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Which chip maker is buying equipment?

Posted: 15 Jul 2008     Print Version  Bookmark and Share

Keywords:IC-equipment  fab-tool  capital spending  wafer shipment 

Fab-tool capital spending is down, but not out. So, which chipmaker will buy IC-equipment in the near future—and who will slam the door on vendors' faces?

Gartner Inc. this week lowered its capital spending forecast, but the firm sees a recovery in 2009. Others agreed, giving vendors some hope at next week's Semicon West trade show in San Francisco.

''We expect a cautious tone at this year's (Semicon West) show due to the challenging business environment, as our checks suggest Q3 08 orders will flat to down 10 per cent. We believe Q3 08 revenue will decline 5 per cent to 10 per cent sequentially and Q4 08 growth will be in low-single-digits, worse than consensus' view,'' said Edwin Mok, analyst, Needham & Co. LLC, in a report.

''However, we continue to believe that bookings will improve in Q4 08 pointing to higher revenues in 1H 09,'' he said.

In the report, Mok listed which chipmaker is expected to buy fab gear—and who will ignore sales calls from vendors.


*Big chip houses: Samsung, Intel, and Toshiba ''will remain committed to their plans in 2H 08,'' he said. ''While TSMC will spend less in capex in 2H 08, we see higher spending in 2009.''

*Another foundry: ''We see increased shipments to Chartered in 2H 08,'' he said.

Hit and Miss

*Memory houses: ''We believe Nanya/MeiYa will delay tool ordering until Q4 08 (later than previously expected), and Rexchip R2 will be booked in Q4 08 (as expected),'' he said. ''We also expect Hynix and IM Flash to resume tool ordering in 1H '09.''


*Advanced Micron Devices Inc.: ''We believe upside to foundry cap-ex could come from AMD if it decides to aggressively outsource production,'' he added.

Overall, it's a mixed bag for fab-tool vendors. On Monday (July 14), Novellus Systems Inc. will kick-off the earnings season and Semicon West with the Q2 08 earnings report and an analyst meeting.

''We expect the company to meet consensus estimates for Q2 08; however, we see downside risk to 2H 08 revenue estimates based on our near-term cautious outlook on the group,'' Mok said. ''We expect 2Q '08 bookings to meet the mid-pt of guidance of down 10 per cent to 25 per cent quarter-over-quarter. We see some upside from foundry bookings (Chartered) offset by weaker then expected memory (Samsung).''

''Another round of estimate cuts (5 per cent to 10 per cent) are coming for some,'' said Raj Seth, an analyst with SG Cowen Securities. ''We've moved our overly ambitious Lam estimates in-line and taken our KLA-Tencor estimates below consensus.''

Next week, there will be a flood of earnings reports, including one from Intel Corp. ''Street consensus estimates are at Rs.37,299.64 crore ($9.32 billion) (minus 4 per cent quarter-over-quarter) and Rs.10.01 ($0.25),'' said Avi Cohen, head of research at Avian Securities, in a report.

''Given what we believe to be a continuing solid environment for processors coupled with benign competition from AMD, we think Intel will report in-line with the Street, which should be viewed positively in light of what's been happening in the semiconductor space lately as many consider Intel to be a bellwether for tech,'' he said. ''One clear area of concern is its exposure to the weak NAND market but we believe the risks there are already priced in and well understood by investors.''

The memory market remains soft. ''Spot pricing for DRAM continued to weaken over the past week in the low single digit range with NAND remaining volatile with both SLC and MLC weakening as well after showing some stability the week before,'' Cohen said. ''Early feedback from our contacts regarding contracts for 1H of July suggests that DRAM will likely be flattish and NAND likely flat to down.''

It's also a mixed bag among the foundries. ''Our recent foundry checks indicate that most foundries, excluding UMC, will meet expected Q2 wafer shipment, with Q 3wafer shipment forecasts currently expected to increase by 5 per cent to10 per cent quarter-over-quarter,'' according to a report from FBR.

TSMC's Q2 wafer shipment exceeded our prior expectations. And, although 3Q customers' order forecasts have recently been revised down, 3Q shipment/revenue is still expected to increase quarter-over-quarter,'' according to FBR.

For UMC, ''checks suggest that Q2 08 wafer shipment grew by 12 per cent quarter-over-quarter, slower than expectations of 13 per cent to 14 per cent growth, but still higher than the company's official guidance of up 10 per cent,'' according to the report.

''Additionally, similar to TSMC, our checks indicate that Q3 wafer shipment has already been adjusted down and is now expected to be up only 5 per cent, lower than previous expectations of up 5 per cent 10 per cent, according to the report.

- Mark LaPedus
EE Times

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