Bullish stance reaffirmed on semiconductor sector – analyst

Posted on : 07-03-2017 | By : sabah today | In : National Business

KUCHING: Analysts at the research arm of TA Securities Holdings Bhd (TA Research) were bullish on the outlook of the semiconductor sector at this juncture.

The bullish outlook conviction for the semiconductor sector was on the back of higher global sales of semiconductor components which registered an increase of 13.9 per cent year-on-year (y-o-y) growth to US$30.6 billion in January 2017.

TA Research believed that promising prospects of the semiconductor sector would be underpinned by better sales outlook and the weak ringgit environment.

“We believe the trend will continue, expecting positive US dollar sales growth in 2017.

“The recent release of the fourth quarter (4Q16) financial results, (semiconductor players such as) Unisem (M) Bhd (Unisem) and Malaysian Pacific Industries Bhd (MPI) have reported US dollar sales that beat initial guidance,” the research firm said.

The positive sales growth in January 2017 was also the largest y-o-y sales growth achieved since November 2010, it said.

At the same time, the research firm noted the World Semiconductor Trade Statistics (WSTS) has revised its sales growth assumption for this year upwards to 6.5 per cent y-o-y which bode well for the current year outlook.

The organisation believed the sector’s growth will be driven by sensors which is expected to witness an increase of nine per cent y-o-y, analog (7.8 per cent y-o-y) and memory (12.8 per cent y-o-y).

In the meantime, the research firm noted the higher sales growth in January 2017 was spreaded across regions.

It added all regions reported double digit growth rates apart from Europe.

Elaborating further, the research firm observed that sales in China led the pack, increasing by 20.5 per cent y-o-y.

It noted the increased sales was followed by the US market which rose by 13.3 per cent y-o-y, Japan (12.3 per cent y-o-y); Asia Pacific (11 per cent y-o-y and Europe (4.8 per cent y-o-y).

TA Research pointed out that all regions reported positive y-o-y sales for the second month in a row. The research firm also noted billings increased by 52.3 per cent y-o-y to US$1,860.3 billion.

It highlighted that the strong billings marked the strongest rise in billings since February 2011.

As a result, the research firm opined that equipment spending is expected to remain strong into 2017, with investments directed at leading edge memory and foundry fabs.


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