UCTT Revisited
Someone asked about UCTT
I posted this on 8/27
"UCTT is a company that helps semiconductor fabs run. They sell modules on to OEM companies like Mattson. UCTT is doing interesting things. First is vertical integration of systems to grow the revenue base. Second is expanding an Asian presence. Moving manufacturing to China for Chinese fabs. Third, cost containment, also via Chinese manufacturing
The result is large sequential earnings growth. I remain bullish on semiconductors despite possible slowdown in consumer spending. Fabs are operating at 91.2% capacity, which is a strong utilization and typically drives towards expansion. So this is partly a semiconductor equipment play but focusing on a smaller player with room for growth."
UCTT does make a unique product. Semiconductors are built layer by layer. The layers are ultra thin and need to be controlled for even distribution. After etching, this is the most critical step in manufacturing semiconductors. As chips move into a more 3 dimensional design, the layers need to precisely laid. There are even tools to measure the thickness and density. It is also part of the cost story: better controls lead to less waste, among other things.
UCTT makes THE system that controls the gas diffusion (the metals layers are built in a gas deposit process). These subsystems are part of the Applied Materials type of machines. In other words, they do such a great job that AMAT and Mattson and others outsource this part.
In addition, UCTT is expanding its product line to do more than just gas diffusion.
I see large growth because
1. Semi equipment continues to grow. Up 51%.
2. Increasing penetration. They build a better mousetrap and there are tons of semiconductor manufacturers that will want these systems in place.
All signs point to a solid growth cycle.
However, it has had a nice run up and is priced for some major success.
I posted this on 8/27
"UCTT is a company that helps semiconductor fabs run. They sell modules on to OEM companies like Mattson. UCTT is doing interesting things. First is vertical integration of systems to grow the revenue base. Second is expanding an Asian presence. Moving manufacturing to China for Chinese fabs. Third, cost containment, also via Chinese manufacturing
The result is large sequential earnings growth. I remain bullish on semiconductors despite possible slowdown in consumer spending. Fabs are operating at 91.2% capacity, which is a strong utilization and typically drives towards expansion. So this is partly a semiconductor equipment play but focusing on a smaller player with room for growth."
UCTT does make a unique product. Semiconductors are built layer by layer. The layers are ultra thin and need to be controlled for even distribution. After etching, this is the most critical step in manufacturing semiconductors. As chips move into a more 3 dimensional design, the layers need to precisely laid. There are even tools to measure the thickness and density. It is also part of the cost story: better controls lead to less waste, among other things.
UCTT makes THE system that controls the gas diffusion (the metals layers are built in a gas deposit process). These subsystems are part of the Applied Materials type of machines. In other words, they do such a great job that AMAT and Mattson and others outsource this part.
In addition, UCTT is expanding its product line to do more than just gas diffusion.
I see large growth because
1. Semi equipment continues to grow. Up 51%.
2. Increasing penetration. They build a better mousetrap and there are tons of semiconductor manufacturers that will want these systems in place.
All signs point to a solid growth cycle.
However, it has had a nice run up and is priced for some major success.
posted by Andrew at
6:17 PM
2 Comments:
Any comments on JNPR? Their results are inline.Also NVL has also shooted up.Both these stocks were on your sell list.Any thoughts?.
When are we buying UCTT?.I believe that the earnings are sometimes next week? Andrew,do you recommendation to entry a limit order with certain price?.please advice.
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