February 12, 2014 / 11:25 PM / in 4 years

UPDATE 1-Applied Materials boosted by demand for flash memory chips

* Expects second-qtr adj EPS $0.25-$0.29/shr vs est $0.27

* Expects second-qtr rev to increase 3-10 pct sequentially

* First-qtr adj EPS $0.23/shr vs est $0.22

* Revenue $2.19 bln vs est $2.13 bln

Feb 12 (Reuters) - Applied Materials Inc, the biggest maker of equipment used to make semiconductors, reported a 39 percent jump in first-quarter revenue as higher demand from manufacturers of flash memory chips helped to offset weak sales to makers of logic chips.

Applied Materials, which also provides equipment to make flat panel displays and solar cells, said it expected adjusted earnings of 25-29 cents per share in the current quarter.

Analysts were expecting a profit of 27 cents per share, according to Thomson Reuters I/B/E/S.

The company said it expected revenue to increase 3-10 percent sequentially in the current quarter, implying revenue of $2.25 billion-$2.40 billion. Analysts expected $2.32 billion.

Orders in the company’s silicon systems segment, which brings in about two-thirds of total sales, rose 13 percent to $1.57 billion, buoyed by demand from contract chip manufacturers and makers of flash memory chips.

Demand has been strong for flash memory, which is used in everything from memory cards to digital cameras and portable devices such as smartphones and tablets.

But spending by logic chipmakers such as Intel Corp has been hit by lackluster demand for PCs.

“The foundries remain the biggest component of wafer fabrication equipment as they ramp new factories to fulfill demand for advanced mobile chips,” Chief Executive Gary Dickerson said on a conference call with analysts on Wednesday.

“We expect foundry investment to grow 10 percent to 20 percent this year,” Dickerson said.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s biggest contract chipmaker, said it expects double-digit percentage growth in sales and profit in 2014 based on a protracted boom in the mobile device sector.

TSMC, one of Applied Materials’ biggest customers, also said it was investing billions of dollars to pack more processing power into chips.

Applied Materials said orders for logic and DRAM chips declined in the first quarter.

“In logic, we anticipate investment levels (in 2014) to be flat to down relative to 2013,” Dickerson said.

Applied Materials, which also supplies chipmaking gear to Samsung Electronics Co Ltd, agreed in September to buy No. 3 chip equipment maker Tokyo Electron Ltd in an all-stock deal worth more than $10 billion as the number of major customers making logic chips declines.

The company’s net income rose to $253 million, or 21 cents per share, in the first quarter ended Jan. 26 from $34 million, or 3 cents per share a year earlier.

Excluding items, the company earned 23 cents per share.

Revenue rose 39 percent to $2.19 billion.

Analysts had expected earnings of 22 cents per share on revenue of $2.13 billion.

Applied Materials’ shares were little changed at $17.92 in extended trading on Wednesday.

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