Novellus Sees Bookings Rebound in Fourth Quarter
By David Lammers
Novellus Systems CEO Rick Hill said equipment bookings may be recovering from a recent bottom, with Novellus’s fourth quarter bookings expected to be up 10 to 30 percent from the third quarter.
Hill concluded a conference call about the company’s third quarter results by saying that he has found “a small bit of good news” in the recent jump in bookings and the improved forecast for the rest of the fourth quarter.
The company reported Wednesday (Oct. 26) that Q3 bookings were $226.9 million, down $84.7 million (27.2 percent) from Q2 bookings of $311.6 million. Third quarter shipments were $301.6 million, down $57.7 million (16.1 percent) from the second quarter.
While the markets in the United States and Europe for computers and other electronics remain “soft,” Hill said demand in Asia is relatively strong. While he shied away from saying that the floods in Thailand, which have impacted HDD production, would have a direct impact on orders for Novellus, he said the trend is to replace HDDs with solid-state drives (SSDs).
Novellus has a two-pronged growth strategy, based on an expected takeoff of the vertical NAND memories where bits are stacked using sophisticated deposition tools, and continued growth in wafer-level packaging and TSV interconnects. The move toward finFETs also drives demand for new deposition equipment.
Conformal oxide deposited over FinFET core by Novellus Vector CFD. Image courtesy of Novellus
“As we see more SSD-based computers hit the consumer marketplace, that will require more capacity,” Hill said. Asked if NAND vendors would backfill existing fabs with vertical NAND capacity, Hill said he “absolutely” expects companies to move to vertical NAND next year at both existing and green field fabs. Besides adding volumetric transistor density, the V-NAND memories are less reliant on the expensive lithographic tools, he said, adding that vertical NAND becomes more attractive as EUV lithography throughputs and costs remain clouded.
“V NAND allows our customers to enjoy lithography cost reductions. 2012 is when we will begin to see capacity come on line,” Hill said.
TSVs are another technology advance on the verge of taking off, as designers begin to appreciate that “volumetric transistor density, not just area density, is what counts. TSVs are, in my opinion, one of the most underutilized tools in the designer’s toolbox.”
The headwind facing the equipment industry since mid-summer has more to do with macroeconomic issues than with the appeal of today’s electronics products. “It is the fundamental irresponsibility of sovereign nations, including our own, to deal with the inability to cut spending,” Hill said.
During the third quarter, Novellus continued to buy back shares of its own stock. Over the last five years, Novellus has bought back much of its available stock, worth about $3 billion, at an average share price of $27.73. The board of directors has authorized up to $500 million worth of additional stock repurchases by December 2014, which one stock analyst said, speaking half seriously, will be a stealth form of “taking the company private.”
“I’ve asked our investors for their opinions (on the share buy backs) and the resounding reply is: ‘Keep doing what you are doing,’” Hill said.
Tags: NAND, Novellus Systems