Demand for semiconductor products remains robust
KUCHING: The worldwide sales of semiconductor does not display signs off cooling, and as such, analysts expect demand for semiconductor products to remain robust.
However, MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) noted that the growth rate may trend lower mainly due to the high base effect while the annual growth rate is expected to taper off to single digit in 2018, according to World Semiconductor Trade Statistic (WSTS).
“Nonetheless, we expect demand for semiconductor products to remain robust, driven by new smartphone line-up, expected recovery in the tablet market, and stable demand from the automotive industry,” it opined.
It noted that capital spending could continue to growth, albeit slower pace.
“We view that this could negatively impact the dividend payout ratio. As such, we do not expect dividend yield of semiconductor companies under our coverage to go above four per cent for 2018.
“Given the impressive share price performance in 2017, we view that most of the semiconductor companies does not trade at attractive valuation at this juncture,” it added.
Meanwhile, it noted that worldwide sales of semiconductor products for the month of November 2017 strengthened by 21.5 per cent y-o-y and 1.6 per cent m-o-m to US$37.7 billion, leading to the highest monthly sales.
“We observed that the pace of growth has been tapering off after peaking in July 2017 at 24.2 per cent y-o-y. Inclusive of this, the monthly semiconductor sales has come in above the US$30 billion level for the past 14 months since October 2016.
“It is also on track to reach the US$400 billion level in annual sales for the first time. The improvement in the global semiconductor sales (GSS) was mainly attributable to higher sales of memory products.
“This was further supported by robust sales across all the other major product categories. Regionally, sales from the Americas region continues to outperform the other regions, growing by 40.3 per cent y-o-y and 2.6 per cent m-o-m,” the research team said.
“All factors considered, we maintain our ‘neutral’ recommendation on the sector.”