Semiconductor equipment stocks seen rising in 1998
NEW YORK, Feb 18 (Reuters) - Shares of companies that supply equipment and services to computer chip makers are seen rising this year amid the belief that the worst of the Asian economic crisis has passed, industry analysts and company executives said on Wednesday.
Even though capital spending on semiconductor equipment by Asian companies will likely dip this year and perhaps next, strength in other areas of the industry will buoy companies that are strategically prepared, according to speakers at the Seminvest conference in New York.
''We've probably seen a lot of the worst, and we think that investors over the next 12 to 18 months will see higher stock prices,'' Jonathan Joseph of NationsBanc Montgomery Securities said.
''The deeper the cuts in 1998, the better,'' said Elliott Rogers of Deutsche Morgan Grenfell, referring to expectations of reduced spending this year by Asian chip makers. He said many companies in the sector were looking beyond this year and planning for growth in 1999 and 2000.
This month, semiconductor equipment companies such as Applied Materials Inc (AMAT - news) and Lam Research Corp (LRCX - news) have revealed wounds from Asia's recent economic problems, including slowed growth in orders and sales.
Chip makers in South Korea and other Asian countries buy a big chunk of all chip-making equipment each year.
Even so, James Morgan, Applied's chairman and chief executive, said the current market was rich with long-term opportunity, particularly for his company's products outside of the memory chip area. Applied's North American business is healthy, and Europe's economic climate is improving, driven by strong demand for logic and telecommunications devices, he said.
''While there may be some cutback in the next couple of quarters, the long-term viability is not in doubt,'' Morgan said. ''This should not be seen as a trend specific to our industry, but should be viewed as something that we have to deal with,'' he said.
Morgan said the industry was closely watching Japan, where spending decisions for the next fiscal year are expected to be made soon.
''The key now is Japan,'' Morgan said. ''Depending on how that comes out will affect the entire industry.''
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