The angst over the health/trajectory of semiconductor capital equipment orders hasn't hurt Advanced Energy Industries (NASDAQ:AEIS) any more (or any less) than most of its peers. Applied Materials (NASDAQ:AMAT) has been noticeably weak since my February piece on AEIS, due to the fallout of its aborted merger with TEL, but AEIS, MKS Instruments (NASDAQ:MKSI), Entegris (NASDAQ:ENTG), Lam Research (NASDAQ:LRCX) and ASML (NASDAQ:ASML) have all clustered around low-to-mid single-digit loses over that span.
Given
how tied Advanced Energy Industries is, and will be, to the
semiconductor industry, that's not an unreasonable performance. The
company has a good track record and reputation in supplying the semi
equipment market with power conversion systems, remote plasma sources,
thermal instrumentation, and so on, but the fact remains that major
equipment buyers like TSMC (NYSE:TSM) and Intel (NASDAQ:INTC)
have generally been buying less than expected and guiding down with
respect to their plans as development timelines stretch out and the fabs
reuse older equipment to save money.
Looking ahead, I believe
AEIS is making the right decision in cutting its losses in the inverter
business. Likewise, I think management is on the right track in looking
to expand its precision power business beyond the semiconductor industry
and into areas like medical devices and aerospace/defense. The "new"
AEIS will likely emerge as a better, more profitable company, but the
current valuation seems to largely reflect that.
Continue here:
Advanced Energy Industries Looking For A New Start
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