Like its semiconductor cousin, LCD capex is going gangbusters in 2010 (77% growth, vs. ~60% foreseen previously), and Barclays' CJ Muse sees this trend continuing in 2011. LCD capex looks like it'll decline around -15% next year, but that's still good enough to be among the third best years since 2000, driven by Chinese panel makers and LG Display's Gen 8 expansion. 4Q10 will be the trough of the LCD cycle, Muse writes (in terms of panel pricing and glass demand), though lower capex means lower equipment orders and sales through 2011. Look for the biggest impact, he says, on tool suppliers Orbotech (~50% of CY10 sales in LCD), Applied Materials (~10%), Advanced Energy (~6%), and MKS Instruments (~3%), as well as Ulvac (~38% display) and Tokyo Electron (~11%).
And lower spending while capacity surges (19% in 2011, on top of 26% in 2010) means "a relatively healthier environment" for panel makers and suppliers, Muse notes. It's helped that a swarm of capacity expansions into China planned earlier in the year have stalled.
Searching for sun in WFR forecasts
MEMC's 3Q10 results fell short of estimates, with margins lagging expectations; look for its solar biz to rise and semi side to sink, notes Deutsche Bank's Peter Kim. "We believe that the semi wafer industry is seeing some headwinds as utilization rates seasonally slow and potentially enter over-supply (as warned by Shin-Etsu last week)," he writes in a research note. While solar is seen as "robust" for several quarters, he sees supply/demand warning signs of potential oversupply in solar wafers. And SunEdison could get more complex, as projects soon coming online will have margins hit by declining FITs in 2011 and 2012.
Others see darker skies, pointing to WFR's inability to pin down a 2010 EPS number, citing the aforementioned SunEdison project complexities (namely its Rovigo project, which is supposed to clear direct sale in 4Q). "That's the worst thing. We're only one quarter out from the end of the year and they can't even guide," notes Oppenheimer analyst Gary Hsueh, quoted by TheStreet.com. "It seemed like the worst last quarter when they said that EPS would miss but couldn't be more specific, yet now they don't have a clue."