Four Picks In EMS To Benefit From New Intel Plant
Ed Lin, 11.15.05, 9:48 AM ET
UBS Investment Research analyst Stephen Chin said media reports from Israel indicate that Intel (nasdaq: INTC - news - people ) may be building its second 300 mm, 45 nm plant. The company's first is in Arizona.
The new plant, known as fab 28, in Israel is expected to require a $4.4 billion investment, "of which we believe about 62% would be for equipment, representing 38% more than our estimate for Intel's 45 nm fab in Arizona," Chin wrote in a research report.
Chin noted that electronic manufacturing services (EMS) companies Varian Semiconductor Equipment Associates (nasdaq: VSEA - news - people ), KLA-Tencor (nasdaq: KLAC - news - people ), Applied Materials (nasdaq: AMAT - news - people ) and Novellus Systems (nasdaq: NVLS - news - people ) will all benefit from the new Intel plant.
Varian has the most potential sales and earnings-per-share upside, as much as $140 million and 37 cents per share, respectively, starting in calendar 2007, he said.
The analyst said KLA-Tencor, Applied Materials and Novellus "will likely maintain their existing 65 nm product relationships with Intel into its 45 nm node. We estimate Intel represents 8% to 9% of KLA-Tencor's and Applied Materials' sales, and slightly over 10% of Novellus' sales." |
