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US Semiconductor Equipment_ Big Three Capex Preview
Bitfinder·2025-01-16 07:53

Industry Overview * Global WFE Spend: The global wafer fabrication equipment (WFE) spend is expected to reach 95billionin2025,adecreaseof595 billion in 2025, a decrease of 5% year-over-year. This is primarily driven by a decline in mature logic and industrial/auto demand, offset partially by leading-edge AI investments and HBM investments in DRAM. * **Market Segmentation**: The WFE market is segmented into logic (foundry + IDM) and memory. Logic is expected to grow by 13% year-over-year, while memory is expected to decline by 38%. * **Key Players**: The "Big Three" (TSMC, Samsung, and Intel) account for approximately 65% of the global WFE spend. TSMC is expected to be the largest spender, followed by Samsung and Intel. TSMC * **2025 CapEx**: TSMC's 2025 capital expenditure (CapEx) is expected to be higher than 40 billion, slightly higher than the Street's consensus of 35−35-38 billion. * Growth Drivers: TSMC's CapEx is expected to increase throughout the year due to improving non-AI semiconductor demand. * Valuation: Citi's target price for TSMC is NT1,540,basedona23xmultipleofits2025−26Eaverageearningspershare(EPS).Samsung∗∗∗2025CapEx∗∗:Samsung′s2025CapExisexpectedtobesimilarto2024,withaflexibleapproachtomanagingit.∗∗∗Valuation∗∗:Citi′s12−monthtargetpriceforSamsungisW83,000,basedonasum−of−the−parts(SOTP)methodology.Intel∗∗∗2025CapEx∗∗:Intel′s2025CapExisexpectedtobe1,540, based on a 23x multiple of its 2025-26E average earnings per share (EPS). Samsung * **2025 CapEx**: Samsung's 2025 CapEx is expected to be similar to 2024, with a flexible approach to managing it. * **Valuation**: Citi's 12-month target price for Samsung is W83,000, based on a sum-of-the-parts (SOTP) methodology. Intel * **2025 CapEx**: Intel's 2025 CapEx is expected to be 20-23billion,lowerthantheStreet′sconsensusof23 billion, lower than the Street's consensus of 24 billion. * Risks: Intel faces risks related to PC end-market demand, competition, customer risk, and macroeconomic conditions. * Valuation: Citi's target price for Intel is 22.00,basedona26xmultipleofits2025estimatedEPS.OtherKeyPoints∗∗∗KLACorp∗∗:CitihasaBuyratingonKLACorp,withatargetpriceof22.00, based on a 26x multiple of its 2025 estimated EPS. Other Key Points * **KLA Corp**: Citi has a Buy rating on KLA Corp, with a target price of 832 based on a 30x multiple of its 2025E earnings. * Nova Ltd: Citi has a Buy rating on Nova Ltd, with a target price of $240 based on a 31x multiple of its CY26 EPS. * Overall Rating: Citi has a Buy rating on the semiconductor equipment industry, with a focus on large cap and SMID cap names such as KLAC and NVMI.