The Street today had a bunch to say about chip equipment makers, including Lam Research (LRCX), which reported fiscal Q2 results on Wednesday, and KLA Tencor (KLAC), which reported fiscal Q2 yesterday.
KLA beat Q2 estimates and offered a Q3 revenue view that also topped expectations. Lam beat expectations as well, though it projected revenue and earnings this quarter below what analysts have been modeling.
KLAC shares closed the week up 9% at $56.34, while Lam finished up 2.8% at $41.84. The positive good feeling around the stocks follows decent results last week from ASML Holding N.V. (ASML) and Taiwan Semiconductor Manufacturing (TSM). Samsung Electronic‘s (005930KS)Q4 report last night was accompanied by an outlook for spending to remain about the same this year, which was reassuring. And Intel (INTC) last week said on the occasion of its Q4 report that it will spend $13 billion this year, up from $11 billion last year.
KLA on its call last night said it now thinks total foundry spending this year will decline 5% to 10%, better than its prior view of down 10% to 15%.
Stifel Nicolaus‘s Patrick Ho today writes of the Samsung news that there was a “vagueness” to it that suggests plans for capital budgets between Intel and Samsung and Taiwan Semi are so sensitive, nobody wants to completely give the game away.
Management noted on the conference call that given the overall global macroeconomic uncertainty, it expects its total capex to be relatively flattish to 2012 levels (which came in at 23.2 trillion won or almost $22 billion based on Thursday�s f/x rates). On the semiconductor side, Samsung spent 14 trillion won, or approximately $13 billion, which is in line with our forecast and consensus [...]�Management emphasized (over and over again) that it would be �flexible� depending on the market environment and provided no breakdown or mix of
its total capex plans for 2013 [...] We suspect that part of this evasiveness can be attributed to gamesmanship among the top spenders, Intel, TSMC and Samsung in terms of �who can spend more than the other.� Although we should note that both Intel and TSMC provided significantly more details regarding their respective capex plans.
Deutsche Bank’s Vishal Shah late yesterday raised his rating on KLA shares to Hold from Sell,� and raised his price target to $56 from $41.
There’s hope revenue will turn out better in several areas this year, and the company is keeping operating expenses under control:
1) Foundry strength driven by 20nm activity: Company raised capex outlook from down 10-15% to down 5-10% with upside primarily driven by the foundry segment. Dec Q bookings upside was also driven by the foundry segment (67% of bookings from this segment) and mgmt expect foundries to continue to remain strong in 2013. Roughly a third of foundry orders were from sub 28nm node and mgmt expects 20nm spending to increase in 2013. While foundry mix is expected to decrease to 50-52% in Mar Q and remain the same in Jun Q, mgmt expects a CY2H13 bookings uptick driven by all segments (memory, logic, broader foundry participation); 2) Memory bookings low, but improving: Mgmt expect memory bookings to improve in Mar Q, but does not expect significant improvement until 2H13. The company expects logic bookings to strengthen in Mar Q (from 16% of mix in Dec Q to 25% of mix in Mar Q); 3) Mgmt expects KLAC revs to be flat to down 5% in a down 5-10% capex year; 4) Opex under control, limited risk of 450mm opex ramp. Mgmt expects opex to be in the range of $215-220M/qtr for the rest of the year.
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