Summary: Morgan Stanley A latest research report from Morgan Stanley on Sunday detonated the global chip industry. In the global capital market on Monday, the share price of Samsung Electronics Co Ltd (KS:005930) fell more than 5%, TSMC (Taiwan Semicond. Manufacturing Co (NYSE:TSM)) closed down 4.42%, and Western Digital (Western Digital ( NASDAQ:WDC)) fell 6.71%, and Qualcomm (Qualcomm Incorporated (NASDAQ:QCOM)) closed down 1.12%.
Author of this article: Investing.com analyst Li Yingwei
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Investing.com - A latest research report from Morgan Stanley on Sunday detonated the global chip industry. In the global capital market on Monday, the share price of Samsung Electronics Co Ltd (KS:005930) fell more than 5%, TSMC (Taiwan Semicond. Manufacturing Co (NYSE:TSM)) closed down 4.42%, and Western Digital (Western Digital ( Qualcomm (NASDAQ: WDC)) fell 6.71%, and Qualcomm (Qualcomm Incorporated (NASDAQ: QCOM)) closed down 1.12%.
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Korean market: Samsung Electronics stock price closed down 5.08% (currency unit: KRW)
According to these research reports from Morgan Stanley, the investment bank believes that since January 2016 The strong market demand and unprecedented pricing power enjoyed by the semiconductor industry since the beginning of the quarter are unsustainable, and the NAND flash super cycle is expected to be reversed. In view of this, Morgan Stanley recommends that the market immediately reduce the risk exposure of NAND flash memory and even the entire Asian semiconductor industry stocks.
At the same time, the investment bank will Samsung Electronics (Samsung Electronics Co Ltd (KS:005930)), Taiwan Semicond. Manufacturing Co (NYSE:TSM) and Western Digital (NASDAQ:WDC) and other semiconductor hard drives The leading company's rating was downgraded to "wait and see" and Samsung's target price was lowered by 4%.
Phison Electronics (TWO:8299), the world's largest industrial wide-temperature flash memory supplier, was downgraded to a "bearish" rating, with its target stock price shrinking 12% from the market price. The stock is currently quoted at NT$319, down 0.47% from the previous day.
Another industry leader, Hynix Inc (KS:000660), closed down 2.53% yesterday at 83,100 won. Today, the market continued to open lower, closing down 0.6% at 82,600 won.
Samsung and Hynix’s sales on Monday The decline also caused South Korea's KOSPI index to fall by 1.4%.
Morgan Stanley believes that the current high stock prices of flash memory industry companies can no longer support further rises. It is recommended to immediately start selling high positions to escape from the top, and predicts that the entire industry will usher in a round in the short term. A sharp correction.
South Korea's two major chip companies have experienced substantial growth in their third-quarter results.
It is worth noting that just as Morgan Stanley released the above remarks that made the industry miserable, South Korea's market research organization Chaebul.com released data showing that South Korea's two major chip companies Company: Samsung Electronics’ profit in the third quarter was 23.6 trillion won, a 178% increase from the same period last year; SK Hynix’s profit increased nearly five times to approximately 9 trillion won.
The combined profits of these two companies are the highest in South Korea. The top ten companies accounted for 52.2% of the total profit in the third quarter of 62.5 trillion won (approximately US$57.5 billion), an increase of 95.4% from the same period last year, which was the highest profit in the first three quarters in history.
However, Chaebul.com also warned. It is said that the South Korean economy is overly dependent on the profit growth of Samsung and SK Hynix, and the chip industry in which these two companies are located has experienced serious imbalances.
Chung Sun-sup, the person in charge of the website, said: Due to the self-supply of chips in the Chinese market. Capabilities are gradually improving, and the industry is now more vulnerable to external factors, and chip prices will inevitably decline.
In fact, Samsung’s third-quarter financial report has indeed shown the company’s over-reliance on the chip business’s profitability. The profitability of the department's business is also gradually improving, but the profits of its mobile department business have increased by nearly 70%.
The third-quarter financial report of the world's largest chip and smartphone manufacturer shows that operating profit in the third quarter was 14.53 trillion won (approximately US$12.91 billion), an increase of 23.4% compared with the same period last year, and sales of approximately 62 trillion won. In addition, Samsung also announced that it will double its dividend this year to 9.6 trillion won.
In addition, Samsung plans that full-year capital expenditure will reach a record high of 46.2 trillion won. New factories, assembly and storage facilities are planned to cope with a surge in global chip demand. Samsung Electronics' October report shows that supply and demand in the NAND and DRAM markets are expected to remain tight in 2018.
From Samsung’s plan, it is not difficult to see the chip giant’s confidence in the future development of the industry.
Data from the chip industry website semi.org show that global chip sales will reach US$400 billion this year.
The Philadelphia Semiconductor Index in the United States has risen by more than 45% this year. Is the "chip super cycle" overflowing?
Since the beginning of this year, global memory chip manufacturers are experiencing a "super cycle" as the demand for data storage in smartphones, artificial intelligence, driverless cars and the Internet of Things has soared. The global leader in the chip industry still maintained rapid growth in third-quarter profits.
Samsung Electronics’ third-quarter revenue was US$55.788 billion, a year-on-year increase of 31.76%, still far ahead.
Intel third quarter revenue was US$16.149 billion, a year-on-year increase of 2%, ranking second.
In addition, SK Hynix’s third-quarter revenue was US$7.2 billion, a year-on-year increase of 91%; Micron’s third-quarter revenue was US$5.566 billion, a year-on-year increase of 92%. The excellent revenue performance comes from the Server DRAM market, and SK Hynix is developing strongly in the data center.
AMD’s third-quarter revenue was US$1.64 billion, a year-on-year increase of 24.4%.
In addition, Broadcom Ltd (NASDAQ: AVGO), which had previously made an acquisition offer for Qualcomm, had revenue of US$4.689 billion in the third quarter, a year-on-year increase of 16.3%. Compared with Qualcomm, the situation is very good. On November 17, Broadcom completed its acquisition of network equipment manufacturer Brocade Communications Systems for US$5.5 billion. So far, Broadcom has once again expanded its market share in data center products.
Judging from the revenue data of the top ten global semiconductors in the third quarter of 2017, global semiconductor sales have increased month-on-month for 16 consecutive months, and the prosperity has reached a record high.
According to the latest data released by WSTS, global semiconductor sales in 17Q3 increased by 10.2% year-on-year to US$107.9 billion, a record high. Among them, sales of US$360 were achieved in September, a year-on-year increase of 22.2% and a month-on-month increase of 2.8%.
The semiconductor industry will see continued growth in the fourth quarter. Among them, it is not difficult to imagine that Samsung Electronics after the management "reorganization" and Intel, which continues to make efforts, will once again lead the entire semiconductor industry.
There is another data that also shows the current prosperity of the semiconductor industry. One of the main indicators of the prosperity of the global semiconductor industry, the Philadelphia Semiconductor Index in the United States has just hit its highest closing record in history, approaching the historical intraday high set during the Internet bubble. The cumulative increase since this year is as high as 48.62%.
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One of the main indicators of global semiconductor industry prosperity is the Philadelphia Semiconductor Index in the United States.
The sharp decline in stocks in the capital market may be caused by listed companies in the chip industry. Investors' reaction to Morgan Stanley's downgrade of the semiconductor industry was a bit overdone. At present, downstream demands such as high-performance computing, Internet of Things, automotive electronics, and 5G will continue to drive the semiconductor industry forward in the future.
Source of article: Investing.com - expert on real-time market conditions and information on global financial markets
