Despite the recent uptick in global semiconductor sales, the transmission of this growth to local players situated at the back end of the supply chain is expected to be gradual, as highlighted by Kenanga Research.
Kenanga Research anticipates a sluggish start to the 2024 calendar year, attributing it to the traditionally slow first quarter following the peak demand period for consumer electronics and vehicles in the previous quarter. The weak global economy has slightly underwhelmed the market demand at the year-end.
The scheduled plant shutdowns during the extended Chinese New Year break, especially in China, are also factors to consider. Local players are aiming for a more notable recovery in the latter half of 2024. The research advises sticking with established companies while keeping an eye out for potential earnings inflection points. Kenanga Research emphasizes its "neutral" stance on the technology sector amid these anticipations.
WSTS, the global semiconductor industry data aggregator, forecasts a 13.1% increase in global semiconductor sales for this year. This growth is likely to be driven by a surge in memory chips (44.8%) and logic integrated circuits (9.6%). The Americas and the Asia Pacific region are expected to lead the recovery, with Asia-Pacific accounting for approximately 53% of global sales.
Companies are strategizing to capitalize on the rise in demand for artificial intelligence (AI) applications. Memory products are positioned to play a vital role alongside graphical processing power to meet the growing AI demands. Additionally, ventures into optical transceivers, aimed at achieving higher data transfer rates within data centers, are gaining momentum.
Inari, with about 63% of group revenue attributed to its radio frequency business, foresees the manageable impact of the upcoming low cycle in the first quarter of 2023. The absence of power interruptions from the prior quarter is expected to provide a cushion. As the semiconductor industry continues to evolve, it is essential for stakeholders to navigate through the challenges and opportunities presented in the dynamic global market landscape.
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