Semiconductor Manufacturing Stocks Report Q3 Earnings, Key Takeaways Revealed
The semiconductor industry is driven by demand for advanced electronic products such as smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
The 14 semiconductor manufacturing stocks we track reported a satisfactory Q3. As a group, revenues beat analysts' consensus estimates by 2% while next quarter's revenue guidance was 1.3% below. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Kulicke and Soffa (NASDAQ: KLIC) - A Closer Look at Revenue Performance
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices. Kulicke and Soffa reported revenues of $181.3 million, down 10.4% year on year. This print exceeded analysts' expectations by 0.6%. Despite the top-line beat, it was still a softer quarter for the company with revenue guidance for next quarter missing analysts' expectations.
Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "We continue to drive market adoption of our advanced packaging and assembly solutions including vertical wire, high-power interconnect (HPI), advanced dispense and fluxless thermo-compression (FTC). Demand for these solutions is anticipated to accelerate along with coordinated General Semiconductor and Automotive market recovery through fiscal year 2025." Kulicke and Soffa Total Revenue The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $47.03.
Marvell Technology (NASDAQ: MRVL) - Outperforming Analysts' Expectations
Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos. Marvell Technology reported revenues of $1.52 billion, up 6.9% year on year, outperforming analysts' expectations by 4%. The business had an exceptional quarter with a significant improvement in its inventory levels and revenue guidance for next quarter exceeding analysts' expectations.
Story Continues Marvell Technology Total Revenue The market seems happy with the results as the stock is up 18.8% since reporting. It currently trades at $114.02. Is now the time to buy Marvell Technology? Access our full analysis of the earnings results here, it's free.
Entegris (NASDAQ: ENTG) - Weakest Q3 Performance
With fabs representing the company's largest customer type, Entegris (NASDAQ: ENTG) supplies products that purify, protect, and generally ensure the integrity of raw materials needed for advanced semiconductor manufacturing. Entegris reported revenues of $807.7 million, down 9.1% year on year, falling short of analysts' expectations by 3%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts' expectations significantly and a miss of analysts' adjusted operating income estimates.
Entegris delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 9.3% since the results and currently trades at $97.24.
Photronics (NASDAQ: PLAB) - Strong Revenue Growth
Sporting a global footprint of facilities, Photronics (NASDAQ: PLAB) is a manufacturer of photomasks, templates used to transfer patterns onto semiconductor wafers. Photronics reported revenues of $222.6 million, down 2.1% year on year. This number topped analysts' expectations by 2.1%. It was a very strong quarter as it also put up an impressive beat of analysts' EPS estimates and revenue guidance for next quarter slightly topping analysts' expectations.
The stock is down 3.8% since reporting and currently trades at $24.36.
IPG Photonics (NASDAQ: IPGP) - Slowest Revenue Growth
Both a designer and manufacturer of its products, IPG Photonics (NASDAQ: IPGP) is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials. IPG Photonics reported revenues of $233.1 million, down 22.6% year on year. This result surpassed analysts' expectations by 2.3%. Taking a step back, it was a slower quarter as it produced a significant miss of analysts' adjusted operating income and EPS estimates.
IPG Photonics had the slowest revenue growth among its peers. The stock is down 8.2% since reporting and currently trades at $72.82.
Market Update: Fed Rate Cuts and Future Outlook
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing.
The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs.
Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Conclusion
The semiconductor manufacturing stocks report Q3 earnings, with some notable performances among the group. While Kulicke and Soffa reported a softer quarter, Marvell Technology outperformed analyst expectations. Photronics also put up strong revenue growth, while Entegris delivered the weakest performance against analyst estimates.
As the industry continues to evolve, companies like IPG Photonics may face challenges in adapting to changing market conditions. The Fed's rate cuts and future outlook remain a significant uncertainty for investors.
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