PETALING JAYA: Global semiconductor sales hit the highest monthly sales in two years in November, demonstrating the sector’s resilience to the Covid-19 pandemic and economic headwinds.
Sales in November climbed a further 1.1% month-on-month and 7% year-on-year to US$39.4bil. Year-to-date, numbers are up 5.6% to US$396.9bil, said TA Securities in a report.
“The outlook remains bright with the World Semiconductor Trade Statistics organisation forecasting global semiconductor sales to grow further from US$433.1bil (+5.1%) in 2020 to a record high of US$469.4bil (+8.4%) in 2021, ” it added.
By geography, November’s m-o-m sales growth was driven by almost all regions except for Asia Pacific (-0.5%).
Meanwhile, the sales growth of 7% y-o-y was underpinned by Americas (+12.5%), the accelerated growth from China (+6.5%), Asia Pacific (+6.5%), Japan (+5.1%), and a moderated contraction from Europe (-0.7%).
Billings in November eased slightly by 1.4% m-o-m but grew 23.1% y-o-y to US$2.6bil. year-to-date, billings are up robustly by 24.3% to US$27.1bil.
TA noted that billings are expected to grow further in 2021, underpinned by continued investments across both the front and back end.
This is alongside the advancements to newer nodes, emerging technologies including 5G, Internet of Things and artificial intelligence, as well as robust investments in China amid localisation efforts.
“In all, we reiterate our ‘Overweight’ stance on the semiconductor sector with maintained recommendations of ‘Buy’ on Inari Amertron Bhd (target price: RM3.26), Unisem (M) Bhd (TP: RM6.73), (pic below) and Malaysian Pacific Industries Bhd (TP: RM29.40), ” TA said.
The research firm continues to favour outsourced semiconductor assembly and test providers including Inari, Unisem, and MPI for their robust earnings growth prospects.
It said these companies’ earnings visibility remained strong with their pipeline backed by emerging trends including global 5G rollout, increasing digitalisation amid the Covid-19 pandemic, as well as prospects of a global economic recovery.
However, key downside risks remain to its recommendation including a prolonged Covid-19 pandemic weighing on economic growth and sentiment, a prolonged and heightened trade war and a weakening of the USD against the ringgit.
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