According to SIA, global semiconductor sales hit record high in 2017, an increase of 21.6% to US$412.2bn from US$335.2bn in 2016. The surge in semiconductor sales was underpinned by strong end-product demand across various segments ie. consumer, communication, automotive, industrial and medical devices
Malaysian OSAT have started to expand their solutions and services towards the automotive sector for better margin products ie. Unisem (high-end microphone), MPI (sensors) and GTB (LED). This is in tandem with growing demand for automotive sector as indicated by IC Insight, i.e. the growth in IC components used in automobiles are forecasted to grow at 13.4% CAGR over 2016 – 2021.
Historical forward PE for Malaysian OSAT (MO) under our coverage trades at 15.5x ahead of US semiconductor companies at 13.7x. We believe this was due to higher demand for consumer products, automotive, industrial 4.0 and Internet of Things (IoT) which drives OSATs production.
Inari (BUY, TP: RM3.25) is our top pick given its sustainable business driven by robust RF filter business worldwide, growing demand for 4G/LTE network, and connectivity technology. We also like Unisem (BUY, TP: RM3.20) and MPI (BUY, TP: RM11.25) underpinned by better performance and expansion into new business segment- automotive.
The Semiconductor Industry Association (SIA) noted that global semiconductor sales hit record high in 2017, a 21.6% increase to US$412.2bn (2016: US$335.2bn) (Chart 1). This was driven by strong growth from integrated circuits (IC) products (ie. memory, logic, micro and analog), representing over 80% of total sales, grew by 23% yoy. The growths from other product segments – discrete semiconductor (+18.3% yoy), optoelectronics (+16.4% yoy) and sensors (+16.2% yoy) – were also strong.
The sales across all regions were notably robust with China – the largest contributor towards semiconductor sales – maintained a solid growth of +22.2% to US$129.7bn due to strong internal demand and established value chain (Chart 2). The US also chalked the fastest growth in 2017 at 35% yoy followed by Japan Asia Pacific/others and Europe. The growth in these markets were underpinned by strong demand across various sectors as more and more electronic products incorporate semiconductor components.
Source: BIMB Securities Research - 2 Apr 2018
Created by kltrader | Aug 19, 2024
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024