I am ever grateful to Dr. Robert N. Castellano, president of The Information Network., USA, for sharing his article titled “Korea’s Capex Holds The Key To Strong Semiconductor Equipment Sales, But Brexit May Weigh On Business,” which is featured on Seeking Alpha.
- A joint study conducted by Applied Materials and Gartner points to semiconductor equipment sales in Korea of $10 billion per year.
- Although US semiconductor equipment companies stand to benefit, numerous Korean equipment companies compete in several sectors with US companies.
- Revenue and growth could be negatively impacted by the strong US dollar and a possible global slowdown from Brexit.
Wafer fabrication equipment (WFE), he says, presents a lucrative market for Korea. In the short term, the strong dollar, as a result of Brexit, will impact sales of WFE equipment to the European semiconductor manufacturers. Traditionally, Europe represents about 5 percent of WFE sales. Hence, Korea could represent an even a greater percentage of WFE sales in 2016.
On the other hand, the turmoil in global financial markets, as a result of Brexit, could have an overall dampening effect on the Korean economy so that revenues generated from Korean semiconductor companies could be impacted. This will result in lower WFE sales as the NAND and smartphone markets slow, particularly in Europe.
He concludes that the US Dollar and Japanese Yen, could strengthen throughout 2016 and impact revenue growth for US and Japanese equipment companies selling in Korea.
It would be interesting to see how H2-2016 pans out!