UMS Holdings

[Boon]

Applied Materials 3Q2013 result (ending July 28) missed analysts' expectation as demand fell from the company's foundry customers (seasonal factor). – expects demand to recover in 4Q - optimism remains high – business outlook remains good.

Revenue down 1.5% QoQ
New order down 22.4% QoQ

SSG : Revenue (USD million):
1Q2012 = 1,344
2Q2012 = 1,777
3Q2012 = 1,545
4Q2012 = 870
1Q2013 = 969
2Q2013 = 1,291
3Q2013 = 1,272 (This is 1.5% lower than 2Q2013)

SSG : New Orders (USD million)
1Q2012 = 1,418
2Q2012 = 1,969
3Q2012 = 1,166
4Q2012 = 741
1Q2013 = 1,363
2Q2013 = 1,551
3Q2013 = 1,203 (This is 22.4 % lower than 2Q2013) - seasonally decline in foundry demand

SSG : Backlog (USD million)
1Q2012 = 1,056
2Q2012 = 1,208
3Q2012 = 855
4Q2012 = 704
1Q2013 = 1,071
2Q2013 = 1,265
3Q2013 = 1,173 (This is 7.3% lower than 2Q2013)

Key points from results briefing:
1) Mobility is the major driver in electronics. As the mobility build-out gathers pace device makers are engaged in a battle for leadership - all our customers want to be the first to introduce new technology that will help them win. Consumers are making buying decisions based on battery life, features, form factor and visual experience which mean that our customers’ ability to deliver winning products requires new device technology at the right yield and cost. Performance improvements in mobile chips and displays are becoming increasingly dependent on materials innovation. Applied is uniquely positioned to enable next generation transistors and interconnects 3D memory and high resolution, low powered displays. Applied capabilities in Precision Materials Engineering are strategically important for our customers. And this has resulted in employing us into much earlier and deeper engagements. Today, our customer relationships have never been better. And this combined with our strong pipeline of new products is providing us with significant opportunities to grow market share as new transistor, interconnect, memory and display technologies are adopted.
2) Through the third year in a row seasonal buying patterns are evident as consumers wait for new smartphone and tablet models to be released in the fall, as a result we’re seeing a near term slowdown in investment by our foundry customers as they focus on ramping new capacity installed over the past two quarters. This will deliver product for the holiday season and readying their next generation of technology. We expect investment levels to recover in the fourth calendar quarter.
3) Growth of mobile devices is also driving healthy demand for NAND flash memory and bit (ph) growth for 2013 is expected to be in the 40% to 50% range. The transition of 3D NAND technology into production is underway and we expect investment to accelerate in 2014 and 2015 as more manufacturers adopt this technology.
4) In the DRAM market conditions are improving with average selling prices recovering to levels last seen in 2010 as a result of increasing bit (ph) demand for mobile applications combined with structural changes in the market and several years of underinvestment, customers are taking actions to increase bit supply. Today, these investments are primarily focused on technology conversions for the 3X to 2X node. We expect some new capacity will be added if these favorable market conditions continue into 2014. While mobility related demand remains strong, PC sales are still challenged and consequently, we are seeing some minor reductions in logic investment for the year.
5) Looking at industry investment as a whole, while there has been spending mix shifts towards memory in the second half of the year we are maintaining our 2013 wafer fab equipment forecast of $27 billion to $30 billion. We believe that wafer fab equipment investment will be higher in 2014, up 10% to 20% relative to this year. This will be driven primarily by the foundries building out there 20-nanometer node, investment in 3D NAND capacity, and some increase in DRAM spending. This is the spending mix that is favorable for Applied Materials.
6) In summary, the market environment in both semiconductor and display provides a firm foundation for profitable growth. At the same time, major industry trends are playing to Applied Materials strength in Precision Materials Engineering presenting us with an unprecedented number of opportunities. 2013 is shaping up to be a year, where we are building momentum for profitable growth for 2014 and beyond.

Applied Materials' CEO Discusses F3Q 2013 Results - Earnings Call Transcript
Aug 15 2013, 19:23 | about: AMAT
http://seekingalpha.com/article/1639732-...art=single
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