Sunday, December 13, 2015

Seeking Alpha: Ultratech's Convoluted And Uncertain Path

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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