When it comes to wafer fab equipment (or WFE) companies, strong
market share and technical expertise is no guarantee of
quarter-to-quarter or year-to-year performance. Foundries and IDMs have
their own schedules when it comes to buying lithography, etch,
deposition, inspection, RTP, or other tools and in combination with
overall market demand and internal yields, that can lead to very erratic
order patterns.
I fully expect KLA-Tencor (KLAC)
to get its share of orders, and I believe the company's strong position
in process diagnostic and control will serve it well as Taiwan Semiconductor (TSM)
ramps up in 20nm and other foundries move toward 14nm/16nm FinFET and
3D NAND. KLAC has been an okay performer over the past year, lagging Applied Materials (AMAT) and Lam Research (LRCX), and outperforming others like ASML (ASML) and Hitachi High-Tech (OTC:HICTF), but it doesn't seem strikingly cheap relative to its historical valuation range and my cash flow estimates.
To read the full article, click here:
For KLA-Tencor, Strong Expertise Battling With Volatile End-Markets
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