Strong Silicon System Sales Have Likely Driven The Growth For Applied Materials In Q4’16
Leading semiconductor equipment manufacturer, Applied Materials (NYSE:AMAT) is set to report its Q4’16 earnings on November 17th. (Fiscal years end with October.) The company’s growth in the quarter was likely driven by its display and silicon system segments. This comes from the fact that Applied witnessed a strong surge in orders in these segments in Q3, when net sales of $2.8 billion were up 13% sequentially and 15% year to year. The company booked orders worth $3.7 billion in Q3, which is highest in any given quarter in the last 15 years. As such the fourth-quarter consensus revenue estimate of $3.3 billion represents a year-to-year increase on nearly 40%. The hefty uptick in the orders for Applied is being driven by an increased capital expenditure for leading-edge wafer fabrication equipment by its customers.
The company’s major customers are aggressively pursuing 14 nm, 10 nm and 7 nm process technologies, which is providing a key source of equipment demand for the company. Further, capacity additions on core geometries (22 nm and 28 nm) seem strong. In addition, the company is seeing strong demand from its key customers that are upgrading their manufacturing capacity to satisfy an anticipated strong of 3D NAND Flash memory products and FinFET-based logic products. According to Reuters, leading pure-play foundry, Taiwan Semiconductor, recently ordered semiconductor equipment worth $18 million from Applied Materials. In fact, in fiscal 2015, Taiwan Semiconductor contributed 15% (or $1.4 billion) of the company’s net sales.
Furthermore, semiconductor manufacturing is highly capital intensive and complex, involving a wide range of advanced manufacturing processes that occur in rigorously controlled environments over weeks and even months. The range of equipment required is wide and supports a fairly large number of equipment providers.
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In the table below, we can note the key metrics as expected for the company in Q4:
For more details, please refer to our complete analysis for Applied Materials
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