Global semiconductor sales growth to moderate in 2018
KUALA LUMPUR: Global semiconductor sales growth is expected to moderate to seven per cent in 2018 as the demand-supply dynamics for memory products normalise.
Citing the World Semiconductor Trade Statistics (WSTS), Alliance DBS Research said global semiconductor sales posted a phenomenal growth of 21 per cent in 2017, largely driven by strong gains in memory (+60 per cent) year-onyear where ASP was significantly higher on the back of supply tightness.
Excluding memory, the combined sales of other semi products were up by a relatively healthy nine per cent in 2017, showing the breadth of the market’s strength led by the synchronised recovery in global economies, it said in a research note yesterday.
“After the sector’s impressive run in 2017, we are turning “Neutral” as valuations have reached multi-year high with little room to climb further in our view.
“Despite the recent pullback, shares of Malaysian semiconductor companies are still up by 53-105 per cent in 2017, reaching price/ earnings (P/E) multiples, above the historical average.
“We believe a lot of the good fundamentals and opportunities within the sector are already reflected in current valuations,” it said.
The research firm said for 2018, beside memory, the WSTS was also positive on the sensor and optoelectronic segments which are expected to register growth of 7.2 per cent and 8.2 per cent, respectively.
In view of Malaysian semiconductor companies, AllianceDBS said Inari Amertron Bhd’s radio frequency (RF) division, which contributes roughly 50 per cent of sales, should remains the bright spot for the company, given the proliferation of RF content in smartphone to support faster 4G LTE speed.
“This is echoed by its key customer, Broadcom which said there would be a significant increase in film bulk acoustic resonator (FBAR) filter content in 2018, driven by additional filtering at the antenna. We think this refers to new smartphones (in particular, Apple iPhone).
“We remain positive on the company, given the strong visibility for its RF segment and contribution from new businesses, with recommendation of “hold” position with target price RM3,” said the research firm.
AllianceDBS added that alongside Inari, it also recommended “hold” position for Unisem Bhd and Malaysian Pacific Industries Bhd with the target prices of RM3.60 and RM12.90, respectively, as valuations for both companies were now fair with decent dividend yields, in line with Taiwanese peers. — Bernama
Despite the recent pullback, shares of Malaysian semiconductor companies are still up by 53-105 per cent in 2017, reaching price/earnings (P/E) multiples, above the historical average. WSTS