Semiconductor Equipment - Berenberg Bank

Applied Materials Inc
Technology Hardware
Figure 10: AMAT has the most balanced market exposure
Growth markets exposure 2012 Legacy markets exposure 2012
ASML 100% 0%
ASMI 91% 9%
AMAT 61% 39%
LAM 74% 26%
KLA 100% 0%
TEL 23% 77%
Source: Gartner Data, Berenberg estimates
AMAT’s 2016 financial projection assumes WFE spend of $30bn-37bn: the highend
$37bn assumption gives AMAT 30% EPS upside compared with the $30bn
assumption.
Figure 11: WFE spend in 2016 to be $30bn-37bn
AMAT 2016 financial scenarios
bull case
WFE $bn 30.0 33.5 37.0 37.0
Market share 19.9% 19.9% 19.9% 21.9%
Revenue 9.9 10.8 11.7 12.4
SSG 6.0 6.7 7.4 8.1
AGS 2.5 2.6 2.6 2.6
Non semi 1.4 1.5 1.7 1.7
GM 44.0% 45.0% 46.0% 46.0%
Opex 2.1 2.2 2.4 2.5
Opex% 21.0% 21.0% 20.0% 20.0%
OP% 23.0% 24.0% 25.0% 26.0%
EPS 1.5 1.7 1.95 2.15
Share no mn 1,140 1,140 1,140 1,140
Source: Company data
We believe WFE spend can reach $37bn in 2016, which was the peak level seen
in 2011 and 2007. The strong WFE spend is likely to be driven by new technology
such as FinFET, 20nm, 3D NAND and 450mm migration, which is more
complex and capital-intensive than the technology in 2011 and 2007. All recent
WFE spending projections from the industry point to the same conclusion (see
Figure 12).
Figure 12: WFE could reach $40bn by 2017
$bn 2012 2013E 2014E 2015E 2016E 2017E
AMAT 30 -10%~flat yoy up 32~35 37
TEL 30 30 40
LAM 30 28~32
35~40
Gartner 30 27 32 37 36 39
SEMI 30 29 36
Berenberg 30 30 33 35 37 40
Source: Gartner data, company data, the SEMI trade organisation, Berenberg estimates
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