Inventory & Macro Mar Solid 2024 Outlook for Semiconductors

Zacks04-22

This year is likely to be much better than the last for the semiconductor market as a whole, as inventories in the computing and smartphone markets (two of the biggest chip consumers) were worked down...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nInventory & Macro Mar Solid 2024 Outlook for Semiconductors\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-22 23:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/inventory-macro-mar-solid-2024-150500071.html><strong>Zacks</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>This year is likely to be much better than the last for the semiconductor market as a whole, as inventories in the computing and smartphone markets (two of the biggest chip consumers) were worked down...</p>\n\n<a href=\"https://finance.yahoo.com/news/inventory-macro-mar-solid-2024-150500071.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".SPX","symbol_name":"S&P 500 Index","start_time":0,"source_url":"https://finance.yahoo.com/news/inventory-macro-mar-solid-2024-150500071.html","article_id":"2429971655","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/YT7fN0e2Shv68o.6OVnGmA--~B/aD00MDA7dz02MzU7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/zacks.com/c148afeaf671cd9b76653364f8737563"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2429971655","pubTimestamp":1713798300,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"The electronic gadgets we use to accurately read our commands, and record, store, retrieve and process the information we throw at them run on semiconductor technology, whether analog , digital  or mixed signal . Most electronic gadgets use a combination of these components, whether in consumer, industrial, auto, medical, communications, or IoT and other markets.The semiconductor market is expected to return to growth this year. Gartner estimates that growth will be 16.8% in 2024, as memory comes off a very bad 2023 amid weak demand that led to an inventory glut. With memory bouncing 66.3%, that situation will turn around. The return to growth in the analog/mixed signal market is reflected in end-market demand. PCs have been weak for a while now (Gartner estimates that growth returned in fourth-quarter 2023 as inventory was worked down. This year, growth will be facilitated by on-device AI. IDC estimates that the PC market returned to growth in first-quarter 2024, eclipsing pe-pandemic","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".SPX":"S&P 500 Index","LU1992135399.USD":"Allianz Global Intelligent Cities AT Acc USD","LU2265009873.SGD":"Eastspring Investments - Global Growth Equity AS SGD-H","BK4515":"5G概念","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","OEX":"标普100","LU1670710661.SGD":"M&G (LUX) GLOBAL DIVIDEND \"A\" (SGD) INC","BK4585":"ETF&股票定投概念","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","LU0109392836.USD":"富兰克林科技股A","LU1670711123.USD":"M&G (LUX) GLOBAL DIVIDEND \"A\" (USD) INC","SSO":"两倍做多标普500ETF","VOO":"Vanguard标普500ETF","MX":"Magnachip Semiconductor","ADI":"亚德诺","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","BK4566":"资本集团","SDS":"两倍做空标普500ETF","SH":"标普500反向ETF","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","LU0097036916.USD":"贝莱德美国增长A2 USD","BK4559":"巴菲特持仓","SG9999014898.SGD":"United Global Quality Growth Fund Dis SGD","BK4550":"红杉资本持仓","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","BK4141":"半导体产品","SPGI":"标普全球","SPXU":"三倍做空标普500ETF","LU0444971666.USD":"天利全球科技基金","LU1244550221.USD":"FRANKLIN GLOBAL MULTI-ASSET  INCOME \"A\" (USDHEDGED) INC (M)","LU0971096721.USD":"富达环球金融服务 A","UPRO":"三倍做多标普500ETF","LU1642822529.SGD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"A\" (SGD) ACC","SG9999014906.USD":"大华全球优质成长基金Acc USD","BK4561":"索罗斯持仓","LU1496350171.SGD":"FRANKLIN DIVERSIFIED BALANCED \"A\" (SGDHDG) ACC","SPY":"标普500ETF","OEF":"标普100指数ETF-iShares","LU1815336760.USD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"AUP\" (USD) INC","LU2458330169.SGD":"FRANKLIN SHARIAH TECHNOLOGY \"A\" (SGD) ACC","DSP":"Viant Technology Inc.","SG9999014914.USD":"UNITED GLOBAL QUALITY GROWTH (USDHDG) INC","LU0957808578.USD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"ZU\" (USD) ACC","BK4112":"金融交易所和数据","IVV":"标普500指数ETF","LU2458330243.SGD":"FRANKLIN SHARIAH TECHNOLOGY \"A-H1\" (SGDHDG) ACC","SG9999001077.SGD":"United International Growth Fund SGD","LU1670710588.SGD":"M&G (LUX) GLOBAL DIVIDEND \"A\" (SGD) ACC","LU1803068979.SGD":"FTIF - Franklin Technology A (acc) SGD-H1"},"translate_title":"半导体库存和宏观三月固体2024年展望","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ADI":1,"MX":1,"DSP":1,"SPGI":0.9,"VOO":0.66,"SPY":0.66,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,"UPRO":0.6,".SPX":0.6,"ESmain":0.6,"IVV":0.6},"content_text":"This year is likely to be much better than the last for the semiconductor market as a whole, as inventories in the computing and smartphone markets (two of the biggest chip consumers) were worked down in second-half 2023. The World Semiconductor Trade Statistics (WSTS), which supplies data to the Semiconductor Industry Association (SIA), is projecting double-digit growth in semiconductors this year on the back of a 40% jump in memory demand.Discrete, sensors, analog, logic and micro are also expected to grow, albeit at single-digit percentage rates. While growth will be across geographies, the Americas and Asia will post strong double-digit growth. For the Analog/mixed signal group, however, the going is likely to be less smooth. That’s because many of these players have increased their exposure to auto and industrial markets, where design wins have more shelf life. The industrial end market is pulling the industry down -- notwithstanding the fact that growth prospects over the next 5-10 years remain excellent -- because of the adoption of new technologies like AI-ML, EVs, smart cities, IoT, etc. The fourth quarter was likely the bottom for this industry, according to market research firms. Macro-related uncertainties remain, however, limiting growth. Magnachip Semiconductor MX and Analog Devices ADI are worth keeping an eye on.\nAbout the Industry\nThe electronic gadgets we use to accurately read our commands, and record, store, retrieve and process the information we throw at them run on semiconductor technology, whether analog (enabling the recording and measurement of real-world information), digital (processing information available in machine-readable language) or mixed signal (enabling conversion of analog signals to digital or digital to analog among other things). Most electronic gadgets use a combination of these components, whether in consumer, industrial, auto, medical, communications, or IoT and other markets.\nThe industry is cyclical and prices are elastic. Players usually serve multiple markets that offset their individual seasonality, or focus on certain core markets for which they have highly differentiated technology and relationships.\nMajor Themes Impacting the Industry\n\nThe semiconductor market is expected to return to growth this year. Gartner estimates that growth will be 16.8% in 2024, as memory comes off a very bad 2023 amid weak demand that led to an inventory glut. With memory bouncing 66.3%, that situation will turn around. The return to growth in the analog/mixed signal market is reflected in end-market demand. PCs have been weak for a while now (Gartner estimates that growth returned in fourth-quarter 2023 as inventory was worked down. This year, growth will be facilitated by on-device AI. IDC estimates that the PC market returned to growth in first-quarter 2024, eclipsing pe-pandemic levels. There’s the possibility of commercial refresh stretching out to 2025 when Windows 10 support ends, and AI integration, the biggest driver this year. Both firms expect that the new AI PCs will have higher price tags, a positive for PC and component makers.) Smartphone growth is expected to accelerate this year on the back of higher-end AI phones and resurgent Chinese players (3.8% growth in 2024 and 1.4% CAGR for the next five years, according to IDC). Ongoing inventory adjustment is the main reason for softness in the industrial market, with macro-related uncertainty continuing. Other markets like automotive, IoT, cloud and AI are better off. AI in particular is a boom market as of now. According to Gartner, only 5% of companies were using generative AI in 2023, which will grow to 80% by 2026. AI semiconductors will be 20% of total semiconductor sales by 2027, estimates Statista (as quoted in Nikkei). Technological innovation in the form of the metaverse, digital health, EVs and other innovative transportation, and sustainability considerations are secular drivers. Uncertainties related to dealing with China remain.\n\n\nOngoing macro concerns continue to impact suppliers in the industrial end-market. While manufacturing PMI has entered positive territory according to both ISM and S&P Global, and some semiconductor component suppliers are encouraged about a stronger second half to this year, there remains some channel inventory which adds uncertainty, particularly in the face of broader economic concerns.\n\n\nIn general, semiconductor pricing is robust when capacity is tight and utilization high. However, companies start adding capacity when they anticipate the next big growth cycle which usually continues for several years. AI is the main driver of the current build cycle and it is expected to expand continually in the foreseeable future. Therefore, significant capacity is being built up today because it will have to suffice for years to come. And while new fab construction, often supported by government initiatives, and their equipping is necessary to drive future growth, it brings additional capacity online, which is a negative for near-term pricing.\n\n\nAn emerging issue that semiconductor players are particularly exposed to is geopolitical tensions. The semiconductor supply chain is globally distributed, which means that international relations need to be maintained to ensure that work continues without disruption. While the Russia-Ukraine war didn’t have that much of an impact, the souring of relations between the U.S. and China is another story. If China really tries to take control of Taiwan as many experts expect it will, there could be a terrible war that will be highly disruptive of the global economy and especially of the chip sector. That’s because a leading share of advanced node chips are made on the island. Another geopolitical concern is the increasing awareness among all leading nations of the larger role that semiconductors are playing in AI-driven electronic weaponry and surveillance mechanisms. As the importance of semiconductors in defense grows, the need to onshore or near-shore production is being felt. This is leading to rebalancing of the semiconductor supply chain not from a cost-reduction perspective but with a far more strategic objective. So the government is trying to incentivize companies to build in the U.S. TSM, the main supplier to the U.S. is setting up in the country but the plan is to have this on a much larger scale. The CHIPS Act may help a difficult situation where increased capacity would depress prices while U.S. production would increase costs. In the meantime, the U.S. has ordered restrictions on trading with China, which remains a headwind for players.\n\nZacks Industry Rank Indicates Dismal Prospects\nThe Zacks Semiconductor – Analog and Mixed industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #242, which places it in the bottom 3% of the 250 odd Zacks-classified industries.\nThe group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates weak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.\nThe industry’s positioning in the bottom 50% of Zacks-ranked industries is based on the earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions over the past year, we see that analyst opinion about the outlook for both 2023 and 2024 has materially deteriorated, and particularly since July 2023. Overall, the 2024 estimates have dropped 31.9% over the past year, while the 2025 estimates have dropped 24.1%.\nBefore we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.\nStock Market Performance Continues to Lag\nThe Semiconductor – Analog and Mixed industry currently trades at a discount to both the broader Zacks Computer and Technology sector and the S&P 500. However, looking at its performance over the past year, it appears that while it has reached the level of the S&P 500 at times, the sector has been trading at a much higher multiple throughout.\nOverall, the industry gained 5% over the past year while the broader sector gained 35.9% and the S&P 500 20.8%.\nOne-Year Price Performance\nImage Source: Zacks Investment Research\nIndustry's Current Valuation\nOn the basis of forward 12-month price-to-earnings (P/E) ratio, the industry is trading at a 23.5X multiple, which is a premium to the S&P 500’s 20.2X and a discount to the broader computer and technology sector’s 24.8X. At the current level, it is also trading at a premium to its median level of 19.9X over the past year.\nThe industry has traded between the 15.9X and 26.8X multiples over the past year.\nForward 12 Month Price-to-Earnings (P/E) Ratio\nImage Source: Zacks Investment Research\n2 Stocks to Keep an Eye On\nGiven the deterioration in the outlook, there are currently no buy-ranked stocks in the sector. However, a couple of stocks with good long-term potential may be worth looking at:\nMagnachip Semiconductor Corp. (MX): Cheongju, South Korea-based Magnachip Semiconductor designs and manufactures analog and mixed-signal semiconductor platform solutions for consumer, computing and industrial (including IoT and automotive) electronics OEMs, ODMs and EMS companies, as well as subsystem designers in Korea, the Asia Pacific, the U.S. and Europe. The company sells its products through a direct sales force, as well as through a network of agents and distributors.\nThe bulk of revenue comes from its Power Solutions business, which remains under pressure from inventory rebalancing at industrial customers (particularly China’s e-bike market  and weakness in solar). Magnachip is however seeing continued momentum in design wins, particularly at auto OEMs. The OLED business remains slow although the company secured a couple of design wins in China. The phase-out of Transitional Foundry Services will negatively impact revenue this year. Therefore, the longer-term prospects as seen from new product innovation and design win momentum are strong, although macro concerns and inventory rebalancing could mean that near-term numbers will move around a little bit.\nThe company’s 2024 estimate has dropped 61 cents (105%) in the last 60 days. Analysts expect that in 2024, the company’s top line will grow 3.1% while the bottom line falls 116.4%. For 2025, the top and bottom lines will increase a respective 12.6% and 26.1%.\n#3 (Hold) ranked Magnachip’s shares are down 46.9% over the past year.\nPrice and Consensus: MX\nImage Source: Zacks Investment Research\nAnalog Devices, Inc. (ADI): Norwood, MA-based Analog Devices is an original equipment manufacturer of analog, mixed signal and digital signal processing (DSP) integrated circuits, including amplifies, converters, CODECs, embedded processing products, DSPs, MEMS and temperature sensors, thermal management products, RF/IF components, filters and processors. it has direct sales offices, sales representatives and distributors in more than 50 countries worldwide.\nThe company is well positioned for the long term with its product development, customer engagement, manufacturing capacity and balance sheet strength. However, inventories and industrial customers are still being worked down, something management expects will be mostly complete in the current quarter. Based on the fact that industrial bookings started picking up in the current quarter and continued strength in other areas, particularly EVs, it does appear that estimates have bottomed for now, which creates the impression that things go up from here. However macro conditions are hard to predict, which keeps us on the sidelines.\nAnalog Devices beat earnings estimates by a sliver in the first quarter and estimates for both 2024 and 2025 have dropped sharply since. In the last 60 days, the 2024 estimates dropped $1.08 (15.6%) while the 2025 estimate dropped 91 cents (10.7%). While revenue and earnings for 2024 are expected to decline a respective 25.6% and 41.9%, they’re expected to grow 11.9% and 29.8% the following year.\nADI shares, ranked #3, have declined 1.9% in the past year.\nPrice and Consensus: ADI\nImage Source: Zacks Investment Research\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\nAnalog Devices, Inc. (ADI) : Free Stock Analysis Report\nMagnachip Semiconductor Corp. (MX) : Free Stock Analysis Report\nTo read this article on Zacks.com click here.\nZacks Investment Research","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2429971655"}