Tue, Jan. 27, 1:24 PM
- BNP Paribas has downgraded KLA-Tencor (KLAC -2.3%) to Neutral in the wake of last week's soft FQ3 outlook, which was blamed on order push-outs from foundry and logic clients.
- The chip equipment maker is now within $5 of a 52-week low of $59.44, and trades for 15x estimated FY16 (ends June '16) EPS. There's $3.2B of debt on the balance sheet following last year's leveraged recap, to go with $2.4B in cash/marketable securities.
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.
Thu, Jan. 22, 5:36 PM
Thu, Jan. 22, 5:35 PM
- KLA-Tencor (NASDAQ:KLAC) guides on its FQ2 CC for FQ3 revenue of $685M-$762M and EPS of $0.63-$0.87, below a consensus of $790.5M and $0.98. Orders are expected to be in a $500M-$700M range (suggests book-to-bill will likely be below 1).
- Shares have fallen to $67.10 AH. KLA also provided light guidance in October and July, each time blaming delayed orders from a major foundry client for FinFET (3D transistor) process investments.
- FQ2 results, PR
Thu, Jan. 22, 4:16 PM
Wed, Jan. 21, 5:35 PM
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. 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
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. 26, 2014, 9:17 AM
Nov. 20, 2014, 10:02 AM
- In addition to declaring its $16.50/share special dividend, KLA-Tencor (KLAC -0.3%) has adjusted its FQ2 guidance to account for the leveraged recap that had the dividend as its centerpiece.
- The chip equipment maker now expects FQ2 EPS of $0.37-$0.61, down from prior guidance of $0.46-$0.70 and mostly below a $0.58 consensus. Due to the debt taken on to pay for the dividend, other income/expense is expected to be -$30M.
Nov. 19, 2014, 11:21 PM
Nov. 6, 2014, 8:51 AM
Oct. 31, 2014, 12:38 PM
- KLA-Tencor (KLAC +2.9%) is selling $250M worth of 2.375% notes due 2017, $250M of 3.375% notes due 2019, $500M of 4.125% notes due 2021, $1.25B of notes due 2024, and $250M of notes due 2034.
- The chip equipment maker will use the proceeds, along with $750M in term loans and cash on hand, to finance its $2.75B ($16.50/share) special dividend, and to redeem $750M worth of 6.9% notes due 2018.
- KLA had $2.9B in cash/marketable securities at the end of September, and $748M in debt. Shares are rallying on a good day for chip industry names.
Oct. 24, 2014, 12:54 PM
- Initially up over 15% yesterday in response to its leveraged recap plans, KLA-Tencor (KLAC +6.6%) has given back over half those gains after guiding on its FQ1 CC (transcript) for FQ2 revenue of $620M-$700M and EPS of $0.46-$0.70, below a consensus of $755M and $0.89.
- A broad bookings guidance range of $700M-$900M has been provided. FQ1 bookings totaled $567M, below guidance of $600M-$800M. As was the case 3 months ago, KLA blamed delayed orders from a foundry customer related to FinFET (3D transistor) process investments.
- Like many of its peers, KLA is maintaining an optimistic tone for 2015, predicting strong demand from foundry, logic, and memory clients due to investments in advanced technologies and processes (14nm/16nm FinFET, 3D NAND, etc.). After accounting for just 25% of FQ1 orders (lower than normal), foundries are expected to account for 62% of FQ2 orders.
- Credit Suisse and B. Riley have both downgraded KLA to Neutral. Each cites valuation.
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