Barclays U.S. Semiconductor Equipment: SEMICON West Day 2 Recap

Barclays U.S. Semiconductor Equipment: SEMICON West Day 2 Recap

Analyst, C.J. Muse, said, "Day 2 confirmed expectations for a 3Q12 order/shipment pull-back, though equipment vendors differed in their attribution for the pause, with optimism on increasing capital intensity, foundry competition, and 14nm Intel (Nasdaq: INTC) and 20nm foundry investments contributing to optimism on a 4Q order recovery and solid WFE in 2013. We maintain our thesis of this being a seasonal pause, and reiterate our top picks ASML (Nasdaq: ASML) and Cymer (Nasdaq: CYMI) (secular growth), Applied Materials (Nasdaq: AMAT) (restructuring), and Teradyne (NYSE: TER) (mobility leverage/valuation)."

Other highlighted points include: 1) Front end orders are seeing pause in Q3, but not as bad as AMAT outlined; 2) Lam (Nasdaq: LRCX) sees potential for some level of shipment declines in 2H12, the company continues to see CY12 WFE of $30-32B; 3) Cymer remains at the lead among EUV light source vendors; and 4) Subsystem players seeing 3Q pause; We prefer Edwards Group Limited (Nasdaq: EVAC).

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