Aem looks like doing well in the next few years. My thoughts are that electronic sectors are in a booming period, especially with digitalization across all electronic industries, electric vehicles boom, data center, 5G, industry automation 4.0, mobile, e-commerce, and computing.whether you like it or not, seems like our life cannot escape from electronics. This will only keep increasing in my opinion.
Especially in some industry such as automotive ans medical whereby safety is always a concern, inspection check is a critical process and is a must to check failures before sending them to the market, this will greatly enhance the needs to inspect and verify the chips comprehensively. In short, it means manufacturing companies have to invest equipments to test these chips.
3D stack die are increasing widely use as products are getting either smaller or are having more features and functions in a constrained substrate or die space. For example wrist watches, hearing aids and mobile phones. The challenges will be on how to increase the functions in such a small high density space? One way is to stack the die upwards. I think the challenge for the test equipment makers will be how to produce equipment to test these die or similar products.
As for company itself, Low capital expenditures but able to chunk up a lot of cash flows every year shows the strong business model and management it has. Continue to do so in next few years will make the company even stronger in terms of financial and thus have more finacial muscle to invest in more technology company and perhaps in improving their technology. To keep up with the intense competition, enhance heavily in RnD is a need.
Disappointed Q1 result but I think there’s nothing to be fearful of. Management has already announced big orders for their new equipment in Q3 and throughout 2022. Means that throughout next year, this new equipment alone should be able to fetch better revenue and profit than this year and most likely last year due to fact. Plus there could be more meaningful orders from new semiconductor customers which will boost the revenue substantially. Also, not forgetting Intel is building new fabs across USA which has a high potential to add in more equipments. Visibility is there in next few years.
There are risks definitely and obviously highly dependent on one big company is very risky. The customer may cancel working with you andyou will see a drastic change in revenue, profits and subsequent share price.
How did the company reduced the risk? Obviously they have been putting lots of efforts and investments in new companies and expand their broad range of equipment and technology know how. They also are trying to diversify their customers to other industries and regions which have received good response from them recently as informed by the management recently. However, it is pretty normal that it takes some time before new customer will start to buy equipment as they have to qualify the equipment with a few stages. So from enquiry to placing an order could take up to a year. If there is expansion of chips manufacturing, then the process could be reduced as there is a urgent need to supply chips, which could be a case in next few years as there was a real shortage in chips in the market. Hopefully in 2022, we can see substantial orders from these new customers.
Being qualify to sell equipment to them is not enough, you need to convince customers to buy your products as there are other competitors breathing down your neck every time. They could have already strong relationships with their existing customers and it is very difficult to penetrate to their customers as the competitors will try all ways to fan you out of their territory. Therefore, it must be convinced to the new customer that your product must excel and better than them, bring better tangible and intangible benefits to the customers, and thus produce better quality products and profits for them. Here, I am not sure how good the equipments are compare with competitors but there are pretty good signs such as big company Intel which bought so many equipments from them as they help them in their manufacturing process, example save time and manpower for testing. With time save, more chips can be produced and thus revenue and profit will increase.
Above are just my thoughts and up to my knowledge ability and could be wrong. I am vested and could be bias so dyodd.
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