SA Transcripts • Aug. 2, 2014
Jul. 31, 2014, 11:18 AM
- Samsung's (OTC:SSNLF, OTC:SSNGY) memory sales were a strong point for the company in Q2: They rose 10% Q/Q and 21% Y/Y to KRW6.92T ($6.7B). But the company also hiked its 2014 DRAM industry bit supply forecast to low-30% growth from a prior high-20%. Samsung itself expects to grow bit production at a high-40% rate.
- Morgan Stanley notes Samsung once forecast mid-20% industry growth, and that it's increasing capex to make another production line DRAM-capable in 2015. MS reported earlier this month Samsung is planning to hike its DRAM output.
- Micron (MU -7.7%), whose shares have soared on expectations a favorable DRAM supply/demand balance will continue, isn't taking the news well. Samsung's production hike is also a negative for SK Hynix (OTC:HXSCL).
- Samsung fell 3.7% overnight in Seoul, though that arguably had more to do with the performance of its mobile ops than its chip ops. Weak high-end tablet sales and smartphone share losses to Chinese OEMs led mobile sales to fall 12% Q/Q and 21% Y/Y to KRW27.5T ($26.6B).
- The company expects 2H mobile sales to grow with the help of seasonality, but also (in what's at least a partial reference to the iPhone 6) cautions competition is set to intensify.
- Samsung's Q2 slides (.pdf)
Jul. 9, 2014, 10:18 AM
- Morgan Stanley reports Samsung (SSNLF, SSNGY) plans to hike its DRAM output. Micron (MU -3.5%), whose shares have risen over 6x from their fall 2012 lows, is selling off in response. Peer SK Hynix (HXSCL) fell 4.1% in Seoul.
- Digitimes recently reported Samsung is thinking of building a new DRAM fab in 2015, as industry consolidation and strong mobile and server-related demand keep prices high. The site also reported spot prices for 4Gb DDR3 DRAM chips could rise to $4.80-$5.00 in Q3, after rallying to an 18-month high of $4.35 in late June.
- TrendForce estimates Samsung had 35.5% of the global branded DRAM market in Q1, SK Hynix 28.2%, and Micron 28%.
- This morning, SA author David Alton Clark argued Micron investors should tread carefully at current levels, given the DRAM industry's historical cyclicality.
- Previous: Samsung reportedly planning to hike DRAM contract prices
Jun. 30, 2014, 10:05 AM
- Three weeks after hiking its Micron (MU +3.5%) PT to $50, Credit Suisse is planting itself even more firmly on an increasingly crowded bandwagon by adding the memory giant to its Focus List.
- CS praises a valuation of 9.8x EPS, and sees new products and margin expansion driving future EPS growth.
- Separately, Taiwan's Economic Daily News reports Samsung (SSNLF, SSNGY) has told clients it plans to raise DRAM contract prices by 10% starting in July.
- The paper also states spot prices for mainstay 4Gb DDR3 DRAM chips (widely used in PCs) could reach $4.60 in Q3. DRAMeXchange showed an average Friday price of $4.255, following a Q2 gain of nearly 20%.
- Previous: Micron jumps post-earnings
May. 23, 2014, 1:45 PM
- Korea's ETNews.com reports Samsung (SSNLF) and LG (LGEIY) are interested in adopting sapphire cover glass for their phones, and recently asked sapphire wafer/ingot makers to submit samples.
- The site adds the companies were previously reluctant to adopt sapphire due to its steep cost, but have changed their minds following Apple's embrace of the technology.
- Like much of the industry, Samsung/LG have been avid users of Corning's (GLW +0.5%) Gorilla Glass. Sapphire cover glass is thinner, stronger, and more scratch-resistant than Gorilla Glass, but also much more costly for now. Samsung took a 7.4% stake in Corning last year as part of a deal to sell its stake in the Samsung Corning JV.
- GT Advanced (GTAT +8%), currently quite busy ramping sapphire production for Apple, has shot higher on the report. Though GT has said its Apple deal "will be subject to certain exclusivity terms during the duration of the agreement," there could still be a long-term opportunity to service other OEMs. Moreover, stronger industry demand stands to improve GT's pricing power.
- SA author Matt Margolis notes the Apple exclusivity deal doesn't cover GT's sapphire laminate solutions (enabled by its Hyperion tech).
- Sapphire wafer vendor Rubicon (RBCN +4.8%) is also up sharply, aided by an Oppenheimer upgrade.
Apr. 30, 2014, 10:49 AM
- Digitimes reports Micron (MU +2.7%) will likely hike DRAM prices in May "due to low inventory levels in the supply chain and insufficient supply of memory chips from Samsung Electronics (SSNLF) and SK Hynix (HXSCL)"
- Samsung is said to be dealing with low yields for its new 25nm DRAM process, leaving it unable to fulfill orders from PC OEMs, and Hynix's efforts to restart production at its fire-damaged Wuxi, China fab have reportedly been slowed by the installation of new machinery.
- DRAM prices surged last year as industry consolidation, restrained capex, and strong mobile DRAM demand led to a favorable supply/demand balance. David Einhorn's bull case for Micron is based in large part on a belief consolidation will produce long-term changes in the industry supply and pricing dynamics.
- Yesterday, Samsung reported Q1 memory (DRAM + NAND) sales of 6.29T won ($6.08B), -3% Q/Q (mobile seasonality) but +23% Y/Y. The company added PC DRAM demand is stabilizing, and that SSD and high-density memory card sales are boosting NAND demand.
- Samsung expects a "balanced" DRAM supply/demand environment in 2014, and strong PC and data center SSD demand to fuel NAND growth.
Apr. 14, 2014, 2:53 PM
- U.S. first-day Galaxy S5 sales were up 30% relative to first-day S4 sales a year ago, Samsung (SSNLF) declares. The electronics giant also states sales in certain other markets doubled Y/Y.
- Pac Crest's checks also paint a favorable picture of U.S. S5 sales: The firm estimates average inventory sell-through hit 60% within four hours, and thinks sales were especially strong at Verizon thanks to a 2-for-1 promotion.
- Needham thinks S5 sales could reach 10M sales in 25 days vs. 27 for the S4. The firm is reiterating a Buy on touch controller/fingerprint sensor supplier Synaptics (SYNA +3.7%).
- Two caveats: 1) Samsung's numbers typically measure sell-in to carriers/distributors rather than consumer sell-through. 2) S4 sales also got off to a hot start, but later slowed down.
- Compared with the S4, Samsung has taken a no-frills approach with the S5, emphasizing practical features such as waterproofing/dust-resistance over sensor-based features (Smart Pause, Smart Scroll, etc.) often derided as gimmicks. The company has also provided modest discounts relative to the S4 (the S5 still typically goes for $600+ unsubsidized), as it contends with aggressive high-end pricing from Chinese Android rivals.
- Synaptics is outperforming, as is motion sensor supplier InvenSense (INVN +1.7%), which gets over 30% of its revenue from Samsung. S5 OLED materials supplier Universal Display (OLED +0.6%) is up slightly. Synaptics reports on April 24, and InvenSense on May 1.
Jan. 24, 2014, 2:08 PM
- Chip equipment stocks aren't getting spared from a general market selloff after Samsung (SSNLF - the world's #2 chipmaker) guided for its 2014 chip capex to be flat Y/Y. AMAT -1.6%. LRCX -3.7%. ASML -0.7%. UTEK -2.2%. RTEC -3.2%. MTSN -5.1%.
- Industry analyst Robert Marie observes this is the first time since 2009 that Samsung hasn't upped its chip capex budget. With Intel and TSMC (the industry's two other big clients) also guiding for capex to be flat (if not down) this year, Marie is cautious about 2014 growth, even though others have forecast sales will rebound sharply this year following a rough 2013.
- KLA-Tencor (KLAC -2.2%) is joining the selloff even though the company posted an FQ2 EPS beat yesterday afternoon, and provided healthy FQ3 guidance - revenue of $790M-$850M and EPS of $1-$1.20 vs. a consensus of $814.5M and $1.11 - on its CC (transcript). KLA also forecast FQ3 bookings will be in a range of $700M-$800M (implies 10% Q/Q growth at the midpoint), and struck an upbeat tone about 2014 investments in 20nm and 3D NAND flash capacity.
- KLA still expects 10%+ industry growth this year, but admits its outlook is "slightly weaker" than it was three months ago. The company also believes industry adoption of EUV lithography (important for ASML) has generally been pushed out to the 7nm process node from the 10nm node.
Jan. 2, 2014, 10:40 AM
- The Korean won's strong performance over the last six months is leading a growing number of analysts to worry Samsung's (SSNLF, SSNGY) Q4 results will miss estimates.
- The company's chip business is especially vulnerable to forex swings, since it relies on dollars for order settlement. BNP Paribas estimates every 1% change in the won/dollar exchange rate hurts the op. profit of Samsung's chip division by 4%.
- Citing exchange rates and (to a lesser extent) margin pressure for Samsung's OLED display business, IBK Investment is now expecting the electronics/display/chip giant to post a Q4 op. profit of KWT9.5T ($9.04B), below a KWT10.3T Thomson Reuters consensus.
- Korean automakers Hyundai (HYMLF -5.1%) and Kia (KIMTF -6.1%) also fell hard in Seoul overnight. South Korea's benchmark KOSPI index fell 2.2%.
- Korean ETFs: EWY, FKO, KORU, KORZ, DXKW
Dec. 18, 2013, 10:33 AM
- Bloomberg reports SK Hynix (HXSCL), still recovering from a September fire at a Chinese DRAM fab, plans to build a new South Korean DRAM fab to address surging mobile DRAM demand.
- Construction will start next year, and production could begin in 2015. Hynix reportedly plans to spend KWT4T ($3.8B) on the fab, and to upgrade existing facilities.
- Micron (MU -6.8%) investors aren't taking the news well. Shares have flown higher this year thanks to rising memory prices and expectations a newly-consolidated DRAM industry will see a favorable supply/demand balance for years to come. Micron significantly increased its exposure to mobile DRAM, which tends to carry higher margins and see less price volatility than PC DRAM, through the Elpida deal.
- A new Hyniix DRAM fab would also be a negative for Samsung (SSNLF, SSNGY). DRAMeXchange estimates Samsung had a 37.1% Q3 DRAM share. Hynix is assigned a 28.5% share, and Micron a 26.2% share.
Dec. 11, 2013, 10:58 AM
- MKM reports the Wuxi, China SK Hynix (HXSCL) DRAM plant that was badly damaged in a September fire will be operational by mid-January, well ahead of the mid-2014 timeframe forecast by others.
- Micron (MU -2.1%) is slipping, as is SanDisk (SNDK -1.5%), which benefits when NAND flash capacity gets reallocated to deal with DRAM shortages.
- Micron and SanDisk rallied on Monday amid a flurry of positive DRAM sales, pricing, and supply-related news.
- Samsung (SSNLF, SSNGY), the world's largest DRAM manufacturer (37.1% Q3 share per DRAMeXchange), fell 1.4% overnight in Seoul. Hynix rose 0.8%.
Dec. 9, 2013, 12:22 PM
- Digitimes reports DRAM spot prices continue to jump, with recent quotes "soaring more than 5% on a single day." Tight supplies (caused in part by the SK Hynix fire), PC OEM inventory replenishment, and order pull-in from Chinese tablet vendors are said to be contributing factors.
- Naturally, spot price strength is expected to bolster contract pricing, whose growth has been tempered somewhat by attempts from SK Hynix and peers to adjust capacity in the wake of the fire.
- The report backs up recent comments Morgan Stanley's Joseph Moore, who has reported seeing a pickup in orders from the PC supply chain.
- Also: Both Taiwanese DRAM vendor Nanya and Micron/Nanya's Inotera JV have reported strong November sales. Nanya's sales rose 34% Y/Y to NT$3.85B ($130M), and Inotera's sales rose 117% to NT$6.46B ($218M).
- Aided by a favorable supply/demand balance and healthy mobile DRAM growth, the DRAM industry is expected to perform well again in 2014, though growth is expected to slow from 2013's levels. DRAMeXchange forecasts sales will rise 14% to $40B, after growing 32% in 2013.
- Micron (MU +3.9%) is making new 52-week highs, and SanDisk (SNDK +1.6%) is also up. Though not a DRAM vendor itself, SanDisk benefits from DRAM strength to the extent NAND capacity gets reallocated for DRAM production. Samsung (SSNLF, SSNGY) rose 1.8% overnight in Seoul, and SK Hynix (HXSCL) rose 2.4%.
Sep. 5, 2013, 2:50 PM
- Countering comments made by SK Hynix (HXSCL.OB) yesterday, Wedge Partners says the fire that broke out at Hynix's Chinese memory fab will cause at least a 2-month production delay, and that Hynix has suspended price negotiations with clients.
- The remarks come as DRAM spot prices jump 20% on account of the fire, and reports emerge several top memory manufacturers have joined Hynix in putting shipments on hold.
- There could be major downstream ramifications: TrendForce thinks 11M notebook shipments and 10M smartphone shipments will be affected within a month if "main production procedures are halted." The firm estimates it will take 6 months for all of the damage to be fixed.
- Prior to the fire, DRAM and NAND prices had been slumping this summer after rallying earlier this year.
- Micron (MU +3%) and SanDisk (SNDK +1.9%) are adding to yesterday's gains. DRAM/NAND giant Samsung (SSNLF.PK, SSNGY.OB) rose 1.9% overnight in Seoul, while Hynix fell 1.8%.
Currently, there's no company description for SSNGY.
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