Zacks Industry Outlook Entegris, MKS Instruments and Axcelis

Industry Overview - The Zacks Electronics - Manufacturing Machinery industry is facing challenging macroeconomic conditions globally, with softness in the 3D NAND end-market being a headwind [1] - Industry participants are benefiting from increased capital spending on high-performance computing, AI, mobility, augmented reality, virtual reality, advanced packaging, lithography, and wet processing solutions by semiconductor manufacturers [1] - The industry comprises companies providing solutions for wafer processing, device packaging, and test facilities, including thin-film processing systems, photonics, process-control tools, and advanced material-handling solutions [3] Key Trends Shaping the Industry - Miniaturization of electronic products is driving demand for advanced packaging solutions, with a consistent shift to smaller dimensions and new device architectures like FinFET transistors and 3D-NAND [4][5] - The complexity of semiconductor manufacturing processes is increasing due to the demand for faster, more powerful, and energy-efficient semiconductors, driven by cloud computing, IoT, and AI adoption [6][7] - Strong demand for NAND, DRAM, and SSDs, particularly from data centers and cloud spending, is benefiting industry participants [8][9] Industry Performance and Valuation - The Zacks Electronics - Manufacturing Machinery industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500, returning 14% compared to the S&P 500's 24.4% and the sector's 27.1% over the past year [14] - The industry is trading at a trailing 12-month EV/EBITDA ratio of 8.88X, below the S&P 500's 18.73X and the sector's 18.78X [15] - The industry's earnings estimate for 2025 has decreased by 10.7% since September 30, 2024, reflecting a bearish outlook [12] Companies to Watch - Entegris (ENTG): A leading supplier of advanced materials and process solutions for the semiconductor industry, expecting $10-$15 million in annualized cost savings to be reinvested in R&D and new operational capabilities [16][17] - MKS Instruments (MKSI): Benefiting from strong adoption of Photonics and Optical solutions, with steady earnings estimates and a 10.6% share price increase over the past year [18][19] - Axcelis Technologies (ACLS): Experiencing robust demand for ion implantation systems in the silicon carbide market, driven by the EV market, despite a 48.2% decline in share price over the past year [20][21]