Bloomberg News

Nova Sees TSMC Order Boost on Smartphone Boom: Israel Overnight

May 01, 2013

Nova Measuring Instruments Ltd. (NVMI:US), the Israeli maker of process control systems, expects sales to jump from the second half as Asian chipmakers increase spending to meet smartphone demand in the region, according to the chief executive officer.

Orders for Nova (NVMI)’s products for phone chips measuring 20 nanometers or less from Apple Inc. (AAPL:US) supplier Taiwan Semiconductor Manufacturing Co. (2330) will rise this year, Nova CEO Gabi Seligsohn said in a phone interview yesterday from Tel Aviv. Shares of Nova, based in Rehovot, Israel, gained 1.9 percent to a seven- week high of $9.34 in New York, while the Bloomberg Israel-US Equity Index of the biggest Israeli stocks in the U.S. slipped 0.4 percent yesterday.

“What has a direct influence on us is that some time during the second half of this year, TSMC will start to place more massive orders for 20-nanometers while most of the orders will take place in 2014,” Seligsohn said. “A lot of the driving is from mobile and we’re seeing the same thing from the other foundries.”

Nova, which has gained 17 percent in U.S. trading this year, reported April 30 a 21 percent jump in first-quarter sales (NVMI:US) to $27.4 million, beating the $26 million mean of two analysts’ estimates. TSMC, the world’s largest contract chipmaker whose products power Apple’s iPhones, will boost spending by as much as 10 percent this year on demand for the 20-nanometer technology, Chairman Morris Chang said April 19.

China Sales

Apple’s sales in the greater China region, the world’s largest market for computers and handsets, rose 11 percent to a record $8.8 billion during the fiscal second quarter, CEO Tim Cook said on a conference call April 23. The region represented 19 percent of the company’s sales in the quarter.

One nanometer, equal to one billionth of a meter, measures the size of connections within a chip. A smaller number implies more advanced technology, allowing semiconductors to be smaller and more powerful.

“We’ve definitely trended very strongly in the direction of Asia together with the industry,” Seligsohn said. The region has accounted for 75 percent to 90 percent of Nova’s revenue over the last two years, he said.

Nova forecasts sales to grow as much as 5.2 percent from a year earlier to $28.5 million in the second quarter, with earnings declining at least 50 percent to 7 cents a share, Seligsohn said on a conference call with analysts on April 30.

Semiconductor Manufacturing International Corp. (981) in China is also increasing investment for low-end smartphone chips used in the nation’s second-generation networks, Seligsohn said.

‘Humongous Opportunity’

“China is an extremely interesting market in the sense that on the one hand, the high-end smartphone market is a status symbol, and you’ll see the nouveau riche and middle class carrying that,” he said. “But this monstrous market of lower- income people starting to be addressed now by smartphone, that sounds like a humongous opportunity.”

TSMC representatives at the company’s corporate communication division couldn’t be reached outside of business hours in Taiwan.

Nova shares jumped 3.1 percent to 33.02 shekels, or $9.23, in Tel Aviv yesterday. The benchmark TA-25 Index (TA-25) fell 0.2 percent, trimming a 1.6 percent advance in 2013.

BioLineRX Ltd. (BLRX:US) slipped 1.1 percent to $1.80 in New York yesterday, the lowest level since April 9. The stock fell for a fourth day, the longest losing streak since March 14.

The company will decide whether to end the development of an experimental schizophrenia treatment in “about July”, after it failed to help patients in a mid-stage trial, CEO Kinneret Savitsky said in an interview at Bloomberg’s headquarters in New York.

‘Still Alive’

“The study was terminated, the project is still alive,” Savitsky said. “We expect it to be terminated unless we see something surprising” while analyzing data of the study.

Teva Pharmaceutical Industries Ltd. (TEVA:US), the world’s biggest generic drugmaker, slipped for a second day, dropping 0.5 percent to a one-week low of $38.10.

The company is scheduled to release first-quarter results today. Sales declined 4.9 percent from a year earlier to $4.85 billion, according to the average forecast of 19 analysts compiled by Bloomberg. Net income rose 9.2 percent to $938 million, analysts’ average projection shows.

Orbotech Ltd. (ORBK:US), which makes gear used to test televisions and smartphones, declined 3 percent to $9.94, retreating the most in a month. It had the biggest drop on the Israel-U.S. gauge.

Alon Holdings Blue Square Israel Ltd. (BSI), an Israeli supermarket retailer, climbed 2.7 percent in its eighth day of rally to $3.86, the highest price since April 4.

Blue Square, which owns the Mega, Shefa Shuk and Eden Nature store chains, joined other Israeli grocers in raising prices by as much as 8 percent in the first quarter as protests over rising living costs diminished, according to Israel Brokerage & Investments Ltd. IBI projected a 30 percent rally in the next 12 months for the Rosh Ha’Ayin-based company.

To contact the reporters on this story: Belinda Cao in New York at lcao4@bloomberg.net; Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • NVMI
    (Nova Measuring Instruments Ltd)
    • $11.26 USD
    • -0.05
    • -0.44%
  • AAPL
    (Apple Inc)
    • $101.06 USD
    • 0.10
    • 0.1%
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