381.41 0.00 (0.00%)
After hours: 4:30PM EDT
|Bid||381.10 x 1100|
|Ask||383.00 x 1100|
|Day's Range||379.18 - 387.70|
|52 Week Range||181.38 - 387.70|
|Beta (5Y Monthly)||1.36|
|PE Ratio (TTM)||25.26|
|Earnings Date||Oct 21, 2020 - Oct 26, 2020|
|Forward Dividend & Yield||4.60 (1.22%)|
|Ex-Dividend Date||Jun 16, 2020|
|1y Target Est||395.17|
Lam Research (LRCX) reports stronger-than-expected fiscal fourth-quarter results driven by broad-based secular growth across data transport, analysis and storage.
Good day and welcome to the Lam Research's June Quarter Earnings Conference Call. Welcome to the Lam Research quarterly earnings conference call. With me today are Tim Archer, President and Chief Executive Officer and Doug Bettinger, Executive Vice President and Chief Financial Officer.
Shares of Lam Research (NASDAQ:LRCX) rose 1.71% after the company reported Q4 results.Quarterly Results Earnings per share rose 32.04% over the past year to $4.78, which beat the estimate of $4.04.Revenue of $2,792,000,000 up by 18.25% year over year, which beat the estimate of $2,680,000,000.Guidance Lam Research hasn't issued any earnings guidance for the time being.Revenue guidance hasn't been issued by the company for now.How To Listen To The Conference Call Date: Jul 29, 2020View more earnings on LRCXTime: 05:00 PMET Webcast URL: https://edge.media-server.com/mmc/p/v8aa9heqPrice Action Company's 52-week high was at $367.56Company's 52-week low was at $181.38Price action over last quarter: Up 36.44%Company Description Lam Research manufactures equipment used to fabricate semiconductors. The firm is focused on the etch, deposition, and clean markets, which are key steps in the semiconductor manufacturing process, especially for 3D NAND flash storage, advanced DRAM, and leading-edge logic/foundry chipmakers. Lam's flagship Kiyo, Vector, and Sabre products are sold in all major geographies to key customers such as Samsung Electronics and Taiwan Semiconductor Manufacturing.See more from Benzinga * Earnings Scheduled For July 29, 2020 * Stocks That Hit 52-Week Highs On Thursday * Stocks That Hit 52-Week Highs On Tuesday(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Lam Research (LRCX) delivered earnings and revenue surprises of 13.81% and 2.41%, respectively, for the quarter ended June 2020. Do the numbers hold clues to what lies ahead for the stock?
FREMONT, Calif., July 29, 2020 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended June 28, 2020 (the “June 2020 quarter”). Highlights for the June 2020 quarter were as follows: * Revenue of $2.79 billion. * U.S. GAAP gross margin of 45.9%, U.S. GAAP operating income as a percentage of revenue of 27.1%, and U.S. GAAP diluted EPS of $4.73. * Non-GAAP gross margin of 46.1%, non-GAAP operating income as a percentage of revenue of 28.5%, and non-GAAP diluted EPS of $4.78.Key Financial Data for the Quarters Ended June 28, 2020 and March 29, 2020 (in thousands, except per-share data, percentages, and basis points)U.S. GAAP June 2020 March 2020 Change Q/Q Revenue$2,791,864 $2,503,625 +12% Gross margin as percentage of revenue45.9% 46.6% \- 70 bps Operating income as percentage of revenue27.1% 27.7% \- 60 bps Diluted EPS$4.73 $3.88 +22% Non-GAAP June 2020 March 2020 Change Q/Q Revenue$2,791,864 $2,503,625 +12% Gross margin as percentage of revenue46.1% 46.3% \- 20 bps Operating income as percentage of revenue28.5% 26.9% \+ 160 bps Diluted EPS$4.78 $3.98 +20% U.S. GAAP Financial ResultsFor the June 2020 quarter, revenue was $2,792 million, gross margin was $1,280 million, or 45.9% of revenue, operating expenses were $525 million, operating income was 27.1% of revenue, and net income was $697 million, or $4.73 per diluted share on a U.S. GAAP basis. This compares to revenue of $2,504 million, gross margin of $1,167 million, or 46.6% of revenue, operating expenses of $473 million, operating income of 27.7% of revenue, and net income of $575 million, or $3.88 per diluted share, for the quarter ended March 29, 2020 (the “March 2020 quarter”).Non-GAAP Financial ResultsFor the June 2020 quarter, non-GAAP gross margin was $1,288 million, or 46.1% of revenue, non-GAAP operating expenses were $493 million, non-GAAP operating income was 28.5% of revenue, and non-GAAP net income was $704 million, or $4.78 per diluted share. This compares to non-GAAP gross margin of $1,160 million, or 46.3% of revenue, non-GAAP operating expenses of $486 million, non-GAAP operating income of 26.9% of revenue, and non-GAAP net income of $590 million, or $3.98 per diluted share, for the March 2020 quarter.“Lam delivered strong financial results in the June quarter despite tremendous global health, macroeconomic, and geopolitical uncertainty,” said Tim Archer, Lam Research’s President and Chief Executive Officer. “This is a clear demonstration of our Company’s ability to adapt and execute in a period of unprecedented challenges. With an outlook for continued industry growth, we are in an excellent position to outperform as our investments in disruptive innovation and differentiated customer support gain momentum.”Balance Sheet and Cash Flow ResultsCash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $7.0 billion at the end of the June 2020 quarter compared to $5.6 billion at the end of the March 2020 quarter. This increase was primarily the result of net proceeds of $1.97 billion on issuance of long-term debt and $813.0 million of cash generated from operating activities. These sources of cash were partially offset by the $1.25 billion repayment of borrowings from the Company's revolving credit facility and $167.7 million of dividends paid to stockholders.RevenueThe geographic distribution of revenue during the June 2020 quarter is shown in the following table:RegionRevenue China34% Korea32% Taiwan11% Japan8% United States7% Southeast Asia5% Europe3% The following table presents revenue disaggregated between system and customer support-related revenue: Three Months Ended Twelve Months Ended June 28, 2020 March 29, 2020 June 30, 2019 June 28, 2020 June 30, 2019 (In thousands) Systems revenue$1,865,249 $1,647,560 $1,570,373 $6,625,130 $6,451,104 Customer support-related revenue and other926,615 856,065 790,774 3,419,606 3,202,455 $2,791,864 $2,503,625 $2,361,147 $10,044,736 $9,653,559 System revenue includes sales of new leading-edge equipment in deposition, etch and clean markets.Customer support-related revenue includes sales of customer service, spares, upgrades, and non-leading-edge equipment from our Reliant product line.OutlookFor the quarter ended September 27, 2020, Lam is providing the following guidance: U.S. GAAP Reconciling Items Non-GAAP Revenue$3.1 Billion+/-$200 Million — $3.1 Billion+/-$200 Million Gross margin as a percentage of revenue46.4%+/-1% $2 Million 46.5%+/-1% Operating income as a percentage of revenue29.0%+/-1% $14 Million 29.5%+/-1% Net income per diluted share$5.06+/-$0.40 $13 Million $5.15+/-$0.40 Diluted share count147 Million — 147 Million The information provided above is only an estimate of what the Company believes is realizable as of the date of this release and does not incorporate the potential impact of any business combinations, asset acquisitions, divestitures, restructuring, balance sheet valuation adjustments, financing arrangements, other investments, or other significant arrangements that may be completed after the date of this release. U.S. GAAP to non-GAAP reconciling items provided include only those items that are known and can be estimated as of the date of this release. Actual results will vary from this model and the variations may be material. Reconciling items included above are as follows: * Gross margin as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $2 million. * Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $14 million. * Net income per diluted share - amortization related to intangible assets acquired though business combinations, $14 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($2 million); totaling $13 million.Use of Non-GAAP Financial ResultsIn addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company’s non-GAAP results for both the June 2020 and March 2020 quarters exclude amortization related to intangible assets acquired through business combinations, the effects of elective deferred compensation-related assets and liabilities, amortization of note discounts, and income tax expense (benefit) of non-GAAP items. Additionally, the June 2020 quarter non-GAAP results exclude an adjustment to the previously recognized cumulative income tax benefit reversal associated with the Ninth Circuit decision to deny a rehearing of the Altera stock-based compensation case and the March 2020 quarter non-GAAP results exclude the income tax benefit on conclusion of certain tax matters related to a prior business combination.Management uses non-GAAP gross margin, operating expense, operating income, operating income as a percentage of revenue, net income, and net income per diluted share to evaluate the Company’s operating and financial results. The Company believes the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing investors’ ability to view the Company’s results from management’s perspective. Tables presenting reconciliations of non-GAAP results to U.S. GAAP results are included at the end of this press release and on the Company’s website at http://investor.lamresearch.com.Caution Regarding Forward-Looking StatementsStatements made in this press release that are not of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to: our ability to adapt and execute, including during a period of challenges; our outlook for continued industry growth; our ability to gain momentum from our investments in disruptive innovation and differentiated customer support as well as whether our innovation will indeed be disruptive and our support differentiated in the future; the impact of the COVID-19 outbreak on our operations and financial results; macroeconomic conditions; the status of the industry supply chain; customer demand for our equipment; industry conditions; the long–term resiliency of the semiconductor industry; the relevance of our technology to our customers; our positioning within the industry; and our ability to outperform. Some factors that may affect these forward-looking statements include: the severity, magnitude and duration of the COVID-19 pandemic (and the related governmental, public health, business and community responses to it), and their impacts on our business, results of operations and financial condition, are evolving and are highly uncertain and unpredictable; business, political and/or regulatory conditions in the consumer electronics industry, the semiconductor industry and the overall economy may deteriorate or change; the actions of our customers and competitors may be inconsistent with our expectations; and widespread outbreaks of illness may impact our operations and revenue in affected areas; as well as the other risks and uncertainties that are described in the documents filed or furnished by us with the Securities and Exchange Commission, including specifically the Risk Factors described in our annual report on Form 10-K for the fiscal year ended June 30, 2019, our quarterly reports on Form 10-Q for the fiscal quarters ended September 29, 2019, December 29, 2019 and March 29, 2020 and our Current Report on Form 8-K dated April 30, 2020. These uncertainties and changes could materially affect the forward-looking statements and cause actual results to vary from expectations in a material way. The Company undertakes no obligation to update the information or statements made in this release.About Lam ResearchLam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. As a trusted, collaborative partner to the world’s leading semiconductor companies, we combine superior systems engineering capability, technology leadership, and unwavering commitment to customer success to accelerate innovation through enhanced device performance. In fact, today, nearly every advanced chip is built with Lam technology. Lam Research (Nasdaq: LRCX) is a FORTUNE 500® company headquartered in Fremont, Calif., with operations around the globe. Learn more at www.lamresearch.com. (LRCX-F)Consolidated Financial Tables Follow.LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data and percentages) Three Months Ended Twelve Months Ended June 28, 2020 March 29, 2020 June 30, 2019 June 28, 2020 June 30, 2019 (unaudited) (unaudited) (unaudited) (unaudited) (1) Revenue$2,791,864 $2,503,625 $2,361,147 $10,044,736 $9,653,559 Cost of goods sold1,511,532 1,336,618 1,280,256 5,436,043 5,295,100 Gross margin1,280,332 1,167,007 1,080,891 4,608,693 4,358,459 Gross margin as a percent of revenue45.9% 46.6% 45.8% 45.9% 45.1% Research and development338,810 307,914 295,578 1,252,412 1,191,320 Selling, general and administrative185,800 164,979 168,228 682,479 702,407 Total operating expenses524,610 472,893 463,806 1,934,891 1,893,727 Operating income755,722 694,114 617,085 2,673,802 2,464,732 Operating income as a percent of revenue27.1% 27.7% 26.1% 26.6% 25.5% Other expense, net(7,553) (64,619) (7,667) (98,824) (18,161) Income before income taxes748,169 629,495 609,418 2,574,978 2,446,571 Income tax expense(51,496) (54,714) (67,593) (323,225) (255,141) Net income$696,673 $574,781 $541,825 $2,251,753 $2,191,430 Net income per share: Basic$4.79 $3.96 $3.66 $15.55 $14.37 Diluted$4.73 $3.88 $3.51 $15.10 $13.70 Number of shares used in per share calculations: Basic145,295 145,301 148,131 144,814 152,478 Diluted147,416 148,165 154,474 149,090 159,915 Cash dividend declared per common share$1.15 $1.15 $1.10 $4.60 $4.40 (1)Derived from audited financial statements. LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) June 28, 2020 March 29, 2020 June 30, 2019 (unaudited) (unaudited) (1) ASSETS Cash and cash equivalents$4,915,172 $3,961,586 $3,658,219 Investments1,795,080 1,431,550 1,772,984 Accounts receivable, net2,097,099 2,191,070 1,455,522 Inventories1,900,024 1,674,740 1,540,140 Prepaid expenses and other current assets146,160 149,839 133,544 Total current assets10,853,535 9,408,785 8,560,409 Property and equipment, net1,071,499 1,048,619 1,059,077 Restricted cash and investments253,911 254,155 255,177 Goodwill and intangible assets1,652,968 1,666,732 1,701,547 Other assets727,134 560,344 425,123 Total assets$14,559,047 $12,938,635 $12,001,333 LIABILITIES AND STOCKHOLDERS’ EQUITY Current portion of long-term debt and finance lease obligations$839,877 $42,407 $667,131 Other current liabilities2,322,565 2,063,254 1,704,519 Total current liabilities3,162,442 2,105,661 2,371,650 Long-term debt and finance lease obligations4,970,848 5,043,931 3,822,768 Income taxes payable909,709 889,287 892,790 Other long-term liabilities332,559 350,603 190,821 Total liabilities9,375,558 8,389,482 7,278,029 Temporary equity, convertible notes10,995 11,546 49,439 Stockholders’ equity (2)5,172,494 4,537,607 4,673,865 Total liabilities and stockholders’ equity$14,559,047 $12,938,635 $12,001,333 (1)Derived from audited financial statements. (2)Common shares issued and outstanding were 145,331 as of June 28, 2020, 145,156 as of March 29, 2020, and 144,433 as of June 30, 2019. LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended Twelve Months Ended June 28, 2020 March 29, 2020 June 30, 2019 June 28, 2020 June 30, 2019 (unaudited) (unaudited) (unaudited) (unaudited) (1) CASH FLOWS FROM OPERATING ACTIVITIES: Net income696,673 574,781 541,825 2,251,753 2,191,430 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization71,083 67,248 65,408 268,525 309,281 Deferred income taxes(92,293) — 70,125 (17,777) (4,980) Equity-based compensation expense53,153 47,414 44,845 189,197 187,234 Amortization of note discounts and issuance costs1,329 1,361 2,206 5,940 7,343 Other, net(10,822) 7,811 (5,173) 688 (5,819) Changes in operating assets and liabilities93,925 (157,187) 161,251 (571,875) 491,524 Net cash provided by operating activities813,048 541,428 880,487 2,126,451 3,176,013 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and intangible assets(50,554) (51,375) (65,948) (203,239) (303,491) Net (purchase) sale of available-for-sale securities(354,350) 211,159 (555,468) (15,000) (1,326,208) Other, net(25,305) 9,988 (2,067) (25,845) (7,355) Net cash (used for) provided by investing activities(430,209) 169,772 (623,483) (244,084) (1,637,054) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt, net of issuance costs1,974,651 — — 1,974,651 2,476,720 Principal payments on debt(2,948) (617,637) (1,157) (667,537) (117,653) Net repayments from issuance of commercial paper— — (300,000) — (361,754) Proceeds from borrowings on revolving credit facility— 1,250,000 — 1,250,000 — Repayments of borrowings on revolving credit facility(1,250,000) — — (1,250,000) — Treasury stock purchases(41,017) (245,433) (1,108,560) (1,369,649) (3,780,611) Dividends paid(167,739) (163,510) (164,874) (656,838) (678,348) Reissuance of treasury stock related to employee stock purchase plan46,992 — 45,041 85,439 77,961 Proceeds from issuance of common stock1,869 1,714 1,694 8,084 6,813 Other, net1,592 328 — 1,920 (13,208) Net cash provided by (used for) financing activities563,400 225,462 (1,527,856) (623,930) (2,390,080) Effect of exchange rate changes on cash, cash equivalents, and restricted cash7,103 (10,715) (3,137) (2,750) (4,041) Net increase (decrease) in cash, cash equivalents, and restricted cash953,342 925,947 (1,273,989) 1,255,687 (855,162) Cash, cash equivalents, and restricted cash at beginning of period4,215,741 3,289,794 5,187,385 3,913,396 4,768,558 Cash, cash equivalents, and restricted cash at end of period$5,169,083 $4,215,741 $3,913,396 $5,169,083 $3,913,396 (1)Derived from audited financial statements. Non-GAAP Financial Summary (in thousands, except percentages and per share data) (unaudited) Three Months Ended June 28, 2020 March 29, 2020 Revenue$2,791,864 $2,503,625 Gross margin$1,288,339 $1,159,981 Gross margin as percentage of revenue46.1% 46.3% Operating expenses$493,115 $486,494 Operating income$795,224 $673,487 Operating income as a percentage of revenue28.5% 26.9% Net income$704,456 $590,359 Net income per diluted share$4.78 $3.98 Shares used in per share calculation - diluted147,416 148,165 Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income (in thousands, except per share data) (unaudited) Three Months Ended June 28, 2020 March 29, 2020 U.S. GAAP net income$696,673 $574,781 Pre-tax non-GAAP items: Amortization related to intangible assets acquired through certain business combinations - cost of goods sold1,627 1,627 Loss (gain) on elective deferred compensation ("EDC") - related liability - cost of goods sold6,380 (8,653) Loss (gain) on EDC - related liability - research and development11,483 (15,575) Amortization related to intangible assets acquired through certain business combinations -selling, general and administrative12,357 12,357 Loss (gain) on EDC - related liability - selling, general and administrative7,655 (10,383) Amortization of note discounts - other expense, net935 953 (Gain) loss on EDC - related asset - other expense, net(26,135) 33,828 Net income tax (benefit) expense on non-GAAP items(5,698) 1,700 Adjustment to cumulative income tax benefit reversal due to a court ruling(821) — Income tax benefit on the conclusion of certain tax matters— (276) Non-GAAP net income$704,456 $590,359 Non-GAAP net income per diluted share$4.78 $3.98 U.S. GAAP net income per diluted share$4.73 $3.88 U.S. GAAP and non-GAAP number of shares used for per diluted share calculation147,416 148,165 Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income (in thousands, except percentages) (unaudited) Three Months Ended June 28, 2020 March 29, 2020 U.S. GAAP gross margin$1,280,332 $1,167,007 Pre-tax non-GAAP items: Amortization related to intangible assets acquired through certain business combinations1,627 1,627 Loss (gain) on EDC-related liability6,380 (8,653) Non-GAAP gross margin$1,288,339 $1,159,981 U.S. GAAP gross margin as a percentage of revenue45.9% 46.6% Non-GAAP gross margin as a percentage of revenue46.1% 46.3% U.S. GAAP operating expenses$524,610 $472,893 Pre-tax non-GAAP items: Amortization related to intangible assets acquired through certain business combinations(12,357) (12,357) (Loss) gain on EDC-related liability(19,138) 25,958 Non-GAAP operating expenses$493,115 $486,494 U.S. GAAP operating income$755,722 $694,114 Non-GAAP operating income$795,224 $673,487 U.S. GAAP operating income as percent of revenue27.1% 27.7% Non-GAAP operating income as a percent of revenue28.5% 26.9% Lam Research Corporation Contact:Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: email@example.com
For many, the main point of investing in the stock market is to achieve spectacular returns. And highest quality...
Lam Research's (LRCX) fiscal fourth-quarter results are likely to benefit from strength in memory markets and robust equipment demand. However, heightened competition may have been a concern.
Lam Research (LRCX) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
A Commerce Department official closely involved in changes to U.S. policy on exports to China that shook up the semiconductor industry has joined chip equipment maker Lam Research Corp. Richard Ashooh, who resigned last week after three years as Commerce's U.S. assistant secretary for export administration, started on Monday as Lam's global head of government affairs.
If you are looking for the best ideas for your portfolio you may want to consider some of Greenlight Capital's top stock picks. Greenlight Capital, an investment management firm, was bearish on Lam Research Corp (NASDAQ:LRCX) stock. In its Q4 2019 investor letter – you can download a copy here – the firm discussed its […]
On CNBC's "Fast Money Halftime Report," Stephanie Link recommended a long position in Lam Research Corporation (NASDAQ: LRCX). She sees the trade as a play on DRAM and NAND recovery in the second half of the year. The stock is not cheap at 20 times multiple, but Link thinks the earnings are depressed and she expects them to recover.Josh Brown has a long position in Uber Technologies Inc (NYSE: UBER).Jon Najarian is a buyer of Momo Inc (NASDAQ: MOMO) and Energy Transfer LP (NYSE: ET). He noticed unusually high options activity in them. Najarian explained that these trades are short term, but he likes their upside potential.Michael Farr wants to buy Valmont Industries, Inc. (NYSE: VMI). He said it benefits from any sort of infrastructure bill.See more from Benzinga * Jon Najarian Sees Unusual Options Activity In Macy's * Mike Khouw Sees Unusual Options Activity In Freeport-McMoRan * Why Scott Nations Is A Seller Of The US Dollar(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of […]
Lam Research jumped Tuesday, momentarily moving past a 325.22 cup-with-handle buy point. Probably already actionable from downward-sloping trend line. Blue Dot Special – stocks with RS at new high that haven't broken out.
(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.
The Nasdaq Composite touched a new all-time intraday high Tuesday. So let's look at three tech stocks that provide exposure to growth and pay a dividend amid these still uncertain times...
Shares of KLA Corp. are off 1.5% in premarket trading Monday while shares of Lam Research Corp. are down 0.6% after Stifel analyst Patrick Ho downgraded the stocks to neutral from buy. "We believe the recent rally in the markets and the group has led to a less attractive valuation that has risen 'too high' and 'too fast'" Ho wrote. "We believe there is the potential for memory fundamentals to begin weakening in CY-2H20 and this could lead to push outs of certain memory projects out of 2020." He kept a buy rating on shares of Applied Materials Inc. , arguing that the stock still had room for upside and that Applied Materials was among a handful of names that could outperform in the semiconductor-equipment space in part due to more balanced business models. Applied shares have gained 60% over the past three months, while KLA shares have added 69% and Lam shares have rallied 68%. The S&P 500 has increased 34% in that span.
The major stock indexes were sharply higher early Friday on China trade news with three breakout stocks to watch, like Alibaba and Paylocity.