TGPTNDR
thank you, it is just not fun to filter flood of the messages from the trio.
On another topic, ML posted some notes today and they think that the volume asps
are $50-$55. They expect amd to continue gaining market share
Regards
-Albert
03:33pm EDT 16-Jul-01 Merrill Lynch (M.Tech Group (1) 212 449-2047) AMAT AMD
TECHNOLOGY:ML Tech Bits & Bytes 7.16PM
ML++ML++ML Merrill Lynch Global Securities Research ML++ML++ML
TECHNOLOGY
ML Tech Bits & Bytes 7.16PM
ML Tech Group (1) 212 449-2047
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including investment banking relationships, with the companies in this report.
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Semiconductor Capital Equipment: Semicon-West 2001 (Brett Hodess 415-676-
3546)
o In conjunction with Semicon-West, the following news worthy items have
already come out today.
o ThermaWave (TWAV: D-2-1-9, $16.35) Announced that they would beat their
1QFY02 consensus estimate (June quarter). Our estimate is $33 million revenues
and $0.06 EPS, consensus is $0.05 EPS. However, orders continue to be weak so
the following quarter will be down significantly and could have a small loss.
Our Sept. Qtr estimate is currently $30 million and $0.02 EPS. Also TWAV
announced that it has cancelled its joint development program with Applied
Materials (AMAT; D-3-1-9, $45.69) but is still working on specific programs
with AMAT. We do not believe the joint program cancellation is material,
however we would expect this to put some pressure on the stock near term.
o Ultratech Stepper (UTEK; D-2-1-9, $25.89) announced a joint development
program with Varian Semiconductor and Tokyo Electron. This program is focused
on solving the critical problem of shallow junction formation at 0.07 microns.
These three companies are leaders in the technologies required for this
problem. Ultratech brings its laser thermal processing (LTP) technology to the
solution - a key enabling piece of equipment. We believe this will be a major
opportunity for UTEK, with first equipment shipments in about a year. Our
source checks show that microprocessor companies like Intel are very interested
and could be early customers for this technology.
Applied Materials (AMAT, $42.56, C-3-1-9) Analyst Meeting at Semicon West
(Brett Hodess 415-676-3546)
o AMAT estimates capital spending will be down 27% this year vs last year.
Management stated it believes there could be a 2nd round of capital spending
cuts from semiconductor companies in 2H01 which could cause downward press to
AMAT's forecast of capital spending down 27%.
o AMAT indicated it has seen some 300 mm pushouts. The company believes the
industry could be near the bottom but that we are likely not at it yet. This
outlook is basically inline with our report last week that we expect capital
spending down 32% this year vs. last year.
o AMAT would not comment on its current quarter or the outlook for next
quarter. The majority of AMAT's presentation focused on new products and
integrated process solutions for new technologies. We maintain our Neutral/Buy
rating.
Semiconductors: MPU and DRAM Summary (Joe Osha 415-676-3510)
o With demand still weak, our checks indicate that both AMD (AMD; $20.19; C-
3-1-9) and Intel (INTC; $29.75; B-3-2-7) are offering pricing on high-end
desktop microprocessors that is far below either list or reported small-lot
spot. We believe that 1.4Ghz parts from both companies are being made
available in volume for approximately $100. We do not believe that a similar
gap between reported and actual pricing exists for the Celeron/Duron value
lines.
o Our checks also indicate that after a slow start, Intel is beginning to
see a pickup in P4 design activity. Whether this is the result of improving
demand or Intel's aggressive pricing is difficult to say, but regardless of the
reason we think that Intel's P4 ramp will be accelerating in the coming month.
We expect AMD to continue offering aggressive prices in an attempt to hold
market share. Intel's value processor lineup continues to look stale, although
the recent introduction of a 900Mhz part has helped a little. We expect
continued gains from AMD in this segment, although ASPs for volume deals are
low at $50 to $55. We saw little change in either list or small-volume spot
microprocessor pricing this week.
o DRAM parts declined 2% to 7% this week, modest as compared to the free-
fall that took place a week ago. Not surprisingly, 128M 8x16 PC100s fell the
most this week after losing only 1% last week. DRAM modules remain unchanged,
and this relative stability is probably the only "good" news in the memory
sector. With price now below variable manufacturing cost for most DRAM
players, this week's numbers confirm our belief that significant declines from
current levels are unlikely. We reiterate last week's closing remarks - at
current prices none of the DRAM manufacturers we cover are profitable.
(AMAT, INTC, TWAV, UTEK) The securities of the company are not listed but
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Copyright 2001 Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF).
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