Thursday, January 6, 2011

ASML (Nasdaq:ASML), Lam Research (Nasdaq:LRCX), Varian (Nasdaq:VSEA), Applied Materials (Nasdaq:AMAT), MKS Instruments (Nasdaq:MKSI), Advanced Energy

Barclays released its favorites in the U.S. Semiconductor Capital Equipment sector, and they include ASML (Nasdaq:ASML), Lam Research (Nasdaq:LRCX), Varian (Nasdaq:VSEA), Applied Materials (Nasdaq:AMAT), MKS Instruments (Nasdaq:MKSI), Advanced Energy (Nasdaq:AEIS) and Teradyne (NYSE:TER).

Barclays said, "Not A Read-Through for Other Equipment Vendors: We would caution any investors to read this pre-announcement as suggestive of weakening trends at leading front-end equipment vendors. Apparently, Mattson (Nasdaq: MTSN) is seeing pushes of expedited tools to Samsung from 4Q into 1Q along with selected other pushes from tier 2 DRAM vendors. Our take here is that this is company specific and relates to MTSN's more limited customer base. Beyond MTSN, our checks throughout the supply chain in the last few days suggests there have been no change to business fundamentals over the last 4 weeks --- meaning 1HCY11 wafer fab equipment trends are tracking similarly to 2HCY10. So we view this announcement as not indicative of weakness at others and expect SPE companies to reiterate this view at a competitor's conference in NY next week.

"Our top picks in the front-end remain ASML, Lam Research, Varian, and Applied Materials. In sub-system, MKS Instruments and Advanced Energy remain favorites (recently upgraded in December). And finally, in the back-end, we continue to like Teradyne. If there is broad-based weakness for SPE shares post MTSN's print, we would be adding to positions."

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