Analysts disagree over Novellus' outlook in 2H '03
By Mark LaPedus
Silicon Strategies
09/29/2003, 3:20 PM ET
SAN JOSE -- Chip-equipment maker Novellus Systems Inc. is expected to meet its order forecast in the third quarter of 2003, although analysts disagree over the company's prospects for the fourth period of this year.
In separate reports issued today (Sept. 29, 2003), American Technology Research Corp. and Berean Capital Inc. agree about Novellus' Q3 outlook. The San Jose-based fab-tool supplier is expected to meet its Q3 order guidance of $220 million, up 11 percent from the previous quarter, with break-even results in the period, according to the report from Berean Capital of Chicago.
In Q3, Novellus is expected to garner orders from Sony, Toshiba and Elpida, according to American Technology Research in San Francisco.
But the research firms disagree about Novellus' outlook in the fourth quarter. Vijay Rakesh, an analyst with investment banking house Berean Capital, believes that Novellus' order rates in Q4 "could be softer than other OEMs" in the industry, such as Applied Materials Inc. and Lam Research Corp.
Novellus--and other chip-equipment makers--may be hard pressed in Q4. "Capex under spending is more widespread than earlier estimates and the fourth quarter spike in bookings may not happen, as chip manufacturers evaluate current capacity and capital requirements," Rakesh said in the report. "We believe major chip manufacturers are delaying orders with widespread pushouts."
Orders for Novellus' capacity-driven tools are weak, such as physical vapor deposition and chemical vapor deposition, he said. Novellus is expected to report earnings of $0.05 in Q4, according to Berean Capital.
Bill Ong, an analyst with research firm American Technology Research, disagreed. "There has been recent investor concern on Novellus' sequential order pattern over the next couple of quarters," Ong said in a report today.
"We believe these concerns are unwarranted and would cite the ongoing improvement in industry fundamentals that will benefit most semi equipment providers and in particular, leading process tool makers such as Novellus," Ong said. "Our checks indicate that orders are expected to improve sequentially over the next several quarters as visibility increases driven by strong DRAM investments followed by the foundries."
Novellus will benefit from order activity at Samsung, Intel, and others. "Orders from Samsung's line 13 are likely to be placed in the December quarter and are expected to be pulled-in from 1Q04," Ong said. "From Intel's positive presentation on fab manufacturing requirements, as well as their $450 million investment to Micron, our contact concurs that copper interconnect tools will be a major investment in the fourth quarter and next year."
Even the silicon foundries may be ready to order after holding back their procurements. "While the timing of foundry orders has been debated in recent weeks, if they do not occur in the fourth quarter, they are near certain to be placed by 1Q04 for TSMC Fab 14, United Microelectronics and UMCi-Singapore," according to the report. "Incremental orders in 1H04 could also come from Hynix and Matsushita as 300-mm investment becomes an increasingly critical necessity to stay cost-competitive." |
