Semiconductor Equipment - Berenberg Bank

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: Berenberg 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.
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