Is semiconductor capex spending beating expectations? AMAT's Q1 results, Q2 guidance

February 20, 2012 -- Applied Materials Inc. (Nasdaq:AMAT) is one of the largest and broadest makers of semiconductor manufacturing and packaging equipment, as well as tools for display and solar photovoltaics fab. The company's strong Q1 results, and positive guidance for Q2, have many analysts questioning whether 2012 is going to be as grim a semiconductor capital expenditures year as previously thought.

This one sentence from AMAT chairman and CEO Mike Splinter is echoing around the industry: "In semiconductor, 2012 is shaping up to be the year of the foundry."

Display tool orders were $40 million, reflecting ongoing weakness in LCD TV equipment demand. Energy and Environmental Solutions (EES) orders were $33 million, down 62% from the prior quarter, reflecting solar industry overcapacity. But the Silicon Systems Group of AMAT saw a 53% jump in orders from Q4 2011, to $1.42 billion, reflecting strength in global semiconductor foundries and positive effects from AMAT's buy of Varian.

"Global demand for mobile devices is driving a third consecutive year of strong capital investment by semiconductor customers," said Splinter. Chipmakers such as Intel Corp (INTC.O), AMD (AMD.N) and contract foundries such as TSMC (2330.TW) are seeing more demand amid rising sales of smartphones and tablets, added Reuters news service.

AMAT's order backlog decreased by $230 million from Q4 2011 to $2.2 billion.

For the second quarter of fiscal 2012, Applied expects net sales to be up 5-15% sequentially. Look for the Silicon Systems Group to do better, 15-25%, AMAT forecasts. "We see solid order momentum and an improved outlook overall for our second quarter," Splinter said.

Applied generated orders of $2.01 billion and net sales of $2.19 billion in Q1. Get AMAT's full Q1 report here.

-- Meredith Courtemanche, digital media editor