Interesting to hear Rick Hill's opinion - of course it comes too late.
My guess first question will come from Timothy Arcuri on Monday
Did someone tell Arcuri that Samsung will convert the metal etchers into oxide etchers?
July 11, 2008, 9:55 am
AMAT: Citi Cuts Rating To Hold, Sees Samsung Cutbacks
Posted by Eric Savitz
Applied Materials (AMAT) shares are trading off sharply this morning after Citigroup’s Timothy Arcuri cut his his rating on the stock to Hold from Buy. He also cut estimates on KLA-Tencor (KLAC), Novellus (NVLS), Lam Research (LRCX) and Advanced Energy Industries (AEIS).
Arcuri reports in a research note that he sees AMAT’s Q3 semi equipment orders tracking down 5%-10% in sequentially off a Q2 that was at the low-end of guidance due to push-outs from Hynix that now also includes Samsung and Taiwan Semiconductor (TSM).
Arcuri writes that there have been “big changes at Samsung,” where the company has “significantly downsized” second half orders, with its Line16 now planned as “a stripped down copper fab” with re-used tools rather than a “full-blown production fab.” He says this is part of a strategic shift in which Samsung “appears to be moving away from wholesale capacity adds” and toward a just-in-time spending approach.
(is he trying to say Samsung is adding smaller chuncks more frequently?)
While Samsung’s more conservative stance is a long-term positive for the supply/demand equation in the memory sector, Arcuri says it “stifles our optimism” for a big Q4 recovery and “drives further risk” to second half fundamentals in the supply chain.
Arcuri says that estimates “still have to come down a lot.” For AMAT, he now sees EPS for the October 2008 fiscal year of 71 cents, down from 81 cents; for ‘09 he goes to 85 cents, from $1.32. For KLA-Tencor, his June 2009 estimate drops to $2.23, from $2.85. For Novellus, he goes to 28 cents from 55 cents for this year, and to 89 cents from 92 cents for next year. For Lam, his June 2009 fiscal year estimate drops to $1.04, from $1.97. For AEIS, he goes to 35 cents from 41 cents for this year, and to 63 cents from 76 cents for next year.
Arcuri takes his price target for AMAT down to $20 from $25; for KLAC, he goes to $50, from $56; for NVLS, $21, from $24; for LRCX, $36, from $47; for AEIS his target stays $14.
Lam Research (LCRX): The Big Winner in Micron (MU) Push To Copper
Posted by Eric Savitz
lrcxLam Research (LRCX) should be a big beneficiary as memory chip maker Micron Technology (MU) builds out three new 300mm semicondcutor fabs that will use copper instead of aluminum “interconnect” wiring on the parts. That’s the conclusion of a new report today by UBS’ Stephen Chin. The UBS analyst dived into the question of who will benefit from the huge spending required to outfit the new facilities. Chin figures it cost Micron $1.2 billion over the next 12 months for each of the three new fabs. That’s 65%-plus more than was required by older 200 mm aluminum fabs, he writes. Moreover, he says spending on etchers, equipment that lays literally etches circuitry onto the chips, will increase by more than 2x. And Lam, he finds, is likely to win an increasing percentage of Micron’s etch business.
Ergo, Chin today raised his rating on Lam shares to “buy” from “neutral,” and increased his profit estimates as well. He now expects fiscal 2006 profits of $2.38 a share, up from $2.35, and more importantly, sees fiscal 2007 profits of $3.30 a share, up from $2.74.
Chin also notes in his report today that he expects Applied Materials (AMAT) to win Micron’s orders for polishing tools, and Novellus (NVLS) to win some orders for electroplating equipment.
Lam shares today are up 68 cents at $44.52, while Applied is down 19 cents at $16.03 and Novellus is off 35 cents at $24.20. |
