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Novellus' Hill: IC market set for four-year growth cycle

Posted: 27 Apr 2010 ?? ?Print Version ?Bookmark and Share

Keywords:lithography? NAND flash? fab tool? semiconductor industry?

Novellus Systems Inc. has smashed Wall Street estimates posting Q1 10 sales of $276.2 million, up 13.1 percent from Q4 09 net sales of $244.2 million, and up 179.3 percent from Q1 09 net sales of $98.9 million.

Net income for Q1 10 was $41.3 million, or $0.43 per diluted share, up from Q4 09 net income of $35.2 million, or $0.36 per diluted share. The Q1 09 net loss was $66.4 million, or minus $0.69 per diluted share.

The results were at the "high end of our guidance," said C.J. Muse, an analyst at Barclays Capital, in a report. "For the June quarter, management expects revenues of $285-to-$315 million, above our estimate of $275 million and, at the midpoint, above consensus of $288 million. Shipments were guided likewise to be $300-to-$330 million. EPS guide of $0.50-$0.60 was well ahead of our estimate of $0.44."

The outlook is bright. "For the June quarter, management guided to a flat-to-up 15 percent uptick in bookings to the $283-to-$322 million range, which, our checks suggest, has a customer profile comprising Samsung, TSMC, Intel, a bit of Hynix, UMC, Chartered and Nanya/Inotera orders," Muse said.

"In terms of concerns while reaching our investment conclusions, we are a bit concerned about minor share losses in ECP and in PVD at Hynix, which has seen inroads made by Semitool ECP/Applied Materials PVD, but, are congratulatory of PVD share gains at Samsung memory," he said. "On the other hand, Novellus PVD seems to be surprisingly underperforming somewhat in logic, an usual stronghold of Novellus, with Applied gaining business at Samsung LSI, TSMC and IBM for the advanced nodes, a slight loss of momentum, because they had made inroads at these customers earlier."

At the same time, Novellus' Peter Wolters industrial segment, is apparently losing money. But the segment is expected to be "profitable in the third quarter," Muse said.

Still, the news is positive for Novellus in general. Novellus is back on track after being hit hard by the downturn last year. Driven by many of the same dynamics from the 1990s, the semiconductor industry is set for a new and healthy three-to-four year growth cycle, according to Rick Hill, chairman, president and chief executive of Novellus in a recent interview.

Late last monthand prior to Novellus' resultsEE Times caught up with Hill at the company's headquarters. Hill is busy these days amid the upturn. Prior to the visit, he had travelled to Asia twice, Europe and New Yorkall in a three week period. As usual, Hill addressed many subjects and pulled no punches in the process:

EE Times: How long do you think the IC expansion will last? Are we in a super cycle?
Hill: From a standpoint of the semiconductor expansion, I think the upturn will probably last three to four years at least. I hate the word super cycle. I think the fundamental demand (for ICs) is real. It's not driven by the United States. It's global.

Do you think the current IC demand is real or are we in a replenishment cycle?
The fundamental demand is real this time around. And you lay on top of this that governments want to stimulate the economy. That's nothing but good for semiconductors. Our forecast for semis is up 13 to 15 percent for 2010.

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