It's only a matter of time before the semiconductor market recovers from the 2022/2023 major correction cycle which has seen  demand for PCs, smartphones, tablets and consumer electronics significantly decline.  Well, DBS Research is now calling for a recovery not too far in the future (excerpts below).

LimEngHong 1.17CEO Lim Eng HongSo, time to pick up some semicon stocks? One Singapore-listed stock, Avi-Tech Holdings (market cap: S$45 million, net cash S$33 million, dividend yield 6.6%), has seen buying by its founder-CEO recently.

And its most recent set of results --1HFY2023 (ended Dec 2022) -- were decent:

• Revenue increased by 14.6% to $17.8 million; 
• Gross profit margin was 25.7% (-2.1 ppt);
• Net profit was unchanged at $2.0 million;
• Interim dividend was unchanged at 0.75 cent/share.

Share purchases by Lim Eng Hong, CEO of Avi-Tech 


No. of shares



Cumulative stake (% stake)
















Source: Company announcements

Excerpts from DBS report

Heading to the right side of U-shaped recovery 

• Maintain our view of anticipated recovery in 2H23

• Drivers for recovery:-

1) Industry data bottoming;
2) Lower inventory;
3) AI to fuel growth;
4) Green shoots from recent results release;
5) SOX* as a leading indicator that the industry is intact 

• AI market projected to register 2022-32 CAGR of 42%; direct beneficiaries are: Nvidia Corp, Marvell Tech, Broadcom, AMD, TSMC, Delta Electronics.

• Asia tech are still laggard vs global peers; our picks are UMS Hldgs, BYD Electronic, Hua Hong Semiconductor

 The PHLX Semiconductor Sector (SOX) is a Philadelphia Stock Exchange capitalization-weighted index composed of the 30 largest U.S. companies primarily involved in the design, distribution, manufacture, and sale of semiconductors.

Industry close to bottoming – are we on the left or right side of the U-shaped recovery?
Recent semiconductor shipment data registered m-o-m growth after 14 consecutive months of decline, suggesting we are closer to bottoming now.

Trade data from countries such as China, South Korea and Taiwan have shown clearer signs of stabilisation, though not yet a recovery. 

Drivers for anticipated 2H23 recovery in place.
These are:-

1) Global semiconductor shipments nearing a bottom;
2) Inventories are trending lower, removing a key obstacle;
3) Pockets of optimism from recent results release;
4) Artificial Intelligence (AI) to fuel recovery; and
5) SOX continues to outperform the broad market. 

Fast-growing AI benefitting the entire value chain
Generative AI is expected to be a US$1.3trn market by 2032 (2022-32 CAGR of 42%) according to research from Bloomberg Intelligence.

Potential beneficiaries are:

(i) Equipment makers of machines that produce advanced chips,
(ii) Foundries on higher orders/demand,
(iii) Memory chips’ makers given the large datasets involved in generative AI,
(iv) OSAT (outsourced semiconductor assembly and testing) as they benefit from increasingly complex assembly/testing. 

Companies with direct exposure to AI are: Nvidia Corp, Marvell Tech, Broadcom, AMD, TSMC, Lenovo, Delta Electronics. 

Asia tech still a laggard vs global peers.
The PE valuation for SOX at c.30x is near the previous peak in 2021, but PEs for the Asian tech stocks under our coverage are still at or below the 5-year average.

Our picks are UMS Hldgs, Hua Hong Semiconductor and BYD Electronics.

Risks: Further demand weakness, deterioration of global economies, geopolitical and currency headwinds.

Full report here. 

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