UMS

UMS: Applied Materials (AMAT), the largest producer of chipmaking equipment and UMS’ largest customer (contributes up to 80% of sales), forecast 1Q12 sales and profit that fell short of analysts’ predictions, a sign that semiconductor makers are scaling back expansion plans.

Profit before certain costs will be US 8cts to US 16cts a share, AMAT said. Revenue will decline as much as 15% from the prior quarter, indicating sales of as little as US$1.85b. Analysts on average predicted profit of 18 cts on sales of US$2.07b.

Many chipmakers are reluctant to increase output until they see evidence that the economy is improving, said RBC Capital Markets. That’s damping demand for the gear needed to manufacture semiconductors. “Unless there is an inflection in demand, there is no need to spend on capacity.”

UMSH manufactures high precision components and is involved in complex electromechanical assembly and final testing services. Its products include modular and integration systems for semiconductor equipment manufacturing.

Stock trades at 4.4x P/E, 0.75x P/B.