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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey D who wrote (4885)	1/14/2003 9:42:28 AM
From: Jeffrey D	Read Replies (2) \| Respond to of 25522

Technology \| Electronics Manufacturing Infrastructure Semi equip. spending analysis from Piper Jaffray from December, 2002 for 2003. Jeff << SEMICONDUCTOR MANUFACTURING TECHNOLOGIES: 2003 CAPITAL SPENDING ANALYSIS December 2002 - Executive Summary The first-ever U.S. Bancorp Piper Jaffray bottom-up analysis of semiconductor capital investment, detailed below, suggests that capital spending for the top 26 global manufacturers in 2003 will be flat from 2002 levels. As a caveat to this survey, we acknowledge that capital budgets change quickly in response to changes in semiconductor device demand conditions. Based on this forecast, expect quarterly order rates at semi equipment suppliers to show improvement throughout the year, but at a relatively modest rate compared to the growth experienced during the first half of 2002. DRAM/memory looks to be the bright spot for growth next year, in which we estimate that budgets from major manufacturers will increase 30 percent in 2003 from 2002 levels. Logic IDMs are expected to reduce investment by about 12 percent next year, while foundries are budgeted to be about flat. By geography, capital investment for 2003 in Taiwan is expected to grow 6 percent; China/Korea/Singapore, 15 percent; Japan, 10 percent; and Europe, 21 percent, while North America is expected to decline by 15 percent. The trend of capital investment growth in Asia is unfavorable for smaller semi equipment companies that cannot support these regions, but favors companies like Applied Materials and Asyst that possess a higher concentration of business in these regions. Much of the capital spending in 2003 will be directed at ramping 300mm capacity with 130nm/copper process technology. The ramp of copper production benefits Novellus, while the eventual launch of new 300mm capacity favors Asyst. The transition to new technology nodes will continue to slow due to increasing challenges related to manufacturing technology as well as capital costs. As a result, the time for the industry to migrate to new technology nodes may take three years versus the historical trend of every two years. This may negatively impact the longer-term growth rate of companies that are leveraged to process technology growth, including KLA-Tencor and Veeco. Given current valuations in the semi equipment space, we believe a healthy recovery is already priced into most stocks. We would wait for meaningful pullbacks to get more aggressive in building or adding to positions in this sector. Risks - General risks for the semiconductor manufacturing technologies sector include 1) rapid changes in fundamentals due to the fast-moving and highly cyclical semiconductor industry, 2) ongoing changes in process technology which can negatively impact the growth outlook for certain companies, and 3) historical volatility in publicly traded semiconductor manufacturing technologies stocks. © 2003 U.S. Bancorp Piper Jaffray, 800 Nicollet Mall, Suite 800, Minneapolis, Minnesota 55402-7020