Supply shortage of semiconductor belies long-term growth – DBS Bank
|The market is overreacting to the recent shortage of the integrated circuit (IC) chips which is mainly limited to the automotive sector. In the view of Yeang Cheng Ling, Strategist at DBS Bank, long-term supply increase is set to meet tremendous demand while major long-term beneficiaries are IC design firms, foundries and semiconductor equipment makers.
Key quotes
“We believe the shortage in IC chips is one-off mainly due to an uneven order procurement placed by auto manufacturers and other customers. The prolonged rush-order cycles should boost the pricing power of wafer foundries and upstream supply chains and bodes well for earnings. The situation highlights and supports our long-term constructive view on global digitalisation themes.”
“We remain constructive on the global information technology sector where leading industry players are likely to deliver better-than-expected earnings over the extended cycle and strong order visibility for the next few years.”
“We hold positions in IC design, logic and memory foundries, and equipment makers which are long-term beneficiaries of the structural development in 5G, high-performance computing, data servers, cloud, artificial intelligence, electric vehicles, gaming, machine learning, industrial automation, power management and sensors.”
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