June 2024 Global Semiconductor Sales +1.7% MoM & +18.3% YoY

In June 2024, the global semiconductor continued its upward trajectory by posting another decent sales growth. According to the Semiconductor Industry Association, global semiconductor sales during the month stood at USD50.0bn (+1.7% MoM, +18.3% YoY) versus May 2024’s of USD49.1bn. This marked YoY sales recovery for the 8th consecutive month, while MoM increased for 4th consecutive month. This further affirms that the global semiconductor market is in an upcycle currently. The strong YoY improvement was mainly driven by Americas (+42.8% YoY), China (+21.6% YoY), and Asia Pacific/All Other (+12.7% YoY).

Seeing MoM Sales Growth for 4th Consecutive Month

By geography, June 2024’s sales increase of 1.7% MoM was driven by America (+6.3% MoM), Japan (+1.8% MoM), and China (+0.8% MoM). Meanwhile, the slowdown was observed in Asia Pacific/All Other (-1.4% MoM) and Europe (-1.0% MoM).

Seeing Gradual Recovery of Worldwide Silicon Wafer Shipment

According to the Silicon Manufacturers Group, the worldwide silicon wafer shipments jumped 7.1% QoQ to 3,035mn square inches in 2Q2024, primarily driven by robust demand for products linked to data centres and generative artificial intelligence. Moving forward, the silicon wafer market is expected to continue its recovery, underpinned by increasing number of new semiconductor fabs under construction as well as demand recovery.

Maintain Overweight

Generally, the local semiconductor space is expected to continue seeing gradual earnings recovery, underpinned by an anticipated healthy recovery in global demand and increasing trade diversion opportunities. Additionally, the potential end of the rate hike cycle in the US this September will bode well for the sector’s valuations. Hence, we maintain our OVERWEIGHT stance on the semiconductor sector. We believe the recent market correction presents a good opportunity for investors to collect the oversold semiconductor stocks. Following the recent share price weakness, we upgraded our recommendations for UNISEM, MPI, and ELSOFT from Hold to Buy. Meanwhile, we maintain Buy recommendation on INARI.

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 - 9 Aug 2024