Debate rages over IC-equipment outlook for Q3, Q4
By Mark LaPedus
Silicon Strategies
10/07/2003, 2:40 PM ET
SAN JOSE -- The consensus among analysts is that chip-equipment makers are finally seeing a slight order upswing in the third quarter of 2003, but there is still considerable debate about the outlook for the fourth quarter and beyond.
Some analysts believe that Samsung, TSMC, and others are ready to open up their purse strings and procure new tools by year's end, thereby propelling the fortunes of beleaguered chip-equipment makers in the second half of 2003--and beyond.
Still others see an entirely different--and weak--picture for Q4. And there are still no signs of a complete recovery in the slumping fab-tool sector. Some don't see a real upturn until mid-2004 or beyond, although others look at the glass half full.
"There are plenty of positive signs right now," said Cristina Osmena, an analyst with Needham & Company Inc. of New York. "But it's still a DRAM spending environment," Osmena said, referring to recent DRAM capital spending surge from the likes of Taiwan's Nanya Technology Corp. and Korea's Samsung Electronics Co. Ltd.
The slight upturn in fab-tool orders could be short-lived, however. Osmena also said there are signs of "air pockets" or a vacuum of orders for chip-equipment makers in the fourth quarter of 2003.
Others agreed. Several chip makers are "scrambling" to make their equipment procurements in the third quarter to prepare for what could be a strong Holiday Season, said G. Dan Hutcheson, president of VLSI Research Inc., based in Santa Clara, Calif.
Lead times have suddenly extended for select, cutting-edge tools, such as low-k-enabled chemical vapor deposition (CVD) systems, 193-nm lithography scanners, and track units, Hutcheson said (see October 2 story). But typically, chip makers tend to de-accelerate their equipment procurements in Q4, because it is too late to bring in gear for the anticipated Holiday Season, he said.
Byron Walker, an analyst with UBS Securities LLC in New York, believes that leading chip-equipment makers will report "conservative" guidance for Q4, including KLA-Tencor, Novellus, and Lam. "We believe that all three made their September quarters," Walker said in a report issued today (Oct. 7, 2003).
"We expect conservative December guidance," he said. "It is unclear whether the Taiwanese foundries will begin to aggressively place orders late in the (December quarter) or early in the (March quarter)," he said. "Consequently, we expect some degree of conservatism. We now believe that order guidance will range from flat to up 10 percent Q/Q (for Q4)."
Others are slightly more bullish. Stephen O'Rourke, senior analyst with US Bancorp Piper Jaffray, agreed that Q3 orders will be stronger Q4, but he doesn't count out the possibility of an order binge by year's end, especially among the leading silicon foundries.
"We believe overall order growth for the December quarter could approach 10 percent, following orders growth of >10 percent in CQ3," O'Rourke said in a report issued this week. "We believe Samsung could begin to place some L13 orders in CQ4, which could help support orders growth in the quarter," he said, referring to Samsung's L13 fab.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) is also supposed to open up its purse string and invest after pushing out its capital spending budgets, he said. TSMC is expected to place fab-tool orders for its 300-mm Fab 14 complex in the first quarter of 2004.
"We view Samsung and TSMC F14 as a principle swing factors for CQ4 orders, and anticipate the bulk of TSMC F14 orders to be placed in CQ1," he said. "We believe the foundries will wait until late CQ4 to assess the 1H'04 environment and anticipate orders after the holiday season."
What's in store for the first quarter of 2004? "We believe CQ1could show healthy orders growth driven in part by TSMC, and Samsung L13, and that potential orders from Renasas and Matsushita," he said. |
