Applied Materials is expecting wafer fab equipment investments in 2021 to hit record numbers.
Investments into semiconductors recovered in 2020 and this momentum is expected to continue throughout 2021, company CEO Gary Dickerson said at Applied Materials’ conference call for its fiscal first quarter (November 2020 to January 2021).
Last year, investments into NAND increased, the CEO said. “In DRAM, supply-demand fundamentals look more favorable than NAND. And as a result, we still expect DRAM investments to outgrow NAND this year. All of this adds up to a very strong demand environment for wafer fab equipment and we believe this strength is sustainable well beyond 2021,” Dickerson said.
“2021 is off to a great start with record results and outlook. We see strong and sustainable demand in our semiconductor business fueled by a combination of macro and technology drivers. We have great momentum thanks to our broad market exposure and differentiated portfolio of new products. And we believe we're in a great position to outperform our markets again this year,” he added.
Cloud service providers were expecting data center capital expenditure growth of over 15% this year, Dickerson said. Broader adoption of 5G handsets was also increasing silicon content in smartphones at double-digit rates, he said.
In automotive, where there are known supply shortfalls, total semi consumption is expected to expand more than 15% this year, translating these factors to industry investments, the CEO said.
Applied Materials CFO Dan Durn said the overall industry consensus points to investments of around US$70 billion but the company’s view was a bit higher than that.
The company recorded US$5.16 billion in revenue for its fiscal first quarter of 2021. Its non-GAAP EPS was US$1.39 during the quarter. Revenue was 24% higher than the market’s forecast and EPS was US$0.11 higher than expected. For the fiscal second quarter, the company said it expected revenue of US$5.39 billion, higher than the market forecast of US$4.96 billion.
Competitors of Applied Materials have also given similar forecast of record growth backed by the so-called “super cycle” in the semiconductor fab equipment industry.
Last month, Lam Research CEO Tim Archer said at its fourth quarter conference call that the company expected worldwide fab equipment spending is expected to be around US$60 billion to US$70 billion this year.
SEMI is forecasting a spending of US$72.1 billion in fab equipment this year, a 5% from 2020’s US$68.8 billion.
Tokyo Electron CEO Toshiki Kawai said the company was expecting its sales from front-end equipment to increase 10% from the previous year. Measurement and inspection equipment makers KLA of the US and extreme ultraviolet equipment maker ASML of the Netherlands were also expecting solid earnings this year.