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US stocks Why is semiconductor soaring?
Following the sharp rise of A-share semiconductors during the day, the semiconductor sector soared at the opening of the US stock market. Xilinx (XLNX), Ram (LRCX), Terida (TER), STMicroelectronics (STM), and AMAT also increased by more than 10%, while Micron , ON Semiconductor and ADI also increased by more than 5%.
We believe that to interpret why US stock semiconductors have risen sharply, the core of lies in the following two issues: 1. The reasons and sustainability of this round of semiconductor economic downturn;
2. After the continuous decline in the fourth quarter, how does the institutions' true expectations compare with Bloomberg's consistent expectations.
Question 1: How do we view this round of semiconductor economy downward? The annual strategy of 100-page semiconductors, "Semiconductors: Intergenerational Switching of Technological Innovation, Global Semiconductors Declines first and then rise, and is expected to reverse in the middle of the year", emphasized that the essence of this round of semiconductor economic downturn is inventory adjustment after encountering trade frictions and macroeconomic downward disturbances in demand during the critical period of intergenerational switching of the global innovation cycle. We counted that the current supply-side inventory level is low, and the industry pullback is mainly due to channel-side destocking . According to general industry rules, channel-side inventory reduction will generally last for 2-3 quarters, and channels will basically start destocking from the third quarter (which corresponds to the decline in orders of some original manufacturers in September). therefore judged that the industry is expected to recover before the end of 19Q2, which is also the reason why we are not so pessimistic recently.
Question 2: The financial reports of overseas leaders have been released one after another. Who exceeds expectations and who is lower than expectations?
Stock 1: Xilinx - Benefiting from the two core drivers of 5G and data center, with outstanding performance and exceeding expectations!
From the perspective of financial report and intraday performance, Xilinx performed the most outstandingly. The core lies in benefiting from the two major drivers of 5G and data centers.
Q4 single-quarter and Q1 guidance exceeded market expectations. Xilinx's FPGA performed well in 2018. In addition to announcing its next-generation architecture of 7nm, it has also reached cooperation with partners such as Microsoft , Huawei , Baidu , Amazon , Alibaba , Daimler-Benz. In AI inference, FPGAs have advantages over ASICs because FPGAs can be reconfigured instantly for specific applications.
Stock 2: Texas Instruments : Q4 slight Miss, the future driving force mainly depends on the industrial and automotive fields;
Company revenue: In Q4, Texas Instruments achieved operating income of US$3.717 billion, a year-on-year decrease of 1%. Company believes that the current market weakness is due to the semiconductor cycle. In addition, due to the tension in the trade situation, the cycle is likely to be extended, and it is expected that the market will be difficult to resume rapid growth for a period of time. Texas Instruments' annual operating income in 2018 was US$15.784 billion, an increase of 5.5% year-on-year.
1. The future driving force mainly depends on the industry and automobile fields. The total revenue of the industrial and automotive sectors in 2018 was about 56%, an increase of 2% from 54% in 2017, and an increase of 14% from 42% of Texas Instruments five years ago. The company believes that in the future, the industrial and automotive sectors will be the fastest-growing semiconductor market segment. With the increase in the content of silicon used, the continuous increase in the use of semiconductors, the continuous penetration of electronicization, and the diversity of these two fields and the high service life, we are firmly optimistic and continue to lay out the industrial and automotive sectors.
Stock 3: Storage leader Hynix: company judged in the performance briefing that Q1 DRAM inventory level will almost inevitably fall further, and demand in 19H2 will rebound.
Risk warning: semiconductor downstream demand growth is lower than expected, and the macro environment deteriorates marginally.
