Photo: FDominec / Wikimedia Commons, CC BY-SA 4.0
Two of Israel’s senior chip-equipment executives said Sunday they see no sign of a slowdown in orders despite last week’s rout in semiconductor stocks, drawing a line between a financial market hunting for short-term returns and companies investing in infrastructure for years ahead.
“We see no change. We are in contact with manufacturers around the world,” Ofer Greenberger, president and CEO of Applied Materials Israel, said on a panel at the “Seeing Beyond the Trend” conference, according to a report from the event. “There is apparently a gap here between a financial market looking for short-term returns and companies investing in infrastructure for a horizon of years. We saw this in previous cycles as well.”
Expanding capacity, not cutting
Greenberger said Applied Materials is investing heavily to expand its production capacity because it sees customer demand continuing. “There is the question of who is financing this whole cycle, but between those ordering and those supplying, we see continuity in demand,” he said. “We are investing a great deal in expanding production capacity, because we see the demand and are preparing for it.”
Lior Aviram, chairman of Camtek, agreed, while cautioning against reading too much into single market moments. Camtek tracks its order backlog, deal pipeline and customers’ road maps, he said, “and also the road maps of our customers’ customers. We are at the back of the cycle, so we feel the rises late, but we also feel a slowdown later. I stressed that right now we see no slowdown at all.”
The remarks came after the Philadelphia semiconductor index fell 12 percent last week, bringing its decline over the past half year to nearly 30 percent, though the index is still up 30 percent over the past year. According to Morgan Stanley data presented at the panel, the wafer fab equipment market, where Camtek, Applied Materials and Nova operate, is estimated at about $100 billion a year and is expected to nearly double by 2028.
A more cautious read
Yotam Ironi, head of foreign equities at Altshuler Shaham, offered a differing assessment, calling the selloff “a waking from a dream, a sobering up.” He said the correction reaches every investment portfolio and savings plan worldwide because the technology sector, and chips in particular, has grown so large in the indexes.
“Now the industry is more mature. We know how much it costs to build a server farm and how much it costs to buy chips, and the screen gives us the cost of financing every day in the form of bond yields,” Ironi said. He added that the U.S. election results signal some data-center projects could be delayed and take longer to generate cash flow, though he believes they will ultimately be built because states carrying heavy debt need the taxes and development.
On pricing, Ironi said the market is already signaling a pause: “Companies publish reports with nice growth in revenue and profits, but the stock moves sideways. Take Nvidia: relative pricing falls quarter after quarter while profitability rises. We are at least one foot into a stop in the cycle.” He said he hopes the correction proves healthy, giving everyone time to prepare financially.
What they watch for a turning point
Greenberger said he follows the capital-spending budgets of the cloud giants and utilization rates at packaging plants, which handle the silicon wafers produced by TSMC. “The packaging field is considered the canary in the coal mine. Those plants get work first, and lose it first,” he said. “Right now things look solid.” Aviram said he sees no path in which the United States pauses AI development while China continues to advance.
The panel also highlighted Israel’s position in process control, the machines that inspect and measure chips during production. Greenberger said Applied Materials Israel leads the global market in electron microscopy, and that “there is almost no chip in the world that does not pass under an Applied Israel machine.”
JBizNews Desk | Tel Aviv
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