Saturday, July 18, 2015

LRCX July 17th

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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