JPMorgan
Recently, the Semiconductor Industry Association announced
September monthly industry sales of $31.8 billion, a
month-over-month increase of 12.6% and year-over-year increase of
8.1%, above our estimate of an 11.0% month-over-month and 5.6%
year-over-year increase.
Semiconductor units (excluding discrete semiconductors) grew
10.5% month-over-month and 8.9% year over year, off a seasonally
weaker August where unit shipments had declined slightly by 0.7%
month-over-month. By segment, revenue increased on a quarterly
basis by approximately 5% for microprocessors, 15% for NAND flash,
11% for DRAM, 7% for analog and 1.7% for microcontrollers. We are
maintaining our overall semiconductor-industry forecast of 8%
year-over-year revenue growth in 2014 as end-demand in aggregate
remains constructive.
Although backward-looking, the data served to confirm a
relatively solid demand profile for the September quarter as most
of our companies reported in-line to slightly better third-quarter
revenue and earnings-per-share results. Despite the recent and
sharp pullback in semi stocks, we believe it served to temper
expectations to match a slightly weaker fourth-quarter fundamental
environment, but should set the stage for stocks to move higher as
the market gets more confidence around growth in 2015.
September monthly sales were $31.8 billion, a month-over-month
increase of 12.6%, above our estimates of 11.0% month over month.
On a quarterly basis, revenue increased 5% quarter over quarter for
microprocessors, 15% for NAND, 11% for DRAM, 7% for analog and up
1.7% for microcontrollers.
Unit growth was slightly below estimates, but still strongly
positive on a year-over-year basis. Unit shipments excluding
discretes increased 10.5% month over month, below our estimate of a
12.5% month-over-month increase and lower than normal seasonality
of 12.3%. On a year-over-year basis, excluding discrete unit
shipments increased 8.9% in June, below our estimate of 10.5% and
below historical seasonality of 11.1%. We believe year-over-year
unit growth bottomed at down 4.0% year over year in February 2013,
and we expect positive year-over-year unit growth throughout
2014.
September average selling prices (ASPs) excluding discretes
increased 1.9% month over month, above our estimate of a decline of
1.6%. On a year-over-year basis, ASPs declined 0.9%, slightly below
normal seasonality of a decline in 0.7%.
We are maintaining our calendar 2014 semi sales forecast of 8%
year-over-year growth, or $330.0 billion. We expect units excluding
discretes to grow 9% year over year and ASPs to decline 1% year
over year.
Despite pockets of weakness from the Samsung [of South Korea]
supply chain (Maxim Integrated Products (ticker: MXIM), Cypress
Semiconductor ( CY), Fairchild Semiconductor International ( FCS),
Synaptics ( SYNA) and Audience ( ADNC)), China service provider
markets (Xilinx (XLNX) and Altera ( ALTR)), and slightly weaker
industrial demand out of Europe, broader end-market trends remain
healthy. Demand from the auto, PC, consumer, enterprise/datacenter,
and Apple ( AAPL) supply chains appear solid. In addition, several
broad-based companies (Texas Instruments ( TXN), Freescale
Semiconductor ( FSL), NXP Semiconductors ( NXPI), Linear Technology
( LLTC), Vishay Intertechnology ( VSH), On Semiconductor ( ONNN),
and Fairchild) have indicated that channel inventory is lean and
lead times remain disciplined.
The PHLX Semiconductor Index is up 20% year-to-date and the
recent pullback in semi stocks was overdue and served to temper
expectations -- we remain constructive on the overall group (semis
and semiconductor capital equipment). We remain positive on the
overall group through the second half and our top picks are Intel (
INTC), Broadcom ( BRCM), Marvell Technology Group ( MRVL), Micron
Technology ( MU), Xilinx, Texas Instruments, Applied Materials (
AMAT), KLA-Tencor ( KLAC) and Lam Research ( LRCX).
-- Harlan Sur
-- Bill Peterson
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