Semiconductor Equipment - Berenberg Bank

Applied Materials Inc
Technology Hardware
expanding 20nm output using DP, and by the expansion of HKMG process
adoption.
By late 2014/2015, the semiconductor equipment market will be driven by 3D
NAND- and FinFET-related spending. Recent comments from management
suggest that its expected memory order intake in H2 is likely to be less than 25% of
total orders, which is less positive than KLA’s and LAM’s recent results and
statements.
KLA is expecting memory to account for 44% of the June quarter’s total order
intake, up from 28% in the March quarter and 17% in the December quarter.
LAM’s memory shipment increased from a low 20% of total shipments in
December 2012 to 31% in the March quarter. We therefore believe that AMAT’s
memory exposure is not as great as peers KLA’s and LAM’s, hence its revenues
from the 3D NAND capex boost may be limited. We estimate a much smaller
revenue growth rate (3%) in 2015 following a 26% increase in 2014, due to
AMAT’s memory exposure is lower, and majority of the equipment required for
3D NAND capacity building would be shipping in 2014.
We estimate that the AGS division’s revenue will decrease in 2013, due to the
decreased order levels since H2 2012. Display revenue is expected to grow in 2014
driven by recent order increases, but we remain cautious about the sustainability of
a high order level. We estimate EES activity to remain at a low level, and we do not
expect a major improvement until the industrial oversupply issue has been
resolved.
Figure 22: Revenue model by segment
2011 2012 2013E 2014E 2015E
Revenues
(Dollars in millions)
SSG 5,414.0 5,536.0 4,945.3 6,186.7 6,359.5
AGS 2,413.0 2,285.0 2,037.0 2,115.0 2,237.3
Display 699.0 473.0 616.9 901.6 762.6
EES 1,991.0 425.0 184.3 234.4 267.0
Total 10,517.0 8,719.0 7,783.6 9,437.8 9,626.5
% of total
SSG 51.5% 63.5% 63.5% 65.6% 66.1%
AGS 22.9% 26.2% 26.2% 22.4% 23.2%
Display 6.6% 5.4% 7.9% 9.6% 7.9%
EES 18.9% 4.9% 2.4% 2.5% 2.8%
YOY % change
SSG 2.1% 2.3% -10.7% 25.1% 2.8%
AGS 29.3% -5.3% -10.9% 3.8% 5.8%
Display -22.2% -32.3% 30.4% 46.2% -15.4%
EES 34.5% -78.7% -56.6% 27.2% 13.9%
Total 10.1% -17.1% -10.7% 21.3% 2.0%
Opm (Pro forma)
SSG 32.8% 27.8% 25.0% 26.9% 28.0%
AGS 21.3% 23.2% 22.2% 22.6% 23.7%
Display 22.3% 6.8% 20.3% 23.8% 18.0%
EES 22.4% -43.3% -74.5% -9.0% -8.0%
Total 22.9% 15.8% 14.6% 19.5% 20.4%
Source: Berenberg estimates
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