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Analysis: Is fab tool downturn over?

Posted: 08 Jan 2010     Print Version  Bookmark and Share

Keywords:fab tool  foundry  ATE market 

Is the fab tool finally downturn over? Answer: Yes and no.

Aehr Test Systems Inc., a supplier in the semiconductor test and burn-in equipment industry, January 6 reported poor results.

On the other hand, an analyst was bullish about the prospects for Brooks, Lam and others.

Overall, the signs are better. Thanks to a resurgence in the memory chip market and increased spending by foundries, semiconductor industry capital spending will reach nearly Rs.156,854.47 crore ($33.5 billion) this year, up 50 per cent from 2009, according to C.J. Muse, an analyst at Barclays Capital.

Some vendors are doing better than others. Lam Research Corp., for example, is roaring back amid a tight supplier for etchers.

"Following recent checks, we raised our estimates for Lam. We model slightly above consensus December quarter (Rs.2,153.82 crore/Rs.19.67 [$460 million/$0.42] vs. consensus Rs.2,121.05 crore/Rs.18.73 [$453 million/$0.40]), but driven by a meaningful uptick in memory spending led by Samsung, Hynix and Inotera as well as foundry (TSM/UMC) coupled with SEZ tracking to about $50-plus million," Muse said in a report.

"We raise our March quarter estimates to reflect expected shipments of $550-plus million (Rs.234.11+ crore). Revenues/EPS move to $550 million/$0.66 (consensus $472 million/$0.46)," he said. "Beyond the March quarter, our checks suggest strong tailwind into the June quarter led by tight etch capacity."

Fab tool automation vendor Brooks Automation Inc. is seeing similar patterns. "We maintain December quarter estimates of $95 million/$0.01 (Rs.444.81 crore/0.47 paise), but raise our March quarter estimates to $110 million/$0.10 (Rs.515.04 crore/Rs.4.68) with risk clearly to upside led by improving demand from key OEM customers—Lam, Varian and Applied," he said.

Weak ATE
Not all are doing well. The ATE segment could be a weak link in the recovery picture.

Aehr said sales were Rs.7.49 crore ($1.6 million) in Q2 of fiscal 2010, compared with Rs.43.08 crore ($9.2 million) in Q2 of fiscal 2009. Aehr Test reported a net loss of Rs.10.30 crore ($2.2 million), or minus Rs.11.71 ($0.25) per diluted share, in Q2 of fiscal 2010, compared with net income of Rs.4.21 crore ($0.9 million), or Rs.4.68 ($0.10) per diluted share, in Q2 of fiscal 2009.

Rhea Posedel, chairman and CEO of Aehr Test, painted a mixed picture. "Similar to recent quarters, our business continued to be impacted by the challenging global macroeconomic climate and lower-than-normal levels of capital spending by our customers in the semiconductor industry," he said in a statement.

"However, there are several data points that suggest our business is in the early stages of a recovery. The second quarter showed marked growth in net sales, when compared with recent quarters," he said. "In addition, second quarter shipments of $2.5 million (Rs.11.71 crore) were significantly higher than the prior quarter,"

At Nov. 30, 2009, cash and cash equivalents were Rs.23.88 crore ($5.1 million) and include the proceeds of approximately Rs.15.45 crore ($3.3 million) received in September 2009 from the sale of a portion of the bankruptcy claim against Spansion Inc. Aehr Test completed the second quarter of fiscal 2010 with no outstanding debt and shareholders' equity of Rs.46.82 crore ($10 million), or Rs.54.78 ($1.17) per share outstanding at Nov. 30, 2009.

- Mark LaPedus
EE Times

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