zachary (zoujia) chen justin craigwell-graham charles gambino vignesh murali jacob rapp
DESCRIPTION
http://www.memc.com/index.php?view=MEMC-History. Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp November 12, 2009. Company Overview. MEMC Electronic Materials, Inc. is engaged in the design, manufacture and sale of silicon wafers - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/1.jpg)
Zachary (Zoujia) ChenJustin Craigwell-GrahamCharles GambinoVignesh MuraliJacob Rapp
November 12, 2009
http://www.memc.com/index.php?view=MEMC-History
![Page 2: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/2.jpg)
Company Overview• MEMC Electronic Materials, Inc. is engaged in the design, manufacture and
sale of silicon wafers
• Based in St. Peters, MO
• 4600 Employees
• Produces both semiconductor wafers and solar wafers
• One of four wafer companies with 10% or more of the market share.
• Strategy: “Continuous improvement of technology, market share, and profits.”
• NYSE Ticker: WFR
![Page 3: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/3.jpg)
Company History• Founded in 1953
• 1995: IPO on NYSE under the ticker WFR
• 2001: After almost filing for bankruptcy, Private Equity Firm Texas Pacific Group acquires 72% of the company
• October 2009: MEMC acquires SunEdison LLC
![Page 4: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/4.jpg)
What is a wafer?
• Wafer’s are the foundation on which the world’s semiconductors and solar cells are built
• All the processes of a micro device are conducted on a wafer
• Wafer sizes have increased device performance and reduced production costs 50mm, 100 mm, 150mm
and 200 mm wafer
![Page 5: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/5.jpg)
What is a Wafer?
![Page 6: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/6.jpg)
Source: MEMC 10K
Global Manufacturing
![Page 7: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/7.jpg)
SunEdison LLC Acquisition
• SunEdison develops solar power projects and is considered a major solar energy services provider in North America
• Reiterates Management goal to focus product mix towards the solar energy division
• $25 million in sales in 2008
![Page 8: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/8.jpg)
Competition• Main Competition
– Solarworld AG: Solar Energy company who also makes semi-conductors based in Germany
– Kyocera: Based in Japan. Products range from Ceramic components to electronic devices, equipment and networks
– SUMCO: Based in Germany, makers of semiconductor and solar cells
![Page 9: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/9.jpg)
Semiconductor and Solar Industries
• These two markets (semiconductor and solar) are evolving and devices are getting more specialized and high-performance.– Silicon wafers are becoming more and more critical to the performance of
these devices.
• Industry is seeing consolidation & segmentation – four major suppliers
• Industry has suffered massive decrease in prices due to decrease in demand and oversupply of wafers as well as polysilicon used to make solar cells
– WFR has had to renegotiate contracts at lower prices
• Demand in solar industry driven by government incentive– Cost of solar power today exceeds cost of power from electric utility grid– Demand correlated with price of other energy sources
![Page 10: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/10.jpg)
Semiconductor Device Industry Risks
• Rapid technological change• Product obsolesence• Changes in product mix• Price erosion• Fluctuations in product supply and demand
![Page 11: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/11.jpg)
Macroeconomic Outlook• A depressed global economy has limited nations
especially US, Japan and Germany from investing in solar energy. Subsidies have reduced.
• Companies lacking the subsidies will invest in other cheaper energy sources
• Short term demand for electronics and semiconductor equipment gloomy as companies hesitate to invest in fixed assets
![Page 12: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/12.jpg)
Dupont Analysis
![Page 13: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/13.jpg)
SWOT • Strengths
– International diversification– Contracts at full capacity for future– Diversified between poly-silicon and solar
wafers to reduce cyclicality risk
• Opportunities– Emerging markets– Consumer’s desire to “Go Green”– Rising costs of conventional forms of
energy
• Weaknesses– Dependence on single and limited source
suppliers– Dependence on both the solar AND
semiconductor industry– Unable to easily transfer production of
specific products between manufacturing facilities
• Threats– Subject to both semiconductor And solar
industry risks– Investments of substantial cash balances
in auction rate securities, fixed income funds, individual corporate bonds, pension plan assets, and asset-backed and mortgage-backed securities.
![Page 14: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/14.jpg)
Management Performance• What Management Said Would Happen:
1. Reduction in manufacturing and operating costs from 2006 levels2. Our belief that our capital expenditures will be approximately 15% of our
net sales in 20083. Company will continue to possess sufficient liquidity to avoid problems with
the tight credit and capital markets
• What Happened: 1. COGS, SG&A, and R&D expenses as a percentage of sales fell from 2006
levels2. Capital Expenditures were 15.13% of net sales in 20083. Quick Ratio has hovered around 3.0x since 2006
![Page 15: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/15.jpg)
![Page 16: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/16.jpg)
Assumptions for Pro FormaRevenue Source 2009E 2010E 2011E 2012E 2013E 2014E 2015ESemiconductor -50% 2% 5% 10% 8% 8% 8%Solar -50% 2% 7% 8% 8% 10% 10%Sales of excess Polysilicon -2% -2% -2% -2% 0% 0% 0%Total Revenue Growth -40.9% 0.7% 3.7% 5.6% 5.9% 6.9% 7.0%
Cost Assumptions by Year 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E
COGS/Sales 49.87% 75.0% 66.0% 58.0% 54.0% 52.0% 52.0% 52.0%
SG&A/Sales 5.58% 6.0% 6.0% 6.0% 5.5% 7.0% 5.5% 5.5%
R&D/Sales 2.00% 3.5% 3.5% 4.0% 4.0% 4.0% 4.0% 4.0%
![Page 17: Zachary (Zoujia) Chen Justin Craigwell-Graham Charles Gambino Vignesh Murali Jacob Rapp](https://reader035.vdocument.in/reader035/viewer/2022070420/56815df3550346895dcc271a/html5/thumbnails/17.jpg)
Recommendation