From Briefing.com today: Axcelis Tech (ACLS +3%) is ticking nicely higher today after predicting Q2 revenue would exceed the high-end of its prior guidance, which called for revs of $205-215 mln. After Micron's (MU) gloomy outlook earlier this month, which stemmed from weakening PC and smartphone demand, sent a shockwave to the semiconductor industry, ACLS's updated forecast is helping alleviate fears that the company would follow a similar bearish path.
Investors already breathed a sigh of relief last week after chip manufacturing titan Taiwan Semi (TSM) guided Q2 revs above consensus. Therefore, ACLS's upbeat Q2 forecast also reinforces that market conditions have not worsened.
ACLS is a semiconductor equipment supplier focused on ion implantation, a principal step in the chip manufacturing process. Although ACLS's customer base is wide-reaching, supplying the world's largest chip manufacturers across the US, Asia Pacific, and Europe, its two primary customers are Samsung Electronics (SSNLF) and Hong Kong Stock Exchange-traded Semiconductor Manufacturing International Corp, or SMIC for short. These two companies represented 10% or more of ACLS's FY21 revs.
- With Samsung and SMIC accounting for such a material portion of ACLS's annual revs, it was a good sign that in early May, SMIC commented it had already adjusted its smartphone-related capacity significantly in anticipation of a slowdown in demand.
- Additionally, SMIC noted it still saw shortages in certain components, including power management, in mobile phones and consumer PCs. These shortages bode well for ACLS, which continues to capture additional market share in power management.
- Furthermore, ACLS commented that investment in the power market is proliferating, which is good news for its new Purion product extensions launched last year. ACLS expects its Power segment to account for 30-40% of its system shipments in FY22.
- Even though Samsung shared similar sentiments as Intel (INTC) in regards to weakening consumer PC demand, it expressed bullish views on enterprise PC demand. The company stated that due to workers increasingly returning to the office and the expansion of hybrid work, enterprise PC sales should help ease some effects of weak consumer PC demand.
Overall, ACLS's upbeat Q2 revenue forecast is another encouraging sign that the semiconductor industry is still performing well despite macroeconomic challenges dampening PC and smartphone demand. With earnings season just around the corner, this is a good sign for chip companies with reduced exposure to the consumer PC and smartphone industry. |
