• In August, it was Applied Materials. Then just last week (Sept 27), Micron Technology also delivered an optimistic outlook, signalling a likely upturn in the semiconductor cycle.

PCB gultech"We are well positioned to drive significant improvements in our financial performance," Micron said in its annoucement of its 4QFY23 (ended Aug 2023) results.

"We believe pricing has now bottomed. Ongoing demand growth, customer inventory normalization, and industrywide supply reductions have set the stage for increased revenue, along with improved pricing and profitability throughout fiscal 2024 (FY24)."

• The semiconductor industry has been hit by an oversupply of chips in the past year or so. Unless the economy gets bad, the inventory level will continue to come down as demand recovers. Semiconductors are used in a wide range of products, including computers, smartphones, and cars.

• Read DBS Research's takeaways from Micron's 4QFY23 results ...



Excerpts from DBS Research reoport

Positive takeaways from Micron’s sequential revenue growth amid steeper-than-expected losses

"Sequential improvement in Micron’s topline affirms our analysts’ view of an easing chip glut, with industry recovery to be led by the memory segment."
» 1Q24 revenue guidance at $4.4b (+10% q-o-q), above consensus estimate of $4.2b.

» Loss per share of $1.07 vs estimate of $0.95, partially attributable to company specific factors.


Sequential improvement in Micron’s topline affirms our analysts’ view of an easing chip glut, with industry recovery to be led by the memory segment. (Refer to our sector report to find out more).

Against this backdrop, we prefer companies with higher exposure to the memory segment.

» Stocks with exposure to the memory segment through global semiconductor customers include UMS via its key customer AMAT (Applied Materials) with c.35% exposure to memory and another new customer in the memory space.

» Broad-based industry recovery should also benefit technology stocks such as Venture and Grand Venture though we caveat that global headwinds remain and manufacturing recovery in Singapore is likely to be gradual and fragile.

 

 See also: 
 • Semiconductor recovery: Signs are there? Yup!
•  UMS: Well-positioned for semicon recovery -- but share price has risen 15%



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