Well, looking at your charts, it sure looks like some sort of retest, though with oil probing unprecedented heights (forgetting the inflation-adjusted stuff), you have to worry there's not a level lower waiting. Your 450 SOX target now is up 12%, as opposed to the +7% when first raised!
As far as AMAT's "cycle time" goes, leaving company-specific effects aside, my question had to do with the semiconductor cycle implications. A great deal of SCE analysis (eg Gottfried's good charts, but also lots of professional stuff) is based on historical analogy, relationships between order and revenues rates, and stock prices. If, in the past, it was necessary to order machines 9 months ahead of time (roughly 300 days), there are going to be a lot more ordering inefficiencies than if you can take delivery in 3 months (AMAT's goal). So the old model that cycle peaks are marked by wild order patterns--"just in case" orders that are then all cancelled--may not apply to the current state of the industry. And it's not just AMAT. Look at the incredible ramps at KLIC or BRKS with little incremental cost or payroll increase (except bonuses). If the entire group is moving to a delivery model that allows them basically to ship on a turns basis (within the quarter), why shouldn't this cycle be more measured and rational than previous ones? Every call I have listened to this quarter has stressed that they intend to remain profitable at all stages of the semiconductor cycle. That may be overly optimistic, but I have no doubt looking at the operating results that they have rationalized their businesses. ASYT is growing revenues 100% and laying off people. BRKS says they can handle downturns better because lots of basic functions (eg CAD/CAM) are now done by contractors. SCE is not heavy equipment, you cannot stockpile ion implanters like backhoes, but if buyers can rely on their capital goods suppliers to provide state-of-the-art machines on a schedule that allows them to match their production demand to equipment needs, using the most up-to-date forecasts, why shouldn't the whole industry show less and less excess buying and excess capacity, which is, after all, the analysts' bugaboo? |
