I see the equipment sector is doing well today. Wonder if it's on the words of Scott Kulicke?
''The semiconductor industry has ended a difficult year, but signs of it bottoming out are becoming evident,'' said C. Scott Kulicke, chairman and chief executive officer of K&S. ''We believe our order rate can improve modestly over the next few quarters, as customers move from technology upgrades that predominate today to capacity additions that signal the upside of an equipment cycle.
''While sufficient assembly capacity exists today to accommodate any near term increases in semiconductor units, an anticipated return to historic industry growth should give our customers confidence to increase orders for more assembly equipment, beginning later this year.'' biz.yahoo.com
I had sold some covered calls, but decided to buy them back today. Hoping ESIO follows a pattern of being a day behind the group. Volume seems pretty high for such a lack luster day.
Also, Kemet announced earnings and they seemed to have a positive outlook for the future although they still seem turbulent times this year with strength in 2000.
"We continue to make significant reductions in our operational costs and at the same time continue to improve our technical and manufacturing efficiencies," stated David E. Maguire, CEO and President. "These programs will enable us to be poised for the maximum leverage in earnings growth as the electronics industry recovers. For example, KEMET is now producing and shipping base metal electrode (BME) multilayer ceramic capacitors and continues to make substantial progress in the reduction of palladium usage. We continue to see signs of market improvement such as the slowing rate of decline in average selling prices, the stronger yen, and the positive outlook for the electronics industry in FY00, but we expect the recovery to be gradual and somewhat erratic over the next several months."
I've also seen something perhaps more important;
Samsung Snares $100M From Intel
Benefit for ensuring Rambus capacity; others may follow
By Peter Brown
Santa Clara, Calif.--Intel Corp. threw more bucks at the Rambus equation last week, signing a letter of intent to invest $100 million in Samsung Electronics Co. Ltd. after Samsung said it would produce half a million D-RDRAMs chips a month before June.
The financing is Intel's second major investment in a leading DRAM manufacturer in four months. The first came in the form of half a billion dollars invested in Micron Electronics, Inc. for ensuring that the company would commit to buying front- and back-end equipment for D-RDRAMs (EN, Oct.19, 1998).
Jim Handy, senior analyst at Dataquest Inc., a market research firm based in San Jose, said Intel is investing heavily to ensure volume production of D-RDRAMs by 2H99, about the same time Intel rolls out its microprocessors geared toward the Rambus memory. “This is a risky switch for Intel because they can't make a chipset that accepts both Rambus and PC-100 memory; it has to be one or the other,” said Handy. "If the DRAM guys can't manufacture the DRAM quick enough for when Intel's chipsets come out at the end of this year, then Intel may be left at the alter by the DRAM guys in terms of PC main memory."
Because of the hard times DRAM vendors have been facing, “the ability to invest in new technologies is somewhat diminished” so Intel is helping these DRAM companies ramp up volumes for next generation memory while getting an equity value in the company, said Intel spokesman Chuck Mulloy.
Mulloy said OEMs want to know there will be sufficient capacity for memory for PCs in the future and Intel is making sure the supply of D-RDRAMs will be in tune with the shipment of next generation high-speed processors.
More to Follow
Several analysts expect this to be only the beginning of this cash-for-capacity bonus that Intel is handing out to DRAM manufacturers. In addition to Samsung, last week both Hyundai Electronics Industries and NEC Corp. pledged to commit additional funds or capacity to ensuring that D-RDRAM is up and running by Intel's time table.
NEC pledged to boost its production of Rambus chips to 5 million by the end of the year while Hyundai said it would boost its sales of D-RDRAMs to $400 million this year. This might be a clear indication that both of these Far East companies may be the next beneficiaries of Intel's generosity.
"With the DRAM guys not willing to spend the money on back end equipment and get the capacity in place for Intel's processors, Intel has found a way to get them to spend a little quicker," said Steve Cullen, senior analyst at Cahners In-Stat Group, a market research firm in Scottsdale, Ariz.
The Pressure Is On
With companies now starting to reveal their plans to invest in D-RDRAM, Subodh Toprani, VP of the Logic Products division at Rambus Inc., believes this puts the pressure on the companies who have not revealed any plans. "With more companies being gun-ho about investing in the technology, it may leave others having to catch up later and some DRAM companies may not be able to do that,” Toprani said.
He noted that with Micron and Samsung now committed to having D-RDRAMs available by 2H99, the "perceived Rambus ramp up issues are now clearly solved."
According to Cullen, with Micron and Samsung, Intel now has invested in and has commitments from one-third of the DRAM market. With Hyundai potentially next, Intel could have 50 percent market share committed to D-RDRAM.
Die and Yield Concerns
Issues linger about the die penalties associated with D-RDRAM as well as low yield rates associated with manufacturing the PC main memory. "Since there is no market outside of PCs for D-RDRAM, the question for Intel is can they get DRAM vendors to increase their yields," said Dataquest's Handy.
Toprani says Rambus has not heard of any yield concerns and the overall maximum die penalty increase would be 15 percent compared to PC-100 DRAMs. He noted that those who want to slow the ramp down of D-RDRAM "so maybe they can catch up later seem to be complaining the most."
Commitment Required
"The real stumbling block is trying to get the DRAM guys to fully commit to invest in the technology and that is why we are seeing this investment from Intel," said Cullen. "And most indications are they have to do it now because there are various lead times that have to be accounted for and if they wait too long it will be too late."
Regards,
Mark
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