July 12, 2012 -- After meeting with various semiconductor manufacturing tool suppliers -- Applied Materials, KLA-Tencor, Lam Research, Tokyo Electron, Teradyne and Cymer -- at SEMICON West, Terence Whalen, semiconductor equipment sector analyst, Citi and colleagues share impressions on foundry spending plans and tool choices.
Whalen observes that Applied Materials (AMAT) expects a large ($500 million) H2 2012 foundry pushback, lowering its Q3 guidance to the bottom of its range, while other tool suppliers report virtually no change to their foundry customers’ plans. There is no change to TSMC’s aggregate 2012 capacity plan that Citi’s taiwan semiconductor analyst Roland Shu could find, though minor shifts in critical layer configurations could (at least partially) explain how AMAT could see weakness not experienced by other vendors.
Speculation has been “markedly negative” on H2 2012 semiconductor demand, Citi says, including talk of NAND capitulation, skepticism that foundry might weaken, and questions on whether Intel might reduce its blockbuster capex. Meetings at SEMICON West are largely confirming tool suppliers’ suspicions that there will be weak orders in Q3, picking up in Q4. Part of 3Q’s weakness may be amplified by heightened seasonality that arises given higher customer concentration, Whalen says. However, Citi accepts the potential for improving semiconductor demand into Q3, which might strengthen capex in Q4.
Foundry orders will rebound sooner in H2 2012 than NAND, which see increases in H1 2013, Citi predicts. Based on its interviews with Lam Research and others, Citi expects flat or slightly better foundry capex in 2013, driven by steady 28nm deployments.
Some notes on equipment trends:
- Single-wafer clean is gaining traction as chipmakers performance demands rise (source: Lam Research);
- Intel’s investment in ASML is likely a move to coordinate supplier timing to chipmaker need on the transition to 450mm wafers;
- 20nm foundry activity is increasing (source: KLA-Tencor);
- Tokyo Electron is looking to grow its business in semiconductor packaging (recent NEXX buy) and organic light-emitting diode (OLED) fab.
Read more from Whalen at http://ir.citi.com/%2BnkGI0K%2BGgl2DqdhefgsTRHbYsIMp6NZjGciK%2FrzUDc%3D