, but also chip equipment, test/assembly, and IP licensing firms: ARMH +3.8%. AMBA +3%. MX +9%. MXIM +4.2%. AMCC +3.5%. ADI +3.1%. SIMG +3.7%. AMKR +4.2%. SPIL +3.3%. SYNA +2.7%. ATML +3.7%. ENTR +3.8%. AMAT +2.7%. KLAC +2.5%.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- Last week: Chip stocks rally after ADI's earnings
Dec. 2, 2014, 6:52 PM
- The DOJ is "vetting a buyer of assets to be divested" by Applied Materials (NASDAQ:AMAT) and Tokyo Electron (OTCPK:TOELF) to win approval for their still-pending merger, TheStreet reports. The DOJ issued a second request for information back in Dec. 2013, three months after the deal was first announced.
- Meanwhile, the Korea Times has reported Samsung, originally opposed to the deal, is urging Korean regulators to approve it after forming a new partnership with AMAT related to next-gen memory chip technologies. Korean approval is deemed likely to arrive "sometime in March or April."
- Chinese and Japanese regulators also still have to vet the deal, which stands to create an industry giant. Morningstar observed last year Applied/Tokyo will have a 40% or greater share in six chip equipment markets.
- TheStreet observes Tokyo, whose shareholders will own 32% of the merged company, still traded at a 10% discount to the merger price as of Monday.
Nov. 28, 2014, 2:32 PM
- Berenberg's Tammy Qiu declares Applied Materials (AMAT - Buy reiterated) and Lam Research (LRCX - launched at Buy) to be two of her favorite chip equipment plays ahead of an expected 2015/2016 slowdown in semi capex.
- Like David Einhorn and others, Qiu expects Lam to gain chip equipment share thanks to strong exposure to the FinFET (3D transistor) etching and 3D NAND flash deposition/etching markets.
- Applied is expected to benefit from both FinFET/3D NAND exposure and Tokyo Electron (OTCPK:TOELF) merger synergies. Qiu: "We believe TEL can improve its margin following the merger with AMAT, from single-digit to above 20%, by exiting non-profitable business, optimizing operations and platform alignment with AMAT."
- She's less enthusiastic about KLA-Tencor (NASDAQ:KLAC) and ASML, launching the former at Hold and reiterating a Hold on the latter. Though liking KLA's process control share (helps with regards to FinFET exposure), Qiu considers shares fairly valued at 21x estimated FY15 (ends June '15) EPS.
- ASML, meanwhile, is expected to see a relatively slow EUV sales ramp. Qiu expects ASML to ship only 40 EUV tools in 2019, below management's guidance for 50-60. In addition, sales of ArFi lithography tools are expected to "decline over time due to re-use and efficiency improvements."
- Altogether, Qiu forecasts semi capex will grow just 2% in 2015 and decline 7% in 2016, after growing 12% in 2014. Memory capex is expected to fare better than foundry/logic capex.
Nov. 13, 2014, 4:22 PM
- Applied Materials (NASDAQ:AMAT) expects FQ1 revenue to be flat to up 5% Q/Q, and EPS to be in a range of $0.25-$0.29. That's largely unfavorable to a consensus of $2.37B (5% Q/Q growth) and $0.31.
- FQ4 orders totaled $2.26B, -9% Q/Q and +8% Y/Y, and even with revenue (book-to-bill of 1). Backlog fell 2% Q/Q to $2.92B.
- Chip equipment orders fell 15% Q/Q to $1.33B, with DRAM, flash, and foundry declines offsetting logic/other growth. Foundries accounted for 50% of chip equipment orders, DRAM 20%, flash 12%, and logic/other 18%. Peers have also reported soft demand (foundry-driven) ahead of an expected 2015 pickup.
- Display equipment orders fell 56% Q/Q to $130M, something Applied attributes to "continued variability in industry order patterns." Energy/environmental (solar equipment) orders fell by a third to $44M; global services orders rose 35% to $747M thanks to strong demand for semiconductor services and spares.
- Gross margin was 44.2% vs. 45.5% in FQ3 and 42% a year ago. GAAP opex fell 9% Y/Y to $547M, thanks to a major drop in G&A spend.
- FQ4 results, PR
Nov. 13, 2014, 4:09 PM
Nov. 13, 2014, 9:10 AM
- Credit Suisse has upgraded Applied Materials (NASDAQ:AMAT) to Outperform ahead of this afternoon's FQ4 report, and set a $26 target. The firm predicts 1H15 chip equipment spending will be better than expected.
- Applied rallied three months ago following its FQ3 report, but has largely moved sideways since. The company and its peers have been dealing with a subdued 2H14 spending environment, thanks to delayed FinFET process investments from major foundry clients. A 2015 pickup has been promised.
- BofA/Merrill upgraded Applied last month,a rguing the company could produce $1.80/share in EPS once the Tokyo Electron merger closes.
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