Tech prospects positive from higher semiconductor demand
27 Jun 2021
The technology sector’s positive prospects are driven from increased demand for semiconductors relating to trends such as the adoption of 5G smartphones and increased investment in expanding 5G infrastructure globally.
To note, AmInvestment Bank Bhd (AmInvestment Bank) has maintained its ‘neutral’ recommendation on the technology sector as the research firm believed that multi-year growth riding on positive prospects has been fairly priced in.
“The sector’s positive prospects arise from increased demand for semiconductors relating to the following trends: adoption of 5G smartphones and increased investment in expanding 5G infrastructure globally, electric vehicles (EVs) and autonomous driving with more interest on new technologies using materials such as silicon carbide (SiC) and galium nitrite (GaN) as well as growth in smart sensors and adoption of Industry 4.0 technologies such as big data, automation and the internet of things (IoT) to build a more resilient supply chain,” AmInvestment Bank said.
AmInvestment Bank highlighted that the World Semiconductor Trade Statistics (WSTS) released its spring forecast on June 8, 2021, projecting a 19.7 per cent growth in 2021 at US$527 billion followed by an 8.8 per cent growth in 2022 at US$573 billion.
It further highlighted that the 2021 forecast was revised upwards from its earlier forecast of US$469 billion in its autumn 2020 forecast.
“In 2021, Asia Pacific, including China, is forecasted to show the strongest growth rate at 23.5 per cent, followed by Europe, Japan and the Americas.
“The largest growth contributors are memory ICs, followed by sensors and analog integrated circuits (ICs) that are projected to expand 31.7 per cent, 22.4 per cent and 21.7 per cent respectively.
“All other categories are expected to show double-digit growth, except for optoelectronics and logic ICs.
“Meanwhile, the Semiconductor Industry Association (SIA) recorded US$41.9 billion sales in April 2021, up two per cent month on month (m-o-m) and up 22 per cent year on year (y-o-y), as global demand remained high and sales rose across a range of chip products throughout the world’s major regional markets.”
AmInvestment Bank also noted that in the first quarter of current year 2021 (1QCY21), global smartphone sales grew 26 per cent y-o-y to 378 million units, according to Gartner, due to the improvement in consumer outlook, sustained learning and work from home requirements, as well as due to pent-up demand from 2020 which saw a steep decline and thus a lower base for comparison.
“Samsung’s launch of its mid-priced smartphones and early shipping of its flagship 5G smartphones boosted its unit sales.
“Apple’s launch of its first 5G iPhone led to continued demand in 2021 and 5G is expected to continue to be the major growth driver for 2021 fuelled by device upgrades.
“All top five vendors registered strong y-o-y growth, which indicates market consolidation among them.
“Meanwhile, Chinese vendors Xiaomi, Oppo and Vivo saw growing demand for 5G phones capitalising on the weakening sales of Huawei and LG for the quarter.
“Although the global chip shortage has not impacted the smartphone industry, this may change in the coming quarters and could result in higher average selling prices (ASPs) for smartphones.”
As for EVs including plug-in hybrids, the research firm noted that this segment is set to increase its global share of the market to six to eight per cent in 2021, after having a 4.4 per cent and 2.5 per cent share in 2020 and 2019 respectively, with the European market is expected to drive growth in EVs.
Source: The Borneo Post
