GLOBAL semiconductor sales remained stable month-on-month (m-o-m), seeing a 5th month of growth, but uncertainties prevail from lingering macroeconomic headwinds, according to TA Securities.
“Global semiconductor sales in June 2020 of US$34.5 bil (RM145.6 bil) was stable relative to May 2020’s US$35 bil. Nevertheless, it represented a fifth consecutive month of growth on a y-o-y basis.”
“On a quarterly basis, numbers also indicated the sector’s resilience to the dim economic backdrop with 2Q20’s down marginally 0.9% quarter-on-quarter (q-o-q) and up 5.1% y-o-y to US$103.6 bil. Year to date, sales in the first half of 2020 increased 6% to US$208.1 bil,” said TA Securities analyst Wilson Loo.
However, Loo also noted that the World Semiconductor Trade Statistics Organisation forecasts global semiconductor sales growth in 2020 to be at about 3.3% due to the uncertainty that remains from lingering macroeconomic headwinds.
The slight 0.3% m-o-m contraction in June’s global semiconductor sales was attributed to Europe, the Asia Pacific region and China, though this was largely cushioned by growth from the Americas and Japan, according to Loo.
“Meanwhile, the 5.1% y-o-y growth was driven by the Americas, China, and the Asia Pacific region, albeit partially offset by contraction from Europe and Japan. Of note, the weakness
from Europe marked the 17th consecutive month of contraction from the region,” said Loo.
June also saw billings easing 1.1% m-o-m, but growing 14.4% y-o-y to US$2.3 bil, with billings growth on a y-o-y basis growing for the 9th consecutive month.
“This was driven by the advancement to newer nodes and the recovery in memory spending, following the preceding downcycle marked by investment cutback and inventory correction amidst the (Sino-US) trade war,” said Loo.
TA Securities maintains its neutral stance on the sector, with a buy recommendation on Unisem (M) Bhd with a target price of RM4.28.
Loo noted that Unisem is liked for its “strong near term order visibility, robust earnings growth profile, and healthy balance sheet with a net cash of RM68.9 mil.”
The key risks to the sector, according to Loo, are a prolonged Covid-19 pandemic weighing on economic growth and sentiment, a prolonged and heightened trade war, and US dollar versus ringgit fluctuations. – Aug 5, 2020
