stocks industry
Compound semiconductor stocks
soar during the last 12 months Strong sales of LED backlit screens and mobile devices have led to substantial gains in the share prices of many III-V chipmakers over the last year. Richard Stevenson reports.
T
he behavior of the stock market is out of kilter with that of the general economy. The politicians and
heads-of-state keep telling us that there is recovery, but it is fragile, and it could be a bumpy ride. The behavior of the stock market, however, suggests that business of booming. This difference arises because the stock price is strongly influenced by expectations of future business. Investors clearly think that recovery is round the corner, and thanks to their optimism we have a bull market. The Dow Jones has climbed by 20 percent over the last financial year, and the FTSE has shot up by 25 percent.
Tech stocks have faired even better. The NASDAQ composite, for example, has gained nearly 45 percent over that time frame. But that is nothing compared to most of the III-V stocks – many of these have doubled in value, or done even better over that timeframe (see “The Compound Semiconductor Share Price Leaderboard”, p. 23, for the numbers).
At the top of the pack sits Veeco, a manufacturer of process equipment and metrology tools. Over the last year its share price has soared from just $7 to nearly $50 (see Figure 1), not far short of its highest value ever, just north of $65. But that record occurred in the heady days of 2001 when all tech stocks prices were incredibly high.
Veeco’s rocketing shares price is a reflection of its great success in the MOCVD tool market. Sales of these growth machines have rocketed as LED chipmakers have increased their capacity to meet the growing demand for LEDs for backlighting displays in netbooks, laptops and TVs. And according to Jed Dorsheimer, an equity analyst at Canaccord Adams, Veeco’s share price has also received a helping hand from investors that have now got to grips with the potential of the LED.
MOCVD tools are by far the biggest sellers in Veeco’s LED and Solar Process Equipment business unit, which has delivered a sequential increase in sales in every quarter of the last year. In Q1 2009, this division netted
June 2010
www.compoundsemiconductor.net 21
$22 million, and since then it risen to $31 million, $53 million, $98 million and most recently $111 million. Growing this business has held the key to reversing Veeco’s fortunes: In Q1 2009 the company made a loss over $22 million, but a year on this three month period produced a $26 million profit.
Orders have also mushroomed over that time frame, growing from $28 million to $212 million. The company expects to ship 75 tools this quarter, and by bringing extra capacity on line, it hopes shipments will hit 100 and 120 units in the next two quarters.
Many of Veeco’s LED customers are buying its K-465i multi-wafer tool, a product has helped the company to take market share away from its main rival, Aixton. Dorsheimer estimates that Veeco has increased market share from 28 percent to 35 percent over the last year, primarily due to sales growth in China and Korea. However, although Aixtron might be loosing ground to Veeco, it is still the dominant player in the market. It has enjoyed a tremendous hike in its orders that has spurred a tripling of its share price, a performance good enough for this company to grab third spot in the table.
Veeco’s launch of the K465i has helped the company to grab market share from its rival, Aixtron, which still dominates the MOCVD market
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