Lam Research Corporation (LRCX)
LRCX started the month of July trading at $82.27 well above
our purchase price of $79.63. However, this was still far below the price
target of $96.55. Unfortunately, LRCX closed on Friday July 17th
trading at $77.26 representing a 6.1% decline for the first half of the month
of July. This is due in large part to the shift in the current state of the
semiconductor industry. Lam is a semiconductor equipment manufacturer and they
also provide maintenance to the specialized equipment. The future of the
semiconductor industry is in question as Moore’s law is starting to be broken.
Moore’s law states that the amount of transistors on a semiconductor will
double every 18 months, this is become difficult as the transistors cannot seem
to get any smaller. Some manufacturers have invested in larger 450mm
semiconductor wafers, but the larger size of the pieces causes it to lose its
integrity. Due to these setbacks the semiconductor industry could go in many
different directions, and it’s anyone’s guess what could be the biggest new advancement
in the industry. As for right now LRCX is in a holding pattern and the demand
for their equipment is in decline. I believe that we should continue to hold
LRCX for the time being, but if the industry appears to shift to require
equipment that Lam doesn’t service, then it might be time to get out of our
position. LRCX is expected to release their next earnings statement at the end
of July.
Jeff Sherman
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