As the Q1 earnings season comes to a close, it's time to take stock of this quarter's best and worst performers in the semiconductor manufacturing industry, including Amtech (NASDAQ:ASYS) and its peers. The semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.

The 14 semiconductor manufacturing stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 1.3%. while next quarter's revenue guidance was in line with consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, but semiconductor manufacturing stocks have performed well, with the share prices up 14.9% on average since the previous earnings results.

Amtech Systems (NASDAQ:ASYS)

Focusing on the silicon carbide and power semiconductor sectors, Amtech Systems (NASDAQ:ASYS) produces the machinery and related chemicals needed for manufacturing semiconductors. Amtech reported revenues of $25.43 million in Q2 2024, down 23.6% year on year, topping analysts' expectations by 8.2%. It was a mixed quarter for the company, with a significant improvement in its inventory levels but underwhelming revenue guidance for the next quarter. Amtech achieved the biggest analyst estimates beat of the whole group. The stock is up 25.8% since the results and currently trades at $6.24.

For the full fiscal year 2023, Amtech reported annual revenue of $113.315 million and a net loss of $12.582 million. Operating cash flow was negative $7.701 million, and free cash flow was negative $10.599 million. In Q2 2024, the company reported revenue of $25.433 million and a net income of $0.97 million.

Lam Research (NASDAQ:LCRX)

Founded in 1980 by David Lam, who pioneered semiconductor etching technology, Lam Research (NASDAQ:LCRX) is one of the leading providers of the wafer fabrication equipment used to make semiconductors. Lam Research reported revenues of $3.79 billion in Q1 2024, down 2% year on year, outperforming analysts' expectations by 1.7%. It was a strong quarter for the company, with a significant improvement in its gross margin and an impressive beat of analysts' EPS estimates. The stock is up 21.9% since the results and currently trades at $1,078.

Kulicke & Soffa (NASDAQ: KLIC)

Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices Kulicke and Soffa reported revenues of $172.1 million in Q1 2024, down 0.5% year on year, falling short of analysts' expectations by 1.2%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter. The stock is up 8.8% since the results and currently trades at $48.18.

Entegris (NASDAQ:ENTG)

With fabs representing the company's largest customer type, Entegris (NASDAQ:ENTG) supplies products that purify, protect, and generally ensure the integrity of raw materials needed for advanced semiconductor manufacturing. Entegris reported revenues of $771 million in Q1 2024, down 16.4% year on year, falling short of analysts' expectations by 0.1%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next quarter and an increase in its inventory levels. The stock is up 4.6% since the results and currently trades at $139.

KLA Corporation (NASDAQ:KLAC)

Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ:KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips. KLA Corporation reported revenues of $2.36 billion in Q1 2024, down 3% year on year, surpassing analysts' expectations by 1.7%. It was a strong quarter for the company, with a solid beat of analysts' EPS estimates and optimistic revenue guidance for the next quarter. The stock is up 24.5% since the results and currently trades at $840.

Amtech's Q2 2024 revenue of $25.433 million represents a 23.6% year-over-year decline, but the company managed to exceed analyst expectations by 8.2%. The company provided underwhelming revenue guidance for the next quarter. Amtech achieved the biggest analyst estimates beat among the group.

For the full fiscal year 2023, Amtech reported annual revenue of $113.315 million, down from the prior year, and a net loss of $12.582 million. Operating cash flow was negative $7.701 million, and free cash flow was negative $10.599 million. In Q2 2024, the company reported revenue of $25.433 million and net income of $0.97 million.

Amtech's Semiconductor segment, which includes thermal processing equipment and related controls, saw revenues decline 21% year-over-year in Q2 2024 due to lower sales across most of its product portfolio amid the broader semiconductor market slowdown. The Material and Substrate segment, which produces consumables and machinery for lapping, polishing, and cleaning of materials, saw a 29% year-over-year revenue decline.

The company noted that it is seeing an uptick in near-shoring activities in North America and at Chinese OSATs as they add capacity, while consumables demand for silicon carbide semiconductor production has been lumpy due to customer buying patterns and softening in overall electric vehicle demand. However, Amtech is seeing stronger demand for replacement parts in its foundry services.

Amtech has taken actions to optimize its operations and better align product pricing with input costs. The company expects these initiatives to significantly improve results and enhance profitability through market cycles. Amtech remains well-positioned to capitalize on secular trends driving demand for its products, including advanced mobility applications, high-performance computing, and artificial intelligence, as well as efforts to build more resilient semiconductor and electronics supply chains.

Looking ahead, Amtech provided revenue guidance for Q3 2024 in the range of $22 million to $25 million, with adjusted EBITDA expected to be nominally positive. This includes some expenses and production downtime associated with the relocation of the company's BTU facility. While the near-term outlook remains challenging, Amtech is confident in the long-term prospects for its consumables and equipment serving advanced mobility and advanced packaging applications.

Amtech's balance sheet remains strong, with $13 million in unrestricted cash and cash equivalents as of March 31, 2024, and only $4.2 million in remaining debt. The company generated $5.3 million in operating cash flow during the first half of fiscal 2024, primarily due to improvements in working capital. Amtech's current ratio stands at 2.7, indicating a healthy liquidity position.

In summary, Amtech delivered a mixed Q2 2024 performance, exceeding revenue expectations but providing underwhelming guidance. The company continues to navigate a challenging market environment, but its strategic initiatives to optimize operations and align pricing with costs are expected to drive improved profitability. Amtech remains well-positioned to capitalize on long-term secular trends in the semiconductor industry, particularly in advanced mobility and packaging applications. The company's strong balance sheet and liquidity provide a solid foundation for weathering the current market conditions and positioning the business for future growth.