TEL(US:TOELY)2025-05-29 14:12Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Global Semiconductor Capital Equipment industry, specifically analyzing the Wafer Fab Equipment (WFE) market, with data from the SEAJ (Semiconductor Equipment Association of Japan) [2][18]. Core Insights - WFE Growth: In April, Japan's SPE (Semiconductor Production Equipment) billing increased by 15% YoY in USD and 8% YoY in JPY. The 3-month average billing showed a 27% YoY increase in USD and 15% YoY in JPY, indicating a cyclical upward trend since mid-CY2023 [3][22]. - Tokyo Electron (TEL): The billing data suggests that TEL's revenue for Q1 may exceed consensus expectations, with a predicted -1% QoQ decline, better than the consensus estimate of -9% QoQ. This indicates potential upside for TEL, especially as the company anticipates a stronger second half of the year [4][27][31]. - Future Projections: The global WFE market is expected to remain flat YoY in CY2025 at $108 billion and grow by 6% to $115 billion in CY2026. This growth is anticipated despite weaker spending from China, which is expected to be offset by increased DRAM spending and a recovery in NAND [5][19]. Company-Specific Insights - Tokyo Electron (TEL): Rated as Outperform with a price target of ¥33,800. TEL is the largest Japanese SPE supplier and is expected to gain market share and expand margins due to competitive pricing following yen depreciation [9]. - DISCO: Also rated as Outperform with a price target of ¥41,300. DISCO holds an 85% market share in grinders and dicers, benefiting from the growing demand for advanced packaging technologies [10]. - Kokusai: Rated as Outperform with a price target of ¥3,640. The company is expected to see increased adoption of batch ALD technology, particularly in NAND applications [11]. - Advantest: Rated as Market-Perform with a price target of ¥7,060. The company benefits from rising testing intensity for HBM and AI GPUs [11]. - AMAT and LRCX: Both rated as Outperform with price targets of $210 and $95, respectively. AMAT is expected to benefit from secular WFE growth, while LRCX is positioned well for a NAND upgrade cycle [14]. Additional Insights - China's Demand: Despite expectations of a decline in China's WFE imports, the situation appears more resilient than previously feared, with YTD March imports remaining relatively stable. This suggests that the decline may not be as severe as the projected -30% [22]. - Market Dynamics: The competitive landscape includes both global players and Chinese suppliers, with domestic substitution driving growth for companies like NAURA and AMEC in China [16][17]. Conclusion - The semiconductor capital equipment industry shows promising growth prospects, particularly for key players like Tokyo Electron, DISCO, and Kokusai. Despite challenges in the Chinese market, the overall outlook remains positive, with expectations of gradual recovery and market share gains for Japanese equipment manufacturers.