The Ultratech (NASDAQ:UTEK)
story continues to be an exercise in frustration. While management has
long argued that its laser annealing technology was the superior option
for sub-20nm chip fabs, the reality is that fabs like Taiwan Semiconductor (NYSE:TSM) and Samsung (OTC:SSNLF) just aren't all that dismayed by the issues with the flash annealing tools offered by rivals like Screen Holdings (OTC:DINRY) and Mattson (NASDAQ:MTSN).
With that, the argument that LSA tools would replicate their 50%-plus
share of 28nm manufacturing at 14nm/16nm has evaporated, and the real
market share has been closer to the 20% seen at the 45nm node.
Looking
at this a different way, what was supposed to be a year of momentum in
LSA tool orders and roughly $200 million in revenue (the sell-side
expectation in December of 2014) has instead turned into minimal order
activity (none in the third quarter) and probably something closer to
$150 million to $160 million in 2015 revenue.
What to do with these shares now? The shares are actually up about 10% from my last update
and now arguably (very arguably, in my opinion) have a new value metric
established by the merger agreement that Mattson signed with Beijing E-Town Dragon Semiconductor.
What's more, I do think there is legitimate momentum in the advanced
packaging (AP) business and good prospects in metrology. On the other
hand, I just don't have the confidence in management that I once did,
and I think Ultratech is firmly in the "show me" penalty box today.
Read more here:
Ultratech's Convoluted And Uncertain Path
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