SAN FRANCISCOŚMike Splinter, president, chairman and CEO of Applied Materials Inc., the largest supplier of semiconductor production equipment, said Wednesday (Nov. 16) that the company expects overall fab tool spending to decline by 10 to 20 percent in 2012.
"We expect the semiconductor equipment market will begin to improve in early 2012 and strengthen through the second half of the year," Splinter said in a call with analysts following the company's fiscal fourth quarter report. Splinter said he expects orders to improve as customers' manufacturing capacity is absorbed and they put next-generation technology into volume production.
Describing 2011 as a "tale of two markets"Świth a strong first half and weakness in the second half of the year, Splinter said Applied now estimates that the total wafer fab equipment market will be worth $30 billion to $33 billion this year.
Applied expects to see a clear increase in orders for its Silicon Systems Group in the first quarter, Splinter said. Noting the healthy growth rates of media tablets and smartphones, Splinter said Applied is counting on investment by NAND flash memory makers to continuing growing, representing as much as 25 percent of the front-end chip equipment market in 2012.
But Splinter cautioned that the company expects capacity investment by DRAM vendors to remain at current low levels through 2012.
As will be the case in 2011, Applied expects the foundry segment to be the biggest spender on chip fab equipment in 2012, Splinter said.
Applied (Santa Clara, Calif.) reported sales of $2.18 billion for the quarter ended Oct. 30, down 22 percent from the previous quarter and down 24 percent compared with the year-ago quarter. The company reported a net income for the quarter of $456 million, or 34 cents per share, down 4 percent from the previous quarter and down 3 percent compared to the year-ago quarter.
Applied said it generated orders worth $1.6 billion in the quarter, a decline of 26 percent from the previous quarter.
On a pro forma basis, excluding charges, Applied reported a net income for the quarter of $271 million, or 21 cents per share.
Applied's results for the quarter beat consensus analysts' expectations, which called for sales of $2.15 billion and pro forma earnings of 19 cents per share, according to Yahoo Finance.
For its fiscal year 2011, also ended Oct. 30, Applied reported record sales of $10.52 billion, up 10 percent from fiscal 2010. The company reported a net income for the year of $1.93 billion, or $1.45 per share, up from $938 million, or 70 cents per share, in fiscal 2010.
Applied said its Silicon Systems Group booked orders worth $925 million in the fiscal fourth quarter, down 25 percent, primarily because of weaker demand among flash and DRAM memory customers. Net sales for the SSG group fell to $1.07 billion in the fiscal fourth quarter, a decline of 24 percent, Applied said.
Foundry customers accounted for 46 percent of SSG's new orders in the quarter, with logic and other chip customers accounting for 32 percent, flash accounting for 15 percent and DRAM accounting for 7 percent, Applied said.
For the current quarter, Applied said it expects net sales to be between $1.85 billion and $2.07 billion, a decline of 5 to 15 percent sequentially. The company expects pro forma net income to decline to 8 to 16 cents per share. Applied's sales and profit targets for the quarter include the addition of recently acquired Varian Semiconductor Equipment.
Applied said it spent $1.1 billion in fiscal 2011 on R&D and engineering.
Join our online Radio Show on Friday 11th July starting at 2:00pm Eastern, when EETimes editor of all things fun and interesting, Max Maxfield, and embedded systems expert, Jack Ganssle, will debate as to just what is, and is not, and embedded system.