LRCX - Lam Research Corporation

NasdaqGS - NasdaqGS Real-time price. Currency in USD
339.98
+4.22 (+1.26%)
At close: 4:00PM EDT

339.01 -0.97 (-0.29%)
After hours: 4:13PM EDT

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Previous close335.76
Open335.09
Bid339.98 x 1000
Ask340.02 x 800
Day's range330.65 - 340.25
52-week range181.38 - 344.32
Volume1,419,686
Avg. volume2,170,193
Market cap49.352B
Beta (5Y monthly)1.36
PE ratio (TTM)24.47
EPS (TTM)13.89
Earnings date29 Jul 2020
Forward dividend & yield4.60 (1.37%)
Ex-dividend date16 Jun 2020
1y target est316.22
  • Why Lam Research Stock Surged 18.2% in June
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  • Lam Research Jumps With Chips
    Investor's Business Daily Video

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  • U.S.-China Feud Gets Nasty With Red Tape as Stealth Weapon
    Bloomberg

    U.S.-China Feud Gets Nasty With Red Tape as Stealth Weapon

    (Bloomberg) -- The U.S. and China are moving beyond bellicose trade threats to exchanging regulatory punches that threaten a wide range of industries including technology, energy and air travel.The two countries have blacklisted each other’s companies, barred flights and expelled journalists. The unfolding skirmish is starting to make companies nervous the trading landscape could shift out from under them.“There are many industries where U.S. companies have made long-term bets on China’s future because the market is so promising and so big,” said Myron Brilliant, the U.S. Chamber of Commerce’s head of international affairs. Now, they’re “recognizing the risk.”China will look to avoid measures that could backfire, said Shi Yinhong, an adviser to the nation’s cabinet and a professor of international relations at Renmin University in Beijing. Any sanctions on U.S. companies would be a “last resort” because China “is in desperate need of foreign investment from rich countries for both economic and political reasons.”Nevertheless, pressure is only expected to intensify ahead of the U.S. elections in November, as President Donald Trump and presumptive Democratic nominee Joe Biden joust over who will take a tougher line on China.Trump has blamed China for covering up the coronavirus pandemic he has mocked as “Kung Flu,” accused Beijing of “illicit espionage to steal our industrial secrets” and threatened the U.S. could pursue a “complete decoupling” from the country. Biden, likewise, has described President Xi Jinping as a thug, labeled mass detention of Uighur Muslims as unconscionable and accused China of predatory trade practices.And on Capitol Hill, Republicans and Democrats have found rare unity in their opposition to China, with lawmakers eager to take action against Beijing for its handling of Covid-19, forced technology transfers, human rights abuses and its tightening grip on Hong Kong.“China is going to be a punching bag in the campaign,” said Capital Alpha Partners’ Byron Callan. “But China is a punching bag that can punch back.”China has repeatedly rejected U.S. accusations over its handling of the pandemic, Uighurs, Hong Kong and trade, and it has fired back at the Trump administration for undermining global cooperation and seeking to start a “new cold war.” Foreign Minister Wang Yi last month said China had no interest in replacing the U.S. as a hegemonic power, while adding that the U.S. should give up its “wishful thinking” of changing the country.Both sides have already taken a series of regulatory moves aimed at protecting market share.The U.S. is citing security concerns in blocking China Mobile Ltd., the world’s largest mobile operator, from entering the U.S. market. It’s culling Chinese-made drones from government fleets and discouraging the deployment of Chinese transformers on the power grid. The Trump administration has also tried to constrain the global reach of China’s Huawei Technologies Co., the world’s largest telecommunications equipment manufacturer.Meanwhile, China prevented U.S. airline flights into the country for more than two months and, after the U.S. imposed visa restrictions on Chinese journalists, it expelled American journalists. It has stepped up its scrutiny of U.S. companies, with China’s state news agency casting one probe as a warning to the White House. China also has long made it difficult for U.S. telecommunications companies to enter its market, requiring overseas operators to co-invest with local firms and requiring authorization by the central government.One of the most combustible flash points has been the Trump administration’s campaign to contain Huawei by seeking to limit the company’s business in the U.S. and push allies to shun its gear in their networks.The U.S. Federal Communications Commission moved to block devices made by Huawei and ZTE Corp. from being used in U.S. networks. And the Commerce Department has placed Huawei on blacklists aimed at preventing the Chinese company from using U.S. technology for the chips that power its network gear, including tech from suppliers Qualcomm Inc. and Broadcom Inc.After suppliers found work-arounds, Commerce in May tightened rules to bar any chipmaker using American equipment from selling to Huawei without U.S. approval. The step could constrain virtually the entire contract chipmaking industry, which uses equipment from U.S. vendors such as Applied Materials Inc., Lam Research Corp. and KLA Corp. in wafer fabrication plants.The curbs also threaten to cripple Huawei. Although the company can buy off-the-shelf or commodity mobile chips from a third party such as Samsung Electronics Co. or MediaTek Inc., going that route would force it to make costly compromises on performance in basic products.Huawei was on a list the Pentagon unveiled last week of companies it says are owned or controlled by China’s military, opening them to increased scrutiny. The Ministry of Foreign Affairs in Beijing accused the Trump administration of “violating the very market economy principle the U.S. champions.”“We are strongly opposed to this,” the foreign ministry said Sunday of the Pentagon’s designation. “China urges the U.S. to stop suppressing Chinese companies without reason and provide a fair, just and non-discriminatory environment for Chinese companies to operate normally in the U.S.”After the new restrictions, the editor of the Communist Party’s Global Times newspaper tweeted that China would retaliate using an “unreliable entities list” that it first threatened at the height of the trade war last year. Although China didn’t identify companies on the list, the Global Times has cited a source close to the Chinese government as saying U.S. bellwethers such as Apple Inc. and Qualcomm could be targeted.The fallout could extend to companies heavily reliant on Chinese supply chains, as well consumer-facing brands eager to expand sales in Asia. Boeing Co., which recorded $5.7 billion of revenue from China in 2019, and Tesla Inc., the biggest U.S. carmaker operating independently in China, are among companies most exposed if relations sour further.“We’re playing in a much wider field now,” said Jim Lucier, managing director of research firm Capital Alpha Partners. “We’re not simply talking about ‘you tariff me’ and ‘I tariff you.’ The playing field is virtually unlimited.”Planes and AutomobilesU.S. automakers have also been singed. In June, China fined Ford Motor Co.’s main joint venture in the country for antitrust violations, saying Changan Ford Automobile Co. had restricted retailers’ sale prices since 2013.Aviation has been another source of tension, as both countries squabble over access to their skies. China’s decision to limit U.S. airlines operations to those services scheduled as of March 12 hurt carriers such as United Airlines Holdings Inc., Delta Air Lines Inc, and American Airlines Group Inc. that had suspended passenger flights to and from China because of the coronavirus pandemic.The U.S. responded earlier this month by initially threatening to ban all flights from China, then relenting to allow two flights weekly once Chinese officials eased their restrictions. Now, in what appears to be a staged de-escalation, China gave U.S. passenger carriers permission to operate four weekly flights to the country and earlier this month, the Trump administration matched the move by also authorizing four flights from Chinese airlines.It’s happening outside of aviation too. Consider the U.S. government’s decision to seize a half-ton, Chinese-made electrical transformer when it arrived at an American port last year and divert the gear to a national lab instead of the Colorado substation where it was supposed to be deployed. That move -- and a May executive order from Trump authorizing the blockade of electric grid gear supplied by “foreign adversaries” of the U.S. in the name of national security -- have already sent shock waves through the power sector.The effect has been to dissuade American utilities from buying Chinese equipment to replace aging components in the nation’s electrical grid, said Jim Cai, the U.S. representative for Jiangsu Huapeng Transformer Co., the company whose delivery was seized. Although Cai said the firm has supplied parts to private utilities and government-run grid operators in the U.S. for nearly 15 years without security complaints, at least one American utility has since canceled a transformer award to the company, Cai said.Trump’s directive is tied to a broader effort to bring more manufacturing to the U.S. from China. “This is a part of the administration’s efforts to impair China’s supply chains into the United States,” said former White House adviser Mike McKenna.Escalating tensions could jeopardize the U.S. economic recovery as well as China’s trade commitment to buy $200 billion in American goods and services over the next two years. The country’s purchase of U.S. goods increased last month as the economy continued its recovery from the coronavirus shutdowns, but imports are still far behind the pace needed to meet the terms of the phase one trade deal, according to Bloomberg calculations based on data from China’s Customs Administration.U.S.-China struggles also may factor into the November presidential election. Former U.S. national security adviser John Bolton alleges in a new book that Trump asked Xi to help him win re-election by buying more farm products -- a claim the White House has dismissed as untrue.“I don’t expect one single blow to send this relationship in a tailspin,” the chamber’s Brilliant said. “Each side will calibrate their reactions in a way that will not tip the scales too far.”Take the recent spat over media access. After the U.S. designated five Chinese media companies as “foreign missions,” China revoked press credentials for three Wall Street Journal staff members over an article with a headline describing China as the “real sick man of Asia.”Then the Trump administration ordered Chinese state-owned news outlets to slash staff working in the U.S. Beijing responded in March by effectively expelling more than a dozen U.S. journalists working in China.Both the U.S. and China have ample opportunities to ratchet up regulatory pressure. A bill passed by the Senate last month could prompt the delisting of Chinese companies from U.S. stock exchanges if American officials aren’t allowed to review their financial audits.And last week, as the U.S. State Department imposed visa bans on Chinese Communist Party officials accused of infringing the freedom of Hong Kong citizens, a senior official made clear the move was just an opening salvo in a campaign to force Beijing to back off new restrictions on the city.China, similarly, can slow licensing decisions and regulatory approvals, launch investigations under its anti-monopoly law and squeeze financial firms that want to do business in the country. For instance, the country could rescind pledges to let U.S. financial firms take controlling stakes in Chinese investment banking joint ventures, according to a Cowen analyst.“China will not make any significant compromise and will retaliate whenever and wherever possible,” said Shi, the Renmin University professor.Companies are still lured to China and its massive local market -- and tensions with the U.S. don’t overcome the Asian superpower’s appeal. Just one-fifth of companies surveyed by the American Chamber of Commerce in China late last year said they had moved or were considering moving some operations outside of the country, part of a three-year downward trend.But the coronavirus pandemic has subsequently pushed more companies to reckon with the risks of relying too heavily on any single country for their supply chains, amid existing concerns about forced technology transfers, cost and rising tensions that could damp investment in China.China is no longer the lowest-cost manufacturer, and companies are more reluctant to invest there, said James Lewis, director of the Technology Policy Program at the Center for Strategic and International Studies in Washington.“Everyone would like to be in the China market -- everyone wants it to be like 2010 -- but things are changing.”(Updates with trade data in 28th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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    Tuesday was a good day for Wall Street, especially for the stocks within the Nasdaq Composite (NASDAQINDEX: ^IXIC). One company investors haven't heard much about lately is Baidu (NASDAQ: BIDU), but the Chinese internet search company got a push higher from interest in one of its major investment holdings. Meanwhile, in the semiconductor equipment sector, Lam Research (NASDAQ: LRCX) continued to gain ground as demand for chips remains robust.

  • Chips Mixed But Lam Research Shines
    Investor's Business Daily Video

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  • Lam Research (LRCX) Gains But Lags Market: What You Should Know
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  • Bloomberg

    TSMC Scores Subsidies and Picks Site for $12 Billion U.S. Plant

    (Bloomberg) -- Taiwan Semiconductor Manufacturing Co. has secured government subsidies for its envisioned $12 billion chip plant in Arizona, moving closer toward finalizing a facility designed to allay national security concerns and shift high-tech manufacturing to America.TSMC, the main chipmaker to Apple Inc. and Huawei Technologies Co., has picked a site for the future plant and both federal and state governments have agreed to help make up for the higher cost of fabricating semiconductors in the U.S., Chairman Mark Liu told reporters Tuesday. Negotiations continue over the specifics of those incentives, he said without elaborating or identifying the site’s location.The decision to situate a plant in Arizona came after White House officials warned about the threat inherent in having much of the world’s electronics made outside of the U.S. TSMC had negotiated a deal with the administration to create American jobs and produce sensitive components domestically for national security reasons. It announced the project just before Washington leveled new restrictions on the sale of chips to Huawei, seeking to contain one of TSMC’s largest customers.TSMC has set aside land adjacent to its selected plot and hopes to convince its own suppliers to set up operations in the vicinity over time, Liu added. They would join the likes of Intel Corp. and Micron Technologies Inc., which already operate facilities in the western state and have helped build a vibrant local semiconductor industry over the years. The scope of any eventual subsidies would require blessing from Congress, Liu added.“Subsidies will be a key factor in TSMC’s decision to set up a fab in the U.S.,” he said. “We are still talking to the U.S. government. Our request is that the state and federal governments together make up for the cost gap between the U.S. and Taiwan.”Read more: TSMC Plans $12 Billion U.S. Chip Plant in Victory for TrumpTSMC is embarking on its U.S. endeavor during one of the most turbulent years in memory, with the coronavirus pandemic depressing the global economy and smartphone demand that top clients Apple and Huawei depend on for growth. The company, which in April trimmed its 2020 sales outlook, also finds itself in the crossfire as the Trump administration ratchets up a campaign to contain China. Washington last month barred any chipmaker using American equipment from supplying the networking giant without U.S. approval, effectively blocking Huawei’s access to semiconductor manufacturing and dealing a blow to TSMC’s business.The Taiwanese chipmaker hopes to keep supplying Huawei but is confident other customers can replace any business lost because of tightening U.S. curbs on China’s largest tech company. TSMC is studying the latest restrictions and is hopeful the issue will get resolved over time, Liu told shareholders Tuesday. Liu declined to comment when asked whether TSMC had already ceased taking orders from the Chinese company.But Liu reaffirmed TSMC’s projections for 2020, saying it still planned to spend as much as $16 billion this year on capacity upgrades and technology, and foresees a mid- to high-teens percentage rise in 2020 revenue.Shareholders “can rest assured that we will resolve these new restrictions one by one. We will find a solution to continue to grow and secure more profits for our shareholders,” Liu said at Tuesday’s annual general meeting. “If there are no more HiSilicon orders, our other customers will want to fill the gap in our capacity, market share, or smartphone market share left by Huawei. How fast they can fill that gap depends.”Read more: Huawei Sees Dire Threat to Future From Latest Trump SalvoWashington’s curbs -- a more precise strike against Huawei because it targets its secretive and cutting-edge HiSilicon semiconductor division -- threaten to wreak havoc throughout the complex chip ecosystem that produces technology for consumers and companies globally.As the world’s largest and most advanced maker of chips for other companies, TSMC plays a crucial role in the production of devices from smartphones and laptops to servers running the internet. Huawei is TSMC’s largest customer after Apple and accounts for about 14% of the Taiwanese chipmaker’s sales, according to data compiled by Bloomberg. The Taiwanese firm may now have to cut off Huawei unless it gets waivers from the Commerce Department. But additional business from existing clients like Apple, Qualcomm Inc., MediaTek Inc. or Advanced Micro Devices Inc. could help offset a decline in orders.For TSMC, it’s growing ever more difficult to remain neutral amid the growing tensions between the U.S. and China. The company brands itself “everybody’s foundry,” effectively the Switzerland of the tech industry -- something executives reiterated on Tuesday. It supplies not just Chinese customers like Huawei but also the American military, while relying on U.S. producers of semiconductor-making equipment like Applied Materials Inc. and Lam Research Corp.“New restrictions can lead to a rebalancing among market players,” Liu told reporters. Huawei “will not be able to make smartphones in the future without semiconductors, and other smartphone brands will eat into its market share.”“We will still have a high market share after the rebalancing,” he added.Read more: U.S.-China Fight Over Chip Kingpin Rattles Tech IndustryFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Huawei Employees See Dire Threat to Future From Latest Trump Salvo
    Bloomberg

    Huawei Employees See Dire Threat to Future From Latest Trump Salvo

    (Bloomberg) -- The Trump administration has fired multiple salvos against Huawei Technologies Co. since the start of a campaign to derail China’s technological ascendancy. The latest blow threatens to cripple the country’s tech champion.Huawei’s leafy campus in southern China has been engulfed in a state of emergency since the Commerce Department in May banned the sale of any silicon made with U.S. know-how -- striking at the heart of its semiconductor apparatus and aspirations in fields from artificial intelligence to mobile services. Its stockpiles of certain self-designed chips essential to telecom equipment will run out by early 2021, according to people familiar with the matter.Executives scurried between meetings in the days after the latest restrictions, according to one person who attended the discussions. But the company has so far failed to brainstorm a solution to the curbs, they added, asking not to be identified talking about private matters. While Huawei can buy off-the-shelf or commodity mobile chips from a third party like Samsung Electronics Co. or MediaTek Inc., it couldn’t possibly get enough and may have to make costly compromises on performance in basic products, they added.What Huawei’s brass fears is that Washington, after a year of Entity List sanctions that’ve failed to significantly curtail the company’s rapid growth, has finally figured out how to quash its ambitions. The latest curbs are the culmination of a concerted assault against China’s largest tech company that began years ago, when the White House tried to cut off the flow of American software and circuitry; lobbied allies from the U.K. to Australia to banish its network gear; even persuaded Canadian police to lock up the founder’s daughter. The latest measures however are a more surgical strike leveled at HiSilicon, the secretive division created 16 years ago to drive research into cutting-edge fields like AI inference chips. That unit surged in prominence precisely because it’s viewed as a savior in an era of American containment, and its silicon now matches rivals’ like Qualcomm Inc.’s and powers many of Huawei’s products: the Kirin for phones, Ascend for AI and Kunpeng for servers.Now that ambition is in doubt. Every chipmaker on the planet, from Taiwan Semiconductor Manufacturing Co. to China’s own Semiconductor Manufacturing International Corp., needs gear from American outfits like Applied Materials Inc. to fabricate chipsets. Should Washington get serious about throttling that spigot, Huawei won’t be able to get any of the advanced silicon it designs into the real world -- stymieing efforts to craft its own processors for mobile devices and radio frequency chips for 5G base stations, to name just two of the most vital in-house components. Dubbed the Foreign-Produced Direct Product Rule or DPR, Trump’s latest constraints have implications for China’s 5G rollout, for which Huawei is by far the dominant purveyor.The ban “focuses on HiSilicon-designed chips, which present the biggest threat to the U.S.,” Jefferies analyst Edison Lee wrote in late May. “The DPR could quash HiSilicon and then Huawei’s ability to make 5G network gears.”Read more: U.S.-China Fight Over Chip Kingpin Rattles Tech IndustryThe scene at Huawei’s Shenzhen nerve center invokes deja vu from a year ago, when Huawei billionaire Ren Zhengfei emerged from seclusion to declare his company’s survival in doubt. In the months following that proclamation, two things happened. U.S. companies, spooked by the prospect of losing billions, lobbied Washington for exceptions to the Entity List and suppliers from Intel Corp. to Micron Technology Inc. relocated assembly to increase foreign-produced components and continue supplying the Chinese company. Huawei employees -- spurred on by patriotism given perceptions the nation was under attack -- went to 24-hour days to design alternatives to American parts.The latest curbs could prove more effective because they remove Huawei’s chipmaker of choice from the equation. In theory, any chipmaker can petition the Commerce department for approval to ship Huawei-designed semiconductors, and opinion is divided on both sides of the Pacific as to how far the agency will allow shipments to proceed. But if it chooses to enforce the new curbs to the hilt, HiSilicon can no longer take its designs to TSMC or any foreign contract manufacturer. And local peers such as SMIC typically operate two generations behind TSMC.In fact, the latest curbs could severely disrupt production of some of the more critical and visible products in Huawei’s portfolio, including the Kirin brains and communications chips of future 5G phones, AI learning chips for its cloud services and servers and the most basic kinds of chips for networking. In February, Huawei touted how its next-generation antenna chips have been installed in “the industry’s highest-performance” 5G base stations. It may no longer able to ship those base stations after the chip inventory runs out.“HiSilicon won’t be able to continue its innovation any further until it’s able to find alternatives through self-development and collaboration with local ones, which will take years to mature,” said Charlie Dai, a principal analyst at Forrester Research. “We estimate that Huawei’s inventory of high-end chips (including baseband chips and CPUs for Huawei’s high-end smartphones) may last 12 to 18 months maximum.”Read about how Trump’s blacklisting of Huawei failed to halt its growth.Modern chip manufacturing at the highest levels simply cannot happen without American gear from the likes of Applied Materials, KLA Corp. and Lam Research Corp. Even in basic wafer fabrication, replacing TSMC is impossible because the Taiwanese foundry is the only company able to reliably make semiconductors using 7 nanometer or smaller nodes -- a must for high performance. Moving everything in-house -- essentially building an American-free plant -- is a pipe dream because it requires extreme ultraviolet lithography machines from ASML Holding NV -- a prerequisite for next-generation chipmaking. Yet ASML’s machines also use American technology from the likes of suppliers such as II-VI Inc. and Lumentum Holdings Inc, according to data compiled by Bloomberg. The best Chinese alternative could be Shanghai Micro Electronics Equipment, but its EUVs are again a few generations behind the Dutch firm’s.All that’s even before factoring in the uncertainty over Huawei’s access to design software developed by Cadence Design Systems Inc. and Synopsys Inc. The pair provide electronic design automation (EDA) tools that Hisilicon’s engineers rely on to draw up blueprints for next-generation processors. As Assistant Secretary of State for International Security and Nonproliferation Christopher Ford told reporters in late May: “If one wants to be working in the area of the very best chips, the chips that have the most computing power packed into the smallest space, it is necessary to use U.S. design tools right now because we have a commanding comparative advantage in that area.”“While there will be lots of opportunity to continue selling lesser quality chips to Huawei, this will be an additional challenge for the really good stuff,” he added.How Huawei Landed at the Center of Global Tech Tussle: QuickTakeIn the long run, the lack of consistent in-house chip supplies will disrupt China’s grand ambition of challenging the U.S. for global tech supremacy. More immediately, they threaten to curtail China’s crucial $500 billion 5G rollout -- a key piece of Beijing’s longer-term strategic vision.Huawei stands at the center of Beijing’s $1.4 trillion New Infrastructure initiative to seize the lead in 5G-based technology. Now it’s uncertain if it can even fulfill the 90-plus contracts it’s won so far to build networks for local operators like China Mobile Ltd. and other carriers around the world. That’s because HiSilicon’s chips are essential in products waiting to be shipped out. The uncertainty of not just fulfilling contracts -- but also around Huawei’s very ability to maintain clients’ networks once they’re up and running -- may also spook potential future customers.Internally, executives remain hopeful of finding a workaround, and are repeating the same mantra of a year ago -- doing without American technology isn’t impossible. “The good news is we still have time,” said one person involved in Huawei’s supply chain management. Chip architecture and supply “redesign takes time, but not something that can’t be done.”(Updates with table of Huawei’s chipmaking options after the tenth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Lam Research (LRCX) Gains As Market Dips: What You Should Know
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    In the latest trading session, Lam Research (LRCX) closed at $291.84, marking a +1.73% move from the previous day.

  • Here’s My Top Stock to Buy in June
    Motley Fool

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  • Lam Research (LRCX) Down 1.2% Since Last Earnings Report: Can It Rebound?
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  • The Zacks Analyst Blog Highlights: Apple, Taiwan Semiconductor, Applied Materials, KLA and Lam Research
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  • U.S.-China Fight Over Chip Kingpin Rattles Tech Industry
    Bloomberg

    U.S.-China Fight Over Chip Kingpin Rattles Tech Industry

    (Bloomberg) -- Since its founding more than three decades ago, Taiwan Semiconductor Manufacturing Co. has built its business by working behind the scenes to make customers like Apple Inc. and Qualcomm Inc. shine. Now the low-profile chipmaker has landed squarely in the middle of the U.S.-China trade war, an incalculably valuable asset that both sides are vying to control.The Trump administration opened up a new front in the conflict on Friday by barring any chipmaker using American equipment from supplying China’s Huawei Technologies Co. without U.S. government approval. That means TSMC and rivals will have to cut off Huawei unless they get waivers from the U.S. Commerce Dept. TSMC has already stopped accepting new orders from Huawei, the Nikkei newspaper reported Monday.The move threatens to wreak havoc throughout the complex ecosystem that produces technology for consumers and companies around the world. An attack on Huawei threatens not just its workers and its standing as a world leader in making smartphones and telecom equipment, but also hundreds of suppliers. The Chinese government has vowed to protect its national champion, with threats of retribution against U.S. companies that depend on China like Apple Inc. and Boeing Co.“China likely will retaliate, and investors should brace themselves for a possible trade war escalation,” Sanford C. Bernstein & Co. analysts led by Mark Li wrote in a research note on Friday.Read more: U.S. Tightens Rules to Crack Down on Huawei’s Chip Supply Huawei suppliers across Asia fell on Monday, with AAC Technologies Holdings Inc., Q Technology Group Co., Sunwoda Electronic and Lens Technology all sliding 5% or more. TSMC, which gets an estimated 14% of its revenue from Huawei, dropped as much as 2.5%.The U.S. already blacklisted Huawei last year, preventing American companies from supplying the Chinese company unless they got a license. The latest move tightens those restrictions to prevent chipmakers -- American or foreign -- from working with Huawei and its secretive chip-design unit HiSilicon on the cutting-edge semiconductors they need to make smartphones and communications equipment. The Trump administration sees Huawei as a dire security threat, an allegation the company denies.“We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests,” Commerce Secretary Wilbur Ross said in a tweet.Huawei countered by accusing the U.S. of ulterior motives.“The so-called cybersecurity reasons are merely an excuse,” Richard Yu, head of the Chinese tech giant’s consumer electronics unit wrote in a post to his account on messaging app WeChat. “The key is the threat to the technology hegemony of the U.S” posed by Huawei, he added.The U.S. decision is likely to hurt not just Huawei and TSMC, but also a clutch of American players including gear-makers Applied Materials Inc., KLA and Lam Research Corp. themselves, Morgan Stanley analysts wrote. Disruptions to Huawei’s production will also hurt U.S. customers from Micron Technology Inc. and Qorvo Inc. to Texas Instruments Inc., they said. But “it bears repeating that any escalation of trade tensions is negative for the stocks overall,” they wrote in a research report.It would have been impossible to imagine TSMC becoming such a coveted chit between the world’s great powers when it was founded in 1987. Morris Chang, born in China and trained in the U.S., started the company as a so-called foundry, manufacturing semiconductors for any customer that didn’t want to construct its own fabrication facility, or fab.At the time, the business wasn’t nearly as glamorous as making chips yourself. Dominating the industry at the time were companies like Intel Corp. and Advanced Micro Devices Inc., which made processors for personal computers. “Real men have fabs,” AMD co-founder Jerry Sanders would say, making clear that was an insult.But in the intervening years, the foundry industry has become far more strategic for the technology industry. Customers from Apple and Huawei to Qualcomm and Nvidia Corp. have found they can innovate more quickly if they focus on chip designs and then turn to foundries like TSMC to produce them. Innovators in emerging technologies like artificial intelligence or the internet of things also depend on foundries to crack open new markets.Today, many of the chips for mobile phones, autonomous vehicles, artificial intelligence and any other key technology are made at foundries. TSMC has become the leading foundry in the world by investing heavily in ever more advanced fabs, with annual capital spending of about $16 billion this year.It can now manufacture at 5 nanometers, about twice the width of human DNA, while China’s top foundry, Semiconductor Manufacturing International Corp., or SMIC, is at 14 nanometers. That makes TSMC’s chips far more powerful and energy efficient.Huawei and HiSilicon will have few good options if they are cut off from TSMC. One possibility is to procure off-the-shelf chips from Taiwan’s MediaTek Inc. and South Korea’s Samsung Electronics Co., an option Huawei’s rotating Chairman Eric Xu mentioned in late March. But even that may no longer be viable under the new Commerce restrictions.SMIC itself is keen on moving up the technology ladder, eyeing a secondary share listing that could raise more than $3 billion on top of a large capital infusion from the state.Read more: China Injects $2.2 Billion Into Local Chip Firm Amid U.S. CurbsBut that’s a longer-term endeavor and Huawei’s products meanwhile are likely to suffer, putting them at risk of falling behind those of rivals like Apple or Xiaomi Corp.For TSMC, it’s growing ever more difficult to remain neutral amid the growing tensions between the U.S. and China. The company brands itself “everybody’s foundry,” effectively the Switzerland of the tech industry. It supplies Chinese customers like Huawei and the American military, while relying on U.S. producers of semiconductor-making equipment like Applied Materials and Lam Research.TSMC did take one step closer to the U.S. last week, saying it would build a $12 billion chip plant in Arizona. The Department of Defense has expressed concern that overseas fabs may be vulnerable to cyberattacks and domestic manufacturing would assure a more reliable supply of chips.The proposal appears to be carefully calculated to address such security issues without too much damage to profits or its political balancing act. Suppliers to the military, such as Xilinx Inc., would be able to use the U.S. fab, but the facility would likely account for less than 5% of revenue so margins won’t be compromised.It’s not clear if the plans for a U.S. plant will win TSMC leniency in supplying Huawei, however.“TSMC will not be granted or granted a license based on their intent to build a 5 nanometer fab here in the United States. That’s not part of it at all,” Keith Krach, undersecretary for economic growth, energy and the environment at the State Department, told reporters on a call. “There’s no assurance on that and we don’t anticipate that.”Meanwhile, China appears to be preparing to retaliate for the new restrictions on Huawei. On Friday, the Global Times -- a Chinese tabloid run by the flagship newspaper of the Communist Party -- reported Beijing was ready to initiate countermeasures, including imposing restrictions on Apple, suspending the purchase of Boeing airplanes and putting U.S. companies on an ‘unreliable entity list.’The list will cover “foreign entities that cause actual or potential damage to Chinese companies and industries,” the newspaper said.(Updates with Nikkei report in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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    TSMC Plans $12 Billion U.S. Chip Plant in Victory for Trump

    (Bloomberg) -- Taiwan Semiconductor Manufacturing Co. plans to spend $12 billion building a chip plant in Arizona, a decision designed to allay U.S. national security concerns and shift more high-tech manufacturing to America.TSMC said Friday it will start construction of its next major fabrication facility in 2021, to be completed by 2024. While the investment falls short of its previous expenditure on cutting-edge factories, it’s a shift for a company that now makes semiconductors for major names like Apple Inc. and Huawei Technologies Co. mainly from its home base of Taiwan.As the world’s largest and most advanced maker of chips for other companies, TSMC plays a crucial role in the production of devices from smartphones and laptops to servers running the internet. Its decision to situate a plant in the western state comes after White House officials had warned repeatedly about the threat inherent in having much of the world’s electronics made outside of the U.S. TSMC had negotiated the deal with the administration to create American jobs and produce sensitive components domestically for national security reasons, according to people familiar with the situation.The Asian chipmaker’s U.S. investment underscores the delicate balance it needs to strike between its huge roster of American clients and China, which views independently governed Taiwan as part of its territory. Beijing’s ambition of creating a world-class domestic semiconductor industry has unnerved Washington, which fears the country’s technological ascendancy may pose a longer-threat. Executives at TSMC, which operates plants in Nanjing and Shanghai and makes chips that go into everything from 5G networks to American fighter jets, have emphasized the company is neutral.“The scale & technology is similar to what TSMC did in China, suggesting a balance between the U.S. & China,” Sanford C. Bernstein & Co. analysts led by Mark Li wrote after the announcement. “Overall, this is probably the minimal price to stay neutral. TSMC needs both U.S. & China to maintain scale & stay competitive and this is probably the minimal cost to keep this strategy.”Read more: Huawei Warns of ‘Pandora’s Box’ If U.S. Curbs Taiwan SupplyThe envisioned facility represents a small step in global industry terms. Upon completion, it will crank out 20,000 wafers a month, versus the hundreds of thousands that TSMC’s capable of from its main home base. And it will employ 5-nanometer process technology, a current standard that will likely become a few generations old by the time output begins in a few years.The higher cost of operating in America may have been a factor ahead of the decision. A true cutting-edge fab is expensive to build: The company spent NT$500 billion ($17 billion) to build an advanced facility in the southern Taiwanese city of Tainan that will supply new iPhones this year. It plans another $16 billion in capital spending in 2020. The Arizona plant still requires approval from TSMC’s board, which may hinge on incentives.“There is a cost gap, which is hard to accept at this point. Of course, we have -- we are doing a lot of things to reduce that cost gap,” TSMC Chairman Mark Liu said on a recent analyst conference call.U.S. Won’t Tolerate Tech Fence-Sitters Any Longer: Tim CulpanIf the federal government provides cash for a U.S. plant, it’ll mark a shift in policy and rhetoric from a Republican administration. Trump’s White House has rarely supported such direct industrial intervention, favoring market dynamics. A similar government-backed effort with Foxconn -- Apple’s main iPhone assembler -- in Wisconsin has so far not created as many jobs as expected.However, emerging trends may be forcing a reconsideration. The U.S. government is already giving or lending billions of dollars to keep companies afloat in the midst of a pandemic-fueled recession. The crisis has also highlighted how vulnerable global supply chains are to such shocks.The White House may also be motivated by broader political factors. Trump has attacked international trade deals and tried to limit China’s access to semiconductor technology, seeking to contain the country’s technological ascent. TSMC said its Arizona facility will create 1,600 jobs and a deal to bring highly skilled work to Arizona may help Trump’s re-election prospects this year.“TSMC’s plan to build a $12 billion semiconductor facility in Arizona is yet another indication that President Trump’s policy agenda has led to a renaissance in American manufacturing and made the United States the most attractive place in the world to invest,” U.S. Secretary of Commerce Wilbur Ross said in a statement.By producing chips for many of the leading tech companies, TSMC has amassed the technical know-how needed to churn out the smallest, most efficient and powerful semiconductors in the highest volumes. It manufactures important components designed by Apple and most of the largest semiconductor companies, including Qualcomm Inc., Nvidia Corp., Advanced Micro Devices Inc. and China’s Huawei. Shares of Applied Materials Inc., Lam Research Corp. and KLA Corp. rose on optimism that these U.S.-based providers of chipmaking equipment may face fewer export controls when supplying TSMC.Concentrating such valuable capabilities in the hands of one company in Asia is a concern for the U.S., especially when, across the Strait of Taiwan, China is rushing to develop its own semiconductor industry.TSMC’s local rival, GlobalFoundries Inc., has given up on advanced manufacturing and Intel Corp., the world’s largest chipmaker, mainly manufactures for itself. Its attempt to become a so-called foundry for external clients has failed to gain major customers. TSMC’s only other significant challenger is South Korea’s Samsung Electronics Co., which is investing more than $116 billion in its effort to keep up with the leader.“TSMC welcomes continued strong partnership with the U.S. administration and the State of Arizona on this project,” the company said in a statement. “This project will require significant capital and technology investments from TSMC. The strong investment climate in the United States, and its talented workforce make this and future investments in the U.S. attractive to TSMC.”Read more: Foxconn Factory Subsidy Estimate Slashed by Wisconsin Agency(Updates with analyst’s comment from the fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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