5 Cool Things Found in Recent Disclosures By Chip Industry Executives
Need to know.

Going through transcripts of tech earnings calls and conference talks to uncover insights requires patience and a willingness to quickly scroll past financial minutiae and PR fluff. A large monitor and a full cup of coffee also don't hurt.

But in return for the effort, one can learn much of value about publicly traded companies, as well as the industries they operate in, that won't necessarily appear in regular media coverage. Here are some noteworthy takeaways from recent earnings calls and conference remarks made by major chip and chip equipment suppliers.

1. Lam Research thinks DRAM capacity growth remains under control.

While top-3 chip equipment maker Lam Research (LRCX) sold off post-earnings on Wednesday -- the company's measured commentary on 2018 shipments appears to be the culprit -- memory giant Micron (MU) clocked a 3.4% gain. Lam's comments about 2018 DRAM capacity additions, which follow recent worries that capacity adds could end the DRAM boom cycle that started in late 2016, likely had something to do with that.

"I would be concerned that our customers are adding too much [DRAM] capacity, if the analytics in our company in terms of end use demand concluded that there was a dramatic imbalance, and we have no evidence of that," said Lam CEO Martin Anstice on the call. He reiterated higher DRAM capital spending doesn't necessarily yield major capacity increases, since capital intensity (the amount of spending needed to achieve a given amount of capacity growth) has been rising, and that Lam sees industry bit supply growth on par with the low-to-mid 20% growth previously forecast by memory makers.

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2. Texas Instruments is very upbeat about long-term industrial chip trends.

Though Texas Instruments's (TXN) automotive chip sales have been registering healthy double-digit growth for several years, COO Brian Crutcher argued at a recent Goldman Sachs conference that the industrial vertical is TI's "best growth opportunity" going forward. "I love automotive...but...we cover over 500 end equipments or end products in industrial. And every single one of them are trying to make their systems smarter, more intelligent, transfer more data, faster. All those things need electronics," he said.

Crutcher added that TI's own chip manufacturing teams have been pushing equipment suppliers to make their machinery smarter. "We want it to tell us sooner if there's an issue with the [chip] wafer that's going through that machine," he said to give an example. Fellow analog chip and microcontroller (MCU) suppliers such as Analog Devices (ADI) and Microchip (MCHP) also have strong industrial exposure.

3. AMD feels the flexibility of its Epyc server CPU platform is a key advantage.

Since AMD (AMD) launched its Epyc server CPU line last summer, industry followers have been intrigued by the ability of the products to enable single-CPU servers with features that Intel (INTC) has only enabled for servers containing two or more CPUs. During a February Morgan Stanley conference talk, CEO Lisa Su suggested this flexibility is paying dividends.

"[I]n the server market you have a lot of different applications whether you're talking about cloud data center applications or you're talking about the enterprise applications, having more processing power, having the right mix of the processing to memory to I/O, is important. And so what we have with EPYC is a very, very flexible solution," Su said. She called initial customer activity for Epyc "very, very promising," and suggested AMD-powered servers have beaten out Intel-powered servers for deals at "major Fortune 1000 customers."

Su also argued the fact that Epyc CPUs actually consist of multiple chip dies connected using a high-speed interconnect (the Infinity Fabric) yields a more scalable and flexible architecture than traditional CPUs relying on one die. Intel still has many strengths in the server CPU wars, but gaining even several percentage points of share would be a big accomplishment for AMD, and the company seems well-positioned to pull it off.

4. Skyworks sees crowded airwaves as a growth driver.

Skyworks (SWKS) and other RF chipmakers have been quick to note that the complexity and stringent technical requirements of 5G radios will increase the dollar content of the RF chips going into phones. But during a Goldman conference talk, CEO Liam Griffin also made the case that 5G's ability to open up brand-new frequency bands for use will both drive network rollouts and increase Skyworks' total opportunity.

"[O]ne of the things that we see today is a very, very crowded network, a crowded spectrum from 700 [MHz] to about 3 [GHz]," Griffin said. "5G is going to provide a whole new set of frequencies, very wideband frequencies for us to address. It's going to create new architectural products...It expands the landscape of our [RF] filter opportunity. It really quite frankly expands the landscape of almost everything that we do today in mobile."

Separately, Griffin suggested the crowded nature of low-band (sub-1GHz) mobile spectrum -- such as the kind that the FCC auctioned off a large chunk of in early 2017 -- adds to RF complexity and grows the addressable market. "The amount of filtering, the number of filters that are required to deliver a high-end low-band [power amplifier device], it would surprise you," he said.

5. Applied Materials expects new plants to make OLED TVs much more cost-competitive.

Though OLED sets have made headway in the high-end TV market thanks to their thinness and stellar picture quality, their $1,500-plus prices remain a major deterrent. During a Morgan Stanley conference talk, Applied Materials (AMAT) CFO Daniel Durn suggested the arrival of Gen 10.5 OLED manufacturing plants, which can churn out much larger panels that current Gen 8.5 plants, will help drive down prices.

"A Gen 8.5 factory can do three 65-inch TVs. A Gen 10.5 factory can do eight 65-inch TVs on a single substrate or six 75-inch TVs," Lurn said. He also noted Applied, whose OLED-related equipment sales have surged over the last couple of years, is "tracking 13 Gen 10.5 factories that are being built between now and 2021." OLED materials and licensing firm Universal Display (OLED) , whose shares have been hit hard lately by smartphone-related concerns, can't complain.

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