Fountainheadinvesting

Fountainhead Investing

  • Objective Analysis: Research On High Quality Companies With Sustainable Moats
  • Tech Focused: 60% Allocated To AI, Semiconductors, Technology

5 Star Tech Analyst Focused On Excellent Companies With Sustainable Moats

Tag: Semiconductor Equipment

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AI Semiconductors Stocks

Micron’s Low Price Is A Gift

Micron’s data center revenue should grow 91% and 38% in FY2025 and FY2026, driven by cloud server DRAM and HBM.

The market is not assigning a strong multiple to Micron’s largest, most profitable, and fastest-growing segment, with HBM3E contributing significantly, and future growth expected from HBM4.

Micron should gain from an extremely strong AI market as evidenced by huge CAPEX from hyperscalers, Nvidia’s Blackwell growth, and Taiwan Semiconductors’s forecasts.

Consumer NAND business faced challenges due to inventory reductions, seasonal slowdowns, and delayed PC refresh cycles, impacting Q2 revenue guidance and margins.

Despite short-term consumer weakness, Micron’s strong data center prospects and attractive valuation make it a compelling buy, especially at the current price of $90

You can read the entire article on Seeking Alpha; Micron (MU) dropped a massive 15% after DeepSeek deep-sixed the market. Nvidia (NVDA) too dropped 14%, but has begun to recover and I expect Micron to recover as well.

Categories
Semiconductors

ASML and Lam Research: A Tale of Two Semiconductor Equipment Leaders

ASML - Semiconductor Giant
ASML

Comment made on the SA article.

ASML – Lithography, Monopoly in EUV machines, each machine costs north of $200 Mn, absolutely vital for lower node semis like 3nm, which is powering the latest I-phone among others.

ASML is at the pole position since it’s a critical component for AI and/or high-end chips. Every chip being planned or in production for AI acceleration or incorporating AI acceleration is produced on a 5 nm or smaller node that requires EUV

They also have the lower-end D-EUV machines, which are also successful.

Here’s a good link to the equipment technology market.

https://www.yolegroup.com/strategy-insights/semiconductor-equipment-market-share-reshuffles-amid-memory-demand-decline

Lam Research on the other hand is strong in Etch and Deposition, which is exposed to cyclicality because it’s more of a mass market commodity with competition for AMAT, KLAC, and Tokyo Electronics. But the pickup from customers like Micron, which itself is riding the AI boom for high-grade memory equipment is a big benefit for Lam. To me the biggest strength is the resilience in the last 10 years with an EPS CAGR of 28% – that is a huge deal, cyclicals/commodity producers never get that.

Categories
Semiconductors

Teradyne’s Weak 2024 Outlook Sparks Concerns, While Advantest Surges Ahead

source

Teradyne’s guidance was a big disappointment – they’re forecasting zero growth for 2024, mainly because the first two quarters will be lower but growth will pick up in Q3, Q4. Consensus estimates were for 10% growth in 2024.

Even as end clients like Cloud Service Providers and hyperscalers have bought more semiconductors in the last 6 months, capacity utilization of Teradyne’s testing equipment is still low and new buying of equipment will not be triggered till capacity is used up. This isn’t always a linear relationship, and often there are lags. Second – mobile and PC’s markets have also not increased demand and Teradyne will not get visibility till April for mobile phones demand (read Apple via TSM, which is their largest customer).

Management believes that there is little downside left, and they see utilization rates improving and unit growth in PC’s and smartphones could be a tailwind in the second half. They are still maintaining 2026 estimates of $4.3Mn and over $6 in EPS, but they have a lot of catching up to do.

Contrast this with closest competitor, Advantest (ATEYY), which surprised this morning and increased guidance by 2-3% for the next quarter.. They’re expecting a great second half as well.

I have more Advantest than Teradyne and it’s also done much better for me. If things don’t improve at Teradyne I may just focus on Advantest.