CHICAGO--Another financial analyst is predicting that Intel Corp. will soon buckle to the chip recession and cut capital spending from the company's current budget of $7.5 billion. In a new report, Morningstar Inc. analyst Jeremy Lopez said it is only a question of how much Intel will cut back from its record capital spending plans.
Until now, however, Intel executives have insisted that the Santa Clara, Calif., chip giant has no plans to lower its $7.5 billion budget this year, despite the fact it has pushed back a number of major projects. Earlier this month, Intel confirmed it was delaying a 300-mm wafer fab in Ireland (see March 14 story).
Lopez is also predicting an end to the recent rise in semiconductor equipment stocks because of new cuts in plant investments. He noted that the tech-heavy Nasdaq exchange has fallen 25% in the past three months but chip-equipment shares have edged up 6%.
Based on current capital spending budgets, Morningstar expects the top 20 semiconductor companies to reduce their 2001 budgets by at least 15%. Chicago-based Moringstar noted that these chip companies represent 70-to-80% of chip-equipment spending worldwide.
"This outlook may be dim, but it may get even worse," Lopez said. "The chip industry's biggest rollers, Intel and Samsung, likely will reduce their spending forecasts going forward. With their current capital-expenditure numbers buttressing an already poor forecast, we find it very unlikely these giants will bail out the chip-equipment industry.
"The question isn't whether or not Intel and Samsung will cut their spending, but rather by how much," he said.
