Analyst Steve Mullane of the boutique BlueFin Research Partners today offers up his impressions from attending last week’s “Semicon West” trade show in San Francisco, specifically what he learned about equipment spending, and finds trends favorable for Lam Research (LRCX), in particular.
“Our mission at the tradeshow was to get the latest views across several levels of both semi equipment and material suppliers as well as end-users on the key fab activities,” writes Mullane, noting that he already had a “positive” view of semiconductor equipment before the show.
Mullane in general sees spending on equipment “gaining some momentum” in this second half of the year, and “early reads” for next year showing “another positive growth year in WFE,” or wafer front-end equipment.
Particularly good for Lam, spending by NAND flash makers such as Micron Technology (MU) seems to know no end, because of new end markets for the chips:
With Memory continuing to lead capex spending and WFE heading for its third straight year of growth, the obvious concern is when will we experience the historical cyclical drop that our industry unfortunately always experiences? The view from our discussions at the conference was mixed. The veterans of the industry are naturally expecting that since the industry always has a tendency to over-build in strong years that we have to see WFE spending decline in 2019, which also happens to be the early view of several independent marketing firms, many of whom are also long time industry veterans. But in discussions with the younger business development managers, it’s clear that they have a more positive view. They believe that the landscape of our industry is changing. They suggest that while Moore’s Law might be slowing, there are many new growth drivers besides PCs and smartphones that could be dampening our typical downturn spending cycles. They note that while Artificial Intelligence (AI), Internet…