Report
Pierre FerraguÊ

Bible 2Q25 – Semicap: Cautious view justified; expectations at risk for 2026.

Today, we are publishing the Semicap section of our 28th Tech Infrastructure Quarterly Bible. The Tech Bible is a must-read for any tech investor, as it summarizes the quarterly earnings reports from the over 140 companies we track, providing an update on our key perspectives and convictions. In the coming weeks we will publish sections on Hyperscale & Cloud, PCs, Enterprise IT and Foundry.

2Q25 semicap revenues up 2% QoQ, 2% above consensus. China up 19% after a 17% decline in 1Q, with manufacturers potentially buying ahead of possible export restrictions. Most vendors expect WFE up mid-single digits in 2025, with memory growing and trailing-edge logic and China declining. On leading-edge logic there are diverging views, with ASML, LAM, and KLA positive, but AMAT and TEL, who spoke later, more cautious. For 2026 the outlook is still uncertain, with consensus expecting capex growth in leading-edge logic and memory, but a further decline in China. The resulting 5% WFE growth forecast may be too ambitious.
Underlyings
Applied Materials Inc.

Applied Materials provides manufacturing equipment, services and software to the semiconductor, display and related industries. The company's segments are: Semiconductor Systems, which develops, manufactures and sells a range of manufacturing equipment used to fabricate semiconductor chips; Applied Global Services, which provides integrated solutions to support equipment and fab performance and productivity; and Display and Adjacent Markets, which is comprised of products for manufacturing liquid crystal displays, organic light-emitting diodes and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices.

ASML Holding NV

ASML Holding provides lithography systems for the semiconductor industry, manufacturing machines that are used in the production of integrated circuits or chips. Co. develops, produces, markets, sells and services advanced semiconductor equipment systems exclusively consisting of lithography systems. Co. sells its products to micro-processor manufacturers and Foundries, NAND-Flash memory and DRAM memory chipmakers. Co.'s products line includes the following: PAS 5000 lithography systems, which Co. no longer manufactures but continues to refurbish; PAS 5500 products; TWINSCAN DUV systems and TWINSCAN EUV systems based on a new platform utilizing the concepts of the TWINSCAN platform.

KLA Corporation

KLA is a supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. The company provides process control and process-enabling solutions for manufacturing and testing wafers and reticles, integrated circuits, packaging, light emitting diodes, power devices, compound semiconductor devices, microelectromechanical systems, data storage, printed circuit boards (PCBs), and flat and flexible panel displays, as well as general materials research. The company has four reportable segments which include Semiconductor Process Control; Specialty Semiconductor Process; PCB, Display and Component Inspection; and Other.

Tokyo Electron Ltd.

Tokyo Electron is a supplier of semiconductor production equipment ("SPE") and flat panel display ("FPD") selling through global network that spans Japan, the U.S., Europe and Asia. Co.'s principal products are coater/developers, plasma etch systems, thermal processing systems, single wafer deposition systems, cleaning systems (auto wet station, single wafer cleaning system, pre-clean system and scrubber system), wafer prober, FPD coater/developers and FPD plasma etch/ash systems. In addition, Co., through its subsidiaries, is engaged in the provision of transportation services, insurance services, as well as the support services for Co.'s photovoltaic cell ("PV") production equipment.

Provider
New Street Research
New Street Research

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Analysts
Pierre FerraguÊ

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