Deutsche (DB) Stays Conservative On Semi-conductors, TSM, UMC, INTL
December 14, 2009 1:25 PM
The analysts at Deutsche Bank believe that a strong foundry investment cycle, augmented by the additional memory spending (foreshadowed by strong memory prices) should drive the 2010 semiconductor industry CapEx up 28% y/y, with an upside scenario that could drive ~35% to 40% y/y growth.
According to the Deutsche Bank, the companies in this industry are trading at 22x consensus of 2010 estimates, thus making them fully valued with a downside bias.
It is expected that the industry majors like TSMC (NYSE: TSM)(FREE stock trend analysis), UMC (NYSE: UMC)(FREE stock trend analysis) and Samsung will ramp up foundry spending in 2010. This capacity expansion for Samsung, TSMC and UMC is partly due to a recent surge in memory prices. TSMC, with the return of Morris Chang as its CEO is undertaking its highest capital expansion plan this decade. Intel (NASDAQ: INTL), and Samsung besides Intel, are the only two companies in the industry that would have a higher capex plan than TSMC.
