Semiconductor Capital Equipment Stocks Discussion

Top 391. Aug 21, 2000 6:30 AM

» Kirk - Hanging Semi-Tough on the Internet

This article is pretty old news, but echos what I have been saying all year and explains it fairly well all in one place.

From: Jay Dreifus Monday, Aug 21, 2000 8:11 AM ET
http://www.siliconinvestor.com/stocktalk...

Hanging Semi-Tough on the Internet
By Cory Johnson
Editor-at-Large
8/21/00 12:30 AM ET
subscribers only
http://www.thestreet.com/p/comment/silic...

SAN FRANCISCO -- Among semiconductor investors, the end is dear.

There is no other aspect of technology investing so focused on calling the end of a trend, be it boom or bust. And fundamental to this endless analysis of historical semiconductor sales is the notion of the cycle. The end of these cycles can be brutal, so the Wall Street fantasy is to get in on the bottom and bail at the top.

But semiconductor sales have boomed far longer than expected this time around, confounding investors who bailed early. This game of chicken intensified on July 5 when Jonathan Joseph, Salomon Smith Barney's San Francisco-based semiconductor analyst, issued a bearish call. This smacked the Philadelphia Semiconductor Index (SOX) down 9.3% in a day. It has been wobbling punch-drunk ever since but has yet to take the full count. (The SOX is now almost back to the level where it was when Joseph landed that hard right and is close to breaking through its 50-day moving average.)

Why the comeback? Simple. The bullish argument for semiconductors has an entirely different element to it this time. To paraphrase James Carville , it's the Internet, stupid.

"People are watching these analysts, and they're watching Wall Street," says Nick Moore, a money manager with Oakland, Calif.-based fund family Jurika and Voyles. "But what they're not watching is the sources of demand. That has fundamentally changed. Last time, the semiconductor boom was overwhelmingly dominated by demand for PCs. This time, the demand is much more diversified."

And chief among those new demands is the Internet. It is creating a broad demand: digital cameras, Internet-equipped mobile phones, personal digital assistants like Palm's Palm Pilot. But no demand is greater than the massive rebuilding of the telecommunications system necessitated by the Internet. In just five years, according to the Semiconductor Industry Association, telecommunications chips have grown from 15% to 21% of total semi sales, eclipsing consumer products as the second-largest market for semiconductors. And this comes amid dramatic growth in the industry, which went from $101.9 billion in 1994 sales, to $149.4 billion in 1999.

Substantially, the new cycle is being driven by growth in markets other than personal computers, and some say that's only just begun. "Traditionally it's a four-year cycle," says Doug Andry, director of information systems and finance for the SIA. "And this thing only really started in earnest in the second half of 1999. So, even if it only follows to course of the last two or three cycles, it has a few years to go. But this one could be different."

Veteran technology investor Bruce Lupatkin, who once headed the research team at Hambrecht and Quist and now is a portfolio manager at North Bay Technology Partners, thinks the paradigm has been broken. "Five years ago, you started to see the effect of the Internet and the infrastructure build-out associated with that," he says. "So it's quite different than it was when we had, really, one end market. That's why we're seeing this long boom. It tends to spook investors who look at it historically, but to understand the semiconductor market now, you have to look at all these new end markets. And I don't care if you're talking about MP3 players, digital cameras or regional phone companies building fiber-optic networks -- really, the Internet touches everything."

For Lupatkin, that means digging a little deeper into the semiconductor sector, buying what he sees as Internet-driven, less cyclical semi stocks. "I tend to avoid the more commodity-like semi companies, like Micron (MU:NYSE - news - boards)," he says. "That stock is about market psychology. I try to find companies that have some kind of special technology with a broad customer base. So I like Applied Micro Circuits (AMCC:Nasdaq - news - boards), NewPort -- which was just bought by Broadcom (BRCM:Nasdaq - news - boards), PMC-Sierra (PMCS:Nasdaq - news - boards), which is absolutely a leader, Altera (ALTR:Nasdaq - news - boards), Xilinx (XLNX:Nasdaq - news - boards) ... these are all seeing demand coming from the Internet, have fairly defensible technologies and strong end markets that aren't subject to that cyclicality."

Moore concurs. "I would argue that this is a supercycle," he says. "Look at end markets and tell me if these are healthy -- the Internet backbone, consumer wideband, upgrades from VCRs to DVD players, digital cameras -- these are incredibly healthy markets."

The notion that It's Different Now has surely been sounded before. But for a growing group of technology investors, there's a belief that the Internet has changed everything -- even the notorious semiconductor cycle. Surely, semiconductor supply will eventually catch up with the Internet's demands. But the bigger picture is, well, bigger. And that suggests the swings won't be as vicious as they once were. "The cycle still exists," says Andry. "But I think the amplitude will be less because of the diversity of the demand."

I just like to thank all the worry worts that gave us some very cheap shares in capital equipment stocks recently! 8)

-- posted by Kirk

Top 392. Aug 21, 2000 8:03 AM

» Kirk - Motorola announces $1.5 billion chip-making plant in China

It's official--Motorola announces $1.5 billion chip-making plant in China

Semiconductor Business News
http://www.semibiznews.com/story/OEG2000...
(08/21/00, 09:03:43 AM EDT)

TIANJIN , China -- A month after the move was prematurely disclosed by local authorities here, Motorola Inc. and the City of Tianjin announced approval of a planned $1.9 billion manufacturing complex, which will include a $1.5 billion chip-production operation and a $400 million facility for wireless telecommunications products.

Motorola's Semiconductor Products Sector has been working on the initial stages of the chip facilities here while it awaited formal approval of the huge complex in Tianjin. In late July, information leaked about the government's approval of the complex, which will be capable of designing ICs, fabricating wafers and producing finished telecommunications products. Motorola said the one-site manufacturing concept will enable it to respond more quickly to customer needs in the region.

The Motorola Tianjin Integrated Semiconductor Manufacturing Complex--dubbed MOS-17 by the U.S. chip maker--will focus on producing integrated solutions for wireless communications, automotive electronics, and advanced consumer products. The initial products will be shipped to customers in China and the nearby Asia-Pacific market, according to Motorola semiconductor officials, based in Austin, Tex.

"The site will become one of the largest integrated semiconductor manufacturing facilities in the world, and the most advanced in China," said Christopher B. Galvin, chairman and chief executive officer of Motorola Inc., based in Shaumberg, Ill. "The site will be a key contributor towards moving us closer to our customers in China and Asia as those markets continue to expand. The result will be greater market opportunities for Motorola, supplied by our China facilities and exports from the U.S. and other locations."

Motorola's MOS-17 fab is expected to employ 2,400 workers when it reaches full production in 2002. Motorola has approval from U.S. export control authorities to use 0.35-micron wafer processes at the China fab. The company is pressing the U.S. government to allow it to upgrade to 0.25-micron processing at MOS-17-especially since the Japanese government is allowing NEC Corp. to transfer quarter-micron technology to its NEC Hua Hong Semiconductor joint venture in Shanghai.

The semiconductor market in China is growing at 17% per year and is forecasted to reach $18 billion by 2004, according to Motorola.

As part of today's announcement, Motorola said it will expand its current manufacturing facility in the Tianjin Economic Technological Development Area (TEDA). The operation will focus on producing new telecommunications and handset products, such as second-generation (2G), 2.5G, and 3G units.

-- posted by Kirk

Top 393. Aug 21, 2000 12:51 PM

» Kirk - Book-to-Bill due out any time.

Book-to-Bill due out any time...

Watch this site http://www.semi.org/web/wpress.nsf
and post the news here if you catch it!

7/20/00 was the last announcement for 1.26

-- posted by Kirk

Top 394. Aug 22, 2000 5:09 PM

» Kirk - The July 2000 Book-to-Bill Ratio is 1.23

Story

JULY 2000 NORTH AMERICAN SEMICONDUCTOR EQUIPMENT INDUSTRY BOOK-TO-BILL RATIO: 1.23

Industry Continues Upward Pace Posting Record Orders and Shipments

SAN JOSE, Calif., August 22, 2000 -- Shaking off its typical summer sluggishness, the North American-based manufacturers of semiconductor equipment posted another record month for bookings and shipments in July 2000 with a book-to-bill ratio of 1.23, it was reported by Semiconductor Equipment and Materials International (SEMI). A book-to-bill of 1.23 means that orders were 23 percent higher than shipments for the month, indicating an expanding market.

The three-month average of worldwide shipments in July 2000 was $2.4 billion. The figure is five percent above the June 2000 level, and is 73 percent above the July 1999 shipments level of $1.4 billion. July shipments came in 45 percent above the previous cycle peak of $1.6 billion shipped in November 1997.

The three-month average of bookings in July 2000 was $2.9 billion. The bookings figure is 2.5 percent above June 2000 orders and 91 percent above the $1.5 billion in orders posted in July 1999. July bookings came in 79 percent above the previous bookings cycle peak (also in November 1997) of $1.6 billion.

"A review of the historical data shows that in six of the last nine years, the industry has typically seen bookings drop in July. The momentum of the current cycle, however, has been strong enough to keep orders edging upward," said Elizabeth Schumann, director of industry research and statistics for SEMI. "The fundamentals of the semiconductor industry remain strong, with continued demand for chips driving the move to add capacity and adopt new manufacturing technologies."

The SEMI book-to-bill is a ratio of three-month moving average bookings to three-month moving average shipments for the North American semiconductor equipment industry. Shipments and bookings figures are in millions of U.S. dollars.

-- posted by Kirk

Top 395. Aug 23, 2000 9:51 AM

» Kirk - Not even mid-summer cools fab investments, says SEMI

Not even mid-summer cools fab investments, says SEMI

North American book-to-bill at 1.23 in July with shipments, orders continuing to hit record highs
http://www.semibiznews.com/story/OEG2000...

By J. Robert Lineback
Semiconductor Business News
(08/23/00, 09:37:15 AM EDT)

SAN JOSE--The surge in semiconductor capital spending has been strong enough this summer to keep production-tool investments climbing in July, according to a new book-to-bill report based on input from North American-based suppliers. Record orders and tool shipments placed the book-to-bill index at 1.23 in July, said the Semiconductor Equipment and Materials International (SEMI) trade group here.

SEMI said July was a better month for equipment suppliers than usual. Worldwide bookings by North American-based suppliers grew 2.5% to $2.930 billion in July from a revised figure of $2.859 in June, based on a three-month moving average. Tool shipments grew 5.2% to $2.376 billion in July from $2.259 in June. A book-to-bill ratio of 1.23 means suppliers were receiving $123 in new tools orders for every $100 in equipment shipments.

"A review of the historical data shows that in six of the last nine years, the industry has typically seen bookings drop in July," noted Elizabeth Schumann, director of industry research and statistics for SEMI. "The momentum of the current cycle, however, has been strong enough to keep orders edging upward.

"The fundamentals of the semiconductor industry remain strong, with continued demand for chips driving the move to add capacity and adopt new manufacturing technologies," she added.

While the value of bookings did rise in July, the growth rate in new tool orders declined slightly last month. SEMI reported a preliminary percentage growth of 2.5% in bookings last month vs. a revised 2.9% increase in June. The book-to-bill ratio eased from June's 1.26 reading (see July 21 story).

But semiconductor equipment suppliers still have plenty to celebrate. July's bookings were 91% higher than $1.5 billion in the same month last year, and 79% higher than the previous cycle peak in November 1997, when orders reached $1.6 billion, said SEMI.

The global trade group also said the three-month average of worldwide shipments in July 73% above July 1999 billings of $1.4 billion, abd 45% higher than $1.6 billion in the last cycle's peak in November 1997.

-- posted by Kirk

Top 396. Aug 27, 2000 10:47 PM

» Kirk - Gottfried's latest charts

To: Kirk who wrote (37011)
From: Gottfried Sunday, Aug 27, 2000 8:22 PM ET
http://www.siliconinvestor.com/stocktalk...

Kirk, the charts have been updated with the latest SEMI numbers and stock prices.

ww semiconductor shipments vs SEMI orders
http://www.geocities.com/gottfried/SEMIs...

selected semi equipment stock prices vs SEMI orders
[prices are on a log scale now]
http://www.geocities.com/gottfried/amat_...
http://www.geocities.com/gottfried/klic_...
http://www.geocities.com/gottfried/klac_...
http://www.geocities.com/gottfried/cohu_...

SEMI orders/shipments/btb
http://www.geocities.com/gottfried/eqpor...

monthly ratio of SEMI orders to ww semiconductor shipments
http://www.geocities.com/gottfried/ratio...

cumulative difference between SEMI orders and shipments
starting Jan ’95. Caution: assumes no order was ever cancelled. [thanks for the idea, Kirk]
http://www.geocities.com/gottfried/SEMIb...

SEMI btb from '95 to 2000 by year
http://www.geocities.com/gottfried/SEMIb...

You can also go through Kirk's site for links.
http://pw2.netcom.com/~kirk_69/SemiLinks...

Gottfried

-- posted by Kirk

Top 397. Aug 29, 2000 6:14 PM

» Kirk - HUGE News

[of course, this is NO SURPRISE except to the analysts that haven't a clue about technology but still cover it anyway...]

TSMC says it's sold out of foundry capacity for 2001 and 2002

By Mark LaPedus
Semiconductor Business News
(08/29/00, 07:02:34 PM EDT)
http://www.semibiznews.com/story/OEG2000...

SANTA CLARA, Calif. -- Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) here today disclosed that the company is already sold out of its worldwide wafer-foundry capacity for both 2000 and 2001, with demand remaining robust at least until 2003.

"Demand is outstripping supply [in the foundry business]," said Edward Ross, president of TMSC's U.S. subsidiary, TSMC North America, at a panel discussion at the Taiwan Semiconductor Day conference here. The conference is a one-day event sponsored by the Taiwan government and CMP Media, the parent company of SBN. "In the short term, I don't see anything on the horizon that will slow [the foundry business] down," said Ross, who is based in San Jose.

The company's disclosure comes to no surprise to industry observers and analysts. With the general trend towards outsourcing in the semiconductor industry, foundry vendors have been scrambling to meet huge OEM demand since the beginning of last year.

Other pure-play foundry vendors, including Singapore's Chartered Semiconductor Manufacturing Pte. Ltd. and Taiwan's United Microelectronics Corp., are also reporting robust demand for their respective services.

Foundry companies, in fact, are riding a huge wave. In total, the worldwide demand for 8-inch wafers is expected to jump from 10.267 million units in 2000 to 12.3 million units, according to estimates from Dataquest Inc. of San Jose.

"The foundry business is one of the fastest growing industries in the electronics market," Ross said in a presentation about Taiwan's foundry industry at the conference. "At this point, we don't see a change in terms of supply and demand. People are saying that that we could see [a capacity shortage] for the next three years."

To meet demand, TSMC is ramping up its fab capacity at a frenetic pace. The company will boost its total production of 8-inch wafers from 3.4 million units in 2000, to 4.7 million units in 2001.

By 2001, in fact, TSMC claims it will be the world's largest IC company in terms of total wafer capacity, surpassing the likes of Hyundai, Hitachi, Intel, Toshiba, NEC, STMicroelectronics, Samsung, and others.

-- posted by Kirk

Top 398. Aug 29, 2000 7:03 PM

» Kirk - Beware of capacity article!

Beware of capacity article!!!

Did you notice the title says

TSMC says it's sold out of foundry capacity for 2001 and 2002

and inside the article it says:

In fact, business is so good that TSMC is fully booked at least until the end of 2001, Ross said. "The demand for 2001 is greater than our capacity," he said in an interview with SBN. "We've allocated our capacity [for 2000]. In 2001, our capacity has been allocated. In 2001, we're already sold out."

Looks like there is still capacity available to buy in 2002. This may ONLY be limited by their ability to buy equipment to add capacity as well as staff the equipment.

Good news, but not nearly as good as the title indicates unless the quote in the body is wrong...

-- posted by Kirk

Top 399. Aug 29, 2000 8:00 PM

» JenL_2 - Yaahhhhoooo

Just rescuing this post from HTML purgatory:

Author: Felipe
Date: August 29, 2000 6:23 PM
Subject: Yaahhhhoooo

Allelulia, Kirk, TSCM is gonna double in price tomorrow!! This boy just got his ticket punched. Felipe's on easy street.

We're going to ride this baby to the Moon!!!!!

Oh wait....wait a minute.....papers flying all over Felipe's office........screams that sounds like a dead cat........the sound of someone sobbing.......

I DON"T OWN ANY TSMC

LOL!

-- posted by JenL_2