• Global semiconductor sales grew by 13% YoY to USD50.8bn in June powered by a sizzling US market. This pushed a robust semiconductor performance amid 1H22 sales that jumped by double digits or 21% YoY to USD304.9bn.

• We remain optimistic on 2022’s semiconductor outlook to be underpinned by a strong demand for 5G smartphone, electrical vehicles (EV), recovery in automotive segment, and a steady trajectory for data centre.

• Maintain OVERWEIGHT call on technology sector with Inari (BUY; TP: RM3.75) and MPI (BUY; TP: RM44.20) emerge as our top pick.

Semiconductor Sales Remained Robust in 1H22

The Semiconductor Industry Association (SIA) announced another upbeat global semiconductor performance following sales that grew by 13% YoY in June 2022 to USD50.8bn thanks to strong sales across all major regional markets and product categories. On a MoM basis, the global semiconductor sales pulled back slightly after it dropped by 2% no thanks to weaker sales across all major markets. Overall, the global semiconductor sales remained robust in 1H22, an increase of 21% YoY to USD305bn which made up 47% of the World Semiconductor Trade Statistics (WSTS) full year 2022 forecast.

June 2022 Semiconductor Sales Powered by the US Market

The US market recorded the strongest sales growth in June following an increase of 29% YoY, followed by Japan (+16% YoY), Europe (+12% YoY). China’s semiconductor sales remained uninspiring after recording only a 5% YoY growth as output was dampened by rampant closure following its zero-COVID policy.

Remain Optimistic on Semiconductor Outlook

We remain optimistic on semiconductor outlook given aggressive network migration to 5G and therefore, 5G smartphone sales, higher adoption of internet of Things (IoT), augmented reality (AR), artificial intelligence (AI) – a combination of driver that will boost demand for semiconductor. This will be added by an expected recovery in automotive segment, growing demand for electrical vehicles (EV), and data centre – additional impetus for semiconductor industry in 2022 and likely into 2023.

OVERWEIGHT Call on the Sector

We maintain an OVERWEIGHT call on the semiconductor, Technology sub-sector with a BUY call on Inari (TP: RM3.75) and MPI (TP: RM44.20).

Source: BIMB Securities Research - 3 Aug 2022