Semiconductor Capital Equipment_ WFE update, NAND uptick but question durability

Summary of Semiconductor Capital Equipment Conference Call Industry Overview - The focus is on the Semiconductor Capital Equipment industry, specifically the Wafer Fabrication Equipment (WFE) segment - The WFE forecast for 2025 has been revised from $96 billion (down 6$99 billion (down 3%), and for 2026 from $101 billion (up 6$103 billion (up 4%) [1][2][35] Key Insights - NAND Market Dynamics: - There is a tactical setup for NAND, but concerns about its durability due to end-market trends persist [1][35] - The revision in forecasts is primarily driven by NAND ($1 billion) and DRAM ($2 billion) adjustments [2][35] - Brownfield investments in NAND are occurring earlier than expected, leading to an increase in upgrade assumptions from $12 billion to$15 billion for 2025-2026 [3][41] - Major players like Samsung, Kioxia, and YMTC have resumed spending, which may drive near-term spending despite profitability concerns [3][46] - DRAM Market Outlook: - DRAM remains a contentious topic, with forecasts varying significantly among companies [4][29] - Some companies predict growth in DRAM WFE, while others forecast flat or declining trends [4][29] - The expectation is that 2025 will be a digestion year for DRAM after a record 2024, with a projected WFE of $25 billion [38][39] - **Company Forecast Divergence**: - Companies have differing forecasts for 2025 WFE, with TEL and Kokusai predicting flat growth, while LAM, KLA, and SCREEN expect moderate growth [28][29] - The consensus is that leading logic will see growth, trailing logic will decline, and NAND will increase [22][28] Additional Important Points - **Record Shipments**: - Q4 2024 saw stronger-than-expected shipments, with total Core-5 shipments reaching$21.7 billion, marking an 11% quarter-over-quarter increase and a 21% year-over-year increase [21][22] - NAND shipments from LAM, AMAT, and TEL totaled $1.11 billion, up 101$3.35 billion, up 35% quarter-over-quarter and 8% year-over-year [22] - Geopolitical Factors: - There is a noted decline in China’s contribution to Core-5 revenue, dropping from 40% to 32%, while South Korea's share increased from 15% to 22% [24][26] - Future Considerations: - The industry is unlikely to see significant greenfield investments outside of China during 2025-2026, with a focus on upgrades instead [39] - The competitive dynamics in NAND may lead to increased spending, potentially reigniting a layers race that could affect long-term industry health [46] This summary encapsulates the key points discussed in the conference call regarding the Semiconductor Capital Equipment industry, highlighting the current trends, forecasts, and potential risks.