Cabot Microelectronics Corporation (NASDAQ:CCMP) Q2 2018 Earnings Conference Call - Final Transcript
Apr 26, 2018 • 10:00 am ET
[Operator Instructions] And our first question will come from the line of Amanda Scarnati with Citi. Your line is now open.
Hi, good morning. Just a question on China demand. We've seen some recent articles that one of the Mainland Chinese manufacturers started receiving orders for 3D NAND. Have you started to see any revenue from these new upcoming Mainland Chinese manufacturers, or do you expect that revenue to start to fill up in the second half of the year as they start ramping up still volume production versus perhaps maybe just pilot line production at this point?
Hi, Amanda, it's Dave. For China, obviously I spent a lot of time there and we follow same things you do. There are a lot of newer domestic players that are in various stages of startup and we have a very strong position in China with both the domestic customers as well as the international players. So, we're really excited about the future growth there in China. Specific to your question about a memory customer starting up in China, we've seen a lot of activity there. I would just generally say, most are still in pilot production at this time, except the established players like the SMICs and Huaweis, but we're supporting and watching closely.
Great. And then one of your largest customers, commented during the earnings calls last week that there is significant weakness in smartphones in the second quarter. If there is a shift from TSMC, Intel starts to win incremental modem revenue, how does that impact Cabot's business, i.e., do you have more content, better exposure at TSMC than you do at Intel, or is it sort of relatively balanced between the two?
As you know Amanda, we sell -- our products are used in pretty much every fab that makes semiconductors today. And so we also follow the TSMC announcement and more broadly kind of a concern around weakness in handsets. And obviously, smartphones drive a lot of demand in semiconductors, but there is a lot of other sectors that are also pulling demand, things like automotive, industrial, high-performance computing, blockchain, all those are really becoming more and more important for semiconductor demand.
So, lot more than just mobility. And I would say also for a customer like TSMC, they also have a wide range of different applications besides smartphone. For us, we really see a continued strong demand environment especially in memory, but also in those legacy logic and foundry segments. So, for us, whether business shifts back and forth between customers, that doesn't affect us as much, but obviously we're watching the handset demand as well as the other sectors.
Then the last question I have is just kind of following up on that. In memory, specifically, does it necessarily matter to you if it's DRAM, if it's NAND that's really producing? I would assume that there is better content on 3D NANDs than there would be on DRAM. But how much of a difference is there