TA Sector Research

Semiconductor Sector - Backed by Robust Growth in Memory and Logic

Publish date: Mon, 10 Jun 2024, 11:15 AM

April 2024 Global Semiconductor Sales +1.1% MoM & +15.8% YoY

In April 2024, the global semiconductor continues its upward trajectory by posting another consecutive YoY sales growth. According to the Semiconductor Industry Association, global semiconductor sales during the month stood at USD46.4bn (+1.1% MoM, +15.8% YoY) versus March 2024’s of USD45.9bn. This marked YoY sales recovery for the 6th consecutive month, while the sales in April increased on a MoM basis for the first time this year. This further confirms that the global semiconductor market is on recovery mode. The decent YoY improvement was mainly driven by Americas (+32.4% YoY), China (+23.4% YoY), and Asia Pacific/All Other (+11.1% YoY).

Higher MoM Sales

By geography, April 2024’s sales increase of 1.1% MoM was mainly driven by the America (+4.2% MoM), Japan (+2.4% MoM), and China (+0.2% MoM). Meanwhile, the slowdown was observed in Europe (-0.8% MoM) and Asia Pacific/All Other (-0.5% MoM).

New Industry Forecast Projects Higher Market Growth in 2024

The World Semiconductor Trade Statistics organisation has recently revised its forecast upwards for global semiconductor sales with 2024’s now at USD611.0bn (+16.0% YoY) as compared with previous forecast of USD588.4bn (+13.1% YoY). The strong growth will be fuelled by robust double-digit growth from memory and logic categories. The Americas and Asia Pacific regions are anticipated to experience substantial growth, with projected increases of 25.1% and 17.5%, respectively. Conversely, Europe is expected to see minimal growth of 0.5%, and Japan is forecasted to experience a slight decrease of 1.1%.

Maintain Overweight

Overall, we maintain our OVERWEIGHT stance on the semiconductor sector. We expect the sentiment of the semiconductor sector in Malaysia will improve further, backed by an anticipated healthy recovery in global demand and increasing trade diversion opportunities as a result of the China Plus One strategy. Within our universe, we have Buy recommendation on INARI (TP: RM4.30). Meanwhile, we maintain Hold recommendations on UNISEM (TP: RM4.37), MPI (TP: RM41.10), and ELSOFT (TP: RM0.58).

Key downside risks include: i) heightened geopolitical tensions weighing on economic growth and disrupting supply chains, ii) weaker-than-expected sales, and iii) weakening of the USD against the Ringgit.

Source: TA Research - 10 Jun 2024

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