Novellus: Business staying soft, but 2008 looking ok

July 17, 2007 – In a Tuesday analyst/press event at SEMICON West, Novellus Systems Inc. said its 2Q07 profits rose roughly 9% to $57.3M — its slowest in four quarters — on ~5% higher revenues of $416.3M, though slightly better than expected. Orders evaporated, though, dropping >19% Q-Q TO $332.2M, with a similar slide predicted for 3Q (shipments, meanwhile, rose ~12% Q-Q to $436.4M).

The company blames the current slowdown on capacity issues at NAND flash memory fabs, and estimates that overcapacity will be solved in 1-2 quarters.

Novellus had already warned in June that its 2Q results would be at the lower end of a previous range of estimates.

In an analyst Q&A, Novellus noted that while memory capex investments are expected to be flat this year, it sees 17 new 300mm fabs that will start accepting equipment in 2008, adding to the 55 total fabs which will add capacity in 2008, for a total of ~700k wafer starts/month capacity addition. That compares to ~600k wafer starts/month worth of 300mm capacity added in 2006. Memory fabs are in the last phases of capacity additions for 200mm fabs, squeezing the last profits out of depreciated lines, the execs noted.


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