Semiconductor Equipment - Berenberg Bank

More documents

Recommendations

Info

Applied Materials Inc Technology Hardware Key risks The key risks to our investment case are as follows. 1. Capex cuts at Samsung, Intel and TSMC: AMAT generated 45% of its revenue from Samsung, Intel and TSMC in 2012. Any capex cut or investment delay from these three companies would thus have a significant impact on AMAT due to the high level of customer/capex spender concentration. In our opinion, Samsung, Intel and TSMC are not likely to reduce their capex spending at any time soon. All of them are heavily exposed to the consumer electronics market, which is highly competitive, and they have to keep up to speed with the most advanced manufacturing technologies to maintain their competitive advantage. 2. Sluggish solar energy market: The solar energy market as a whole has suffered from oversupply in recent years. AMAT’s solar segment (EES) made an adjusted operating loss of $46m in 2012 before impairment charges. Orders were down by 88% yoy in 2012, and down by 43% qoq in Q2 2013. This continuing underperformance will have a negative impact on total corporate earnings. In our opinion, the solar market will continue to underperform over the next two years, until the oversupply issue is resolved. AMAT’s cost saving programme may only be able to narrow the operating loss down to $137m in 2013 as per our estimate. 106
Applied Materials Inc Technology Hardware Financials AMAT’s revenue includes revenue from selling equipment used in semiconductors for manufacturing, FPD fabrication and solar PV panel manufacturing processes. It reports revenue under four segments: SSG, Applied Global Services (AGS), Display and EES. Order trend down for the remainder of 2013 SSG order intake has increased by 14% qoq (see Figure 18 below), which trended to the same direction as its front-end semiconductor equipment peers. Management guided that the full-year wafer fab equipment market would be flat/down 10%, hence we expect the order intake to be down in Q3 and Q4, as the ytd order is already higher than 55% of 2012 total order. In addition, a week-long factory shutdown is due to take place in Q3, which we believe is an indication that management may have already noted some early sign of slowing down. As a result, we expect SSG orders to slow down in Q3 and Q4. Figure 18: Order trend in 2013 Jan Q1 Apr Q2 Jul Q3 Oct Q4 2012 Jan Q1 Apr Q2 Jul Q3E Oct Q4E 2013E (Dollars in millions) SSG 1,418 1,969 1,166 741 5,294 1,363 1,551 1,365 1,338 5,616 AGS 517 650 531 576 2,274 544 481 481 481 1,987 Display 40 84 67 83 274 138 195 218 245 796 EES 33 62 35 65 195 68 39 39 40 186 Total 2,008 2,765 1,799 1,465 8,037 2,113 2,266 2,104 2,103 8,586 Out of total SSG 71% 71% 65% 51% 66% 65% 68% 65% 64% 65% AGS 26% 24% 30% 39% 28% 26% 21% 23% 23% 23% Display 2% 3% 4% 6% 3% 7% 9% 10% 12% 9% EES 2% 2% 2% 4% 2% 3% 2% 2% 2% 2% QOQ % change SSG 53% 39% -41% -36% -- 84% 14% -12% -2% -- AGS -8% 26% -18% 8% -- -6% -12% 0% 0% -- Display 100% 110% -20% 24% -- 66% 41% 12% 12% -- EES -62% 88% -44% 86% -- 5% -43% 1% 1% -- Total 26% 38% -35% -19% -- 44% 7% -7% 0% -- Source: <strong>Berenberg</strong> estimates Revenue/order by customer/region Samsung, TSMC and Intel are AMAT’s top three customers, accounting for 32%/45% of the group revenue in 2011/2012 respectively. The majority of its revenue and order intake is from Asia. We expect to see a similar revenue/order customer/region mix in the future, as Samsung, TSMC and Intel are expected to remain the main capex spender in this sector. 107
Page 1 and 2:
BERENBERG EQUITY RESEARCH Semicondu
Page 3 and 4:
Table of contents Shrinkage brings
Page 5 and 6:
Semiconductor Equipment Technology
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
ASML Holding NV Technology Hardware
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42:
Page 43 and 44:
Page 45 and 46:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
ASM International NV Small/Mid-Cap:
Page 55 and 56: ASM International NV Small/Mid-Cap:
Page 75 and 76: Suess Microtec AG Small/Mid-Cap: Te
Page 93 and 94: Applied Materials Inc Technology Ha
Page 105: Applied Materials Inc Technology Ha
Page 117 and 118: Tokyo Electron Ltd Technology Hardw
Page 137 and 138: Semiconductor Equipment Technology
Page 139 and 140: Semiconductor Equipment Technology
show all

Semiconductor Equipment - Berenberg Bank

Create successful ePaper yourself

Delete template?

Save as template?