Semiconductor Industry

[behappyalways]

Samsung warns its profits will drop 60% as smartphone demand slumps
https://edition.cnn.com/2019/04/05/tech ... index.html

[winston]

Nomura On Semiconductors: Analyst Eyes Data Center, PC Trends

by Jayson Derrick

Earnings season for semiconductor companies is for the most part over. The reports showed that data center trends are "still soft," while the PC market is "looking good," according to Nomura.

The Analyst
David Wong maintained a Buy rating on AMD's stock with an unchanged $37 price target;
a Buy rating on Intel's stock with an unchanged $65 price target;
and a Neutral rating on Nvidia's stock with an unchanged $147 price target.

Data Center Trends

Both Intel Corporation (NASDAQ: INTC) and Nvidia Corporation (NASDAQ: NVDA) showed "modest" quarter-over-quarter growth in their data center businesses at 2% and 3%, respectively, Wong said in a Monday note. (See his track record here.)

Yet both Intel and Nvidia saw "substantial" year-over-year declines of 10% and 14%, respectively.

On the other hand, Advanced Micro Devices, Inc. (NASDAQ: AMD) is likely to show "strong" sequential growth in its data center business, the analyst said.

Growth is likely to come from its new Rome EPYC family, which will continue eating away data center processor share from rivals, he said.

PC Trends

Intel's PC processor growth in each of the past four quarters outperformed the industry average at a time when the chip industry is showing year-over-year declines, Wong said.

AMD has been gaining share in the space, and its new 7nm Ryzen desktop processors could help drive desktop processor growth, the analyst said.

New Growth Segments

Nvidia's July earnings report showed that is automotive revenue grew, but it was helped by recognition of revenues from a non-recurring engineering transaction that may have accounted for most of the sales increase, Wong said.

Current expectations call for Nvidia's automotive revenue to fall in the third quarter and establish a new normalized continuing run rate, he said.

Source: Benzinga

https://finance.yahoo.com/news/nomura-s ... 31464.html

[winston]

Has The Semiconductor Sector Bottomed Out?

Semiconductor sales have shown signs of recovery from their March low – though early, this may signal a possible end to the downcycle seen since mid-2018.

Still, a recovery is likely to be slow and gradual, as the US-China trade war could prove a stumbling block.

A global semiconductor demand recovery, albeit slowly, would help offset further declines in Singapore’s growth, given that the industry has a significant share in the country’s total exports and production.

Source: RHB

https://research.rhbtradesmart.com/atta ... fd10db.pdf

[winston]

Why Chip Stocks' Big Declines Are Far From Over

BY MARK KOLAKOWSKI

"We remain deep in a semiconductor downturn,” says David Wong of Nomura Instinet. There will be “no 2H [2019] demand rebound” for semiconductor companies, and consensus forecasts for 4Q 2019 are "overly bullish," per Shawn Harrison of Longbow Research.

“Broader semis remain weak, given end-demand challenges nearly everywhere,” according to Joseph Moore of Morgan Stanley.

Already hurt by slowing sales of mobile phones and a long term decline in the personal computer market, chipmakers had been counting on continued robust growth in cloud computing to bolster their sales.

However, the building of data centers to support cloud computing is in the midst of a worldwide "pause," as Colette Kress, CFO of Nvidia, put it during a conference call in May, as quoted by MarketWatch.

Source: Investopedia

https://www.investopedia.com/why-chip-s ... yptr=yahoo

[winston]

Chip Inventories At 'Problematic Levels' For Semiconductor Industry

Investment bank Morgan Stanley on Thursday said chip inventories decreased in the second quarter but remain at "problematic levels."

In the first quarter, chip inventories in the supply chain ballooned to record levels, the firm said in June

"Memory producers are holding significant amounts of excess inventory due to persistent price declines, making it more challenging to move product," the firm said.

Meanwhile, days of inventory at chip distributors in the second quarter decreased six days sequentially to 54 days. That's still six days above the historical median.

Source: IBD

https://www.investors.com/news/technolo ... yptr=yahoo

[behappyalways]

Opinion: Semiconductor stocks are bubbly, as companies’ sales are worse than most investors think
https://www.marketwatch.com/story/semic ... od=opinion

[behappyalways]

For chip companies, stocks soared as sales slumped in 2019 — what does that mean for 2020?
https://www.marketwatch.com/story/for-c ... ewer_click

[winston]

US Successfully Urges Netherlands to Avert Semiconductor Gear Export to China: Rumors

US Secretary of State Mike Pompeo has been lobbying the Netherlands government to deter Dutch semiconductor gear supplier ASML from selling chips to China, Reuters citing sources.

The lobbying began in 2018, when the Dutch government permitted ASML's sale of its latest equipment to a Chinese client.

Four rounds of US-Dutch talks were held afterwards to examine whether the deal could be blocked.

Following, Pompeo directly asked Netherlands Prime Minister Mark Rutte to avert the deal.

ASML eventually failed to export roughly US$150 million worth of equipment as its export licence was not renewed by the Dutch government.

Source: AAStocks Financial News

[behappyalways]

Memory loss and gain
A revival is under way in the chip business
The high-tech industry is as cyclical as any commodity

Jan 9th 2020


TO SEE JUST how fast microchips are eating the world, look at the Consumer Electronics Show (CES), an annual gadget-fest held in Las Vegas. This year’s event includes everything from ultra-high-definition televisions, “smart” light bulbs and powered exoskeletons to concept cars that can drive sideways and house robots designed to deliver toilet paper.

Every one of these must-have consumer trinkets is a computer in disguise, with innards made from microprocessors, memory chips and circuit boards.

Yet the industry upon which all this is built has been having a torrid time of late. Future Horizons, a chip-industry analysis firm, reckons that global semiconductor sales shrank by about 12% in 2019, to $410bn.

Samsung Electronics, a South Korean company that is the world’s biggest maker of memory chips, reported a 56% fall in quarterly operating profits in October, dragged down by the poor performance of its chip division.

Entire economies have been feeling the pain. Semiconductors account for a fifth of South Korea’s exports, which have fallen for 12 months in a row, partly owing to the sector’s weakness.

Now the slump seems to be ending. On January 8th Samsung predicted another fall in quarterly profits. But it was smaller than expected. The firm’s share price rose. The price of memory chips is up. Shares in SK hynix, another South Korean chipmaker, have gained around 20% in the past month.

Those of Micron, an American company, have done even better. Memory makes up about a third of semiconductor sales, and industry-watchers see it as a bellwether for the industry.

The nascent recovery reflects the nature of the chip business, where feast routinely follows famine. Despite its high-tech character, says Malcolm Penn, Future Horizons’s founder, the market for microchips is as cyclical as that for pork, soyabeans or other commodities (see chart).

When times are good, chipmakers boost capacity, adding high-tech factories that are expensive to build but cheap to run. That helps supply catch up with demand. To recoup costs, chipmakers carry on producing regardless. Prices sag.

When demand eventually catches up with the extra capacity, the cycle begins anew. Memory chips, which are interchangeable by design, are particularly prone to this periodicity.

The patterns are amplified or suppressed by what happens in the rest of the economy. The most recent bust, which began in 2018, was particularly deep, says Len Jenilek, a semiconductor analyst at IHS Markit.

The memory market consists of two main types of memory, known as DRAM and flash. Their cycles do not always synchronise, but last year they did. The car industry, which has become a big consumer of chips, had its worst year in a decade.

Other big buyers, particularly large data-centre operators like Google, Microsoft and Alibaba, cut back on purchases. The start of a tech-flavoured trade war between America and China did not help.

Whether the rebound will be correspondingly strong likewise depends on broader trends. Economic growth in China, a big importer of chips, is cooling. The bull run in America’s stockmarket is now the longest in history, spurring talk of a correction. American officials are working on a new round of trade restrictions that could rattle the industry.

But for those with strong nerves, chips look like a good long-term bet. Underlying the booms and busts is a growth in demand that, according to Mr Penn, has averaged 8% or so a year for 40 years.

The industry’s products have become millions of times more powerful in that period, while the world has grown hungrier for computing power. Mr Jenilek cites 5G phone networks and chips customised for AI as two big new sources of demand. This week Las Vegas brimmed with both.

Source: The Economist

[behappyalways]

SK Hynix to make deep capex cut as virus spread threatens chip output
https://www.reuters.com/article/us-sk-h ... SKBN1ZT385