Applied Materials, the No.1 supplier of chip making equipment which now gets under half its total revenues from sales of chip-making equipment, is seeing positive trends in its business for the first time in a long time.
New orders for chip-manufacturing equipment more than doubled from calendar Q109, while display orders were up seven times in calendar Q209 on calendar Q109.
Chinese IC and TFT manufacturers were particularly active in the latest quarter, aided by government stimulus spending.
China also purchased more solar panels although, overall, demand for solar panels remains hampered by 'the tough environment and tight credit market', says the company.
Although Applied had a $55m loss for calendar Q2, sales of chip manufacturing equipment and flat panel display manufacturing equipment are picking up, although sales of equipment to make solar generation equipment are in a slump as the solar industry moves into a massive glut.
Overproduction of solar panels is expected to last for three years, according to iSuppli, which says only half of the solar panels manufactured this year will be sold this year, with the rest going into inventory.
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However the good news for Applied is that its chip manufacturing equipment business is moving up from a very low base.
Semiconductor industry capex, as a percentage of IC sales revenue, was at an historic low of 16% last year, but orders for of chip-making equipment started to accelerate sharply upwards in Q209.
SEMI, the equipment makers' trade body, reckons that equipment sales will grow 33% next year. So the prospects for Applied's chip manufacturing equipment unit are good.
In calendar Q209, Applied's sales of semiconductor manufacturing equipment were $542m. Its display manufacturing equipment division had orders of $96m, its solar panel manufacturing equipment unit had orders of $136m and its orders for fab services e.g. techniques for maximising yields and minimising costs, were $298m.
- Applied's solar manufacturing equipment side had orders worth $322m in calendar Q208 but these had slumped to $141m in calendar Q109 and now to $136m in calendar Q209.
- Solar sales in calendar Q209 were $224m compared to $357m in calendar Q109 and $174m inn calendar Q208.
- Applied's display manufacturing equipment side had orders of $374m in calendar Q208 but these collapsed to $13m in calendars Q109 then rose to $96m in calendar Q209.
- Display sales were $69m in calendar Q209, $84m in calendar Q109 and $311m in calendar Q208.
- Applied's fab services unit had orders worth $298m in calendar Q209, $236m in calendar Q109 and $541m in calendar Q208.
- Fab services' sales were $343m in calendar Q209, $319m in calendar Q109, and $607m in calendar Q208.
- The chip-making side had orders of $542m in calendar Q209, $259 in calendar Q109, and $793m in calendar Q208.
- Chip-making sales were $498m in calendar Q209, $260 in calendar Q109, and $756m in calendar Q208.