Too Far, Too Fast
By Richard Tortoriello
Standard & Poor's has taken a near-term negative view of the semiconductor capital equipment industry. With stocks in the group up 40%-80% from their September-October lows, we at S&P view the segment as overbought.
Our view comes from the fact that utilization rates at fabrication facilities remain very low, at around 64% during the third quarter. And next-generation 300mm (12") wafer fabs are being delayed. The only bright spots for the industry: spending on equipment for new copper processes, and semiconductor device sizes of 0.13 microns and below.
Standard & Poor's sees an industry upturn beginning in mid- to late 2002. We believe stocks in the group have temporarily gotten ahead of fundamentals.
Tortoriello is an equity analyst covering the semiconductor capital equipment industry for Standard & Poor's