Article Excerpt:
TWST: What's gone on year to date in the semiconductor equipment space from a business perspective?Mr. Muter: It's been a very dynamic year to date. I believe the year started very strongly, with strong orders and very high expectations, and so far the industry has begun to lose momentum on the order front. I believe that Q1 orders were very strong and I see continued order growth in calendar Q2, but down substantially in terms of the growth rate from Q1. Also, I believe orders will likely decline in calendar Q3. Starting the year, expectations were very high for continued order growth well into the second half of the year, and I believe that order momentum has slowed.
TWST: What has brought about this change in a relatively short period of
time?
Mr. Muter: I think that the PC food chain has been relatively
disappointing regarding demand. According to our semiconductor analyst,
PC demand has been quite weak in calendar Q1, which has diffused some of
the high expectations of late 2005. Also, as NAND flash prices have
dropped substantially, we believe that some of the major memory
manufacturers have paused to assess the right balance between their NAND
flash allocation and their DRAM allocation. Certainly, I sense a lower
sense of urgency to add new capacity from the major NAND suppliers
compared to late last year. Finally, there have been high expectations
for the foundries to step in and order a significant amount of new
capacity in H2 2006 and take over as the major driver of orders from the
memory manufacturers. Our checks show moderate foundry ordering and a
surge in orders in H2 2006 to be unlikely. Certainly, there are pockets
of strength within the foundries, such as Chartered (CHRT). Overall, I
would say expectations have come down for the semi equipment companies
in terms of continued order growth going into the second half.
Tickers included in this excerpt: ADEX, AMAT, CHRT, INTC, KLAC, LRCX, NVLS, PDFS, RTEC
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