Rosenblatt analyst Kevin Cassidy highlighted some key takeaways from final week’s semiconductor earnings.
Final week’s earnings experiences made it clear that corporations uncovered to the higher-end of markets noticed their earnings holding up higher.
Most administration groups pointed to a list correction part beginning, resulting in a cautious stance for 2023.
He believes publicity to the upper efficiency markets reminiscent of AI, 5G, and EV automotive have pushed the better-than-expected numbers.
ON Semiconductor Corp (NASDAQ: ON) (Purchase, Value Goal $80) elevated its silicon carbide (SiC) income expectations for 2023, whereas STMicroelectronics NV (NYSE: STM) maintained its forecasted income and upped its estimate throughout its Could Investor Day. The important thing level is that the EV car market is rapidly adopting SiC, shifting the know-how into the mainstream, and driving new progress.
Rambus, Inc (NASDAQ: RMBS) (Purchase, PT $38) reported an 11% sequential enhance in server DRAM interface merchandise. He noticed the mixture of DDR5 and CXL stimulating the DRAM market in 2023.
Qorvo, Inc’s (NASDAQ: QRVO) (Impartial, PT $110) and Skyworks Options, Inc’s (NASDAQ: SWKS) (Purchase, PT $190) earnings experiences have been very totally different for corporations with related merchandise resulting from their distinction in market publicity. The vital distinction is Skyworks, with ~55% publicity to Apple Inc (NASDAQ: AAPL), vs. Qorvo’s ~30%. The September quarter is seasonally robust for the Apple provide chain. Excessive publicity to the low-to-mid-tier Chinese language OEM handsets resulted in weak outlooks.
Within the face of weakening PC and handset markets, Synaptics Inc’s (NASDAQ: SYNA) (Purchase, PT $220) turned in robust June quarter outcomes. The corporate’s 3-year transformation to ~70% of income uncovered to IoT from ~80% publicity to PC and handsets allowed for the corporate to take care of a 60%+ gross margin. AI on the edge, together with connectivity, is now a worthwhile massive, and rising market.
Resulting from Western Digital Corp’s (NASDAQ: WDC) (Impartial, PT $45) comparatively excessive publicity (~45%) to shoppers, PC, and handsets, the corporate is receiving the brunt of the stock correction. WDC labored on rising the Enterprise SSD market share to 16% over the subsequent three years.
Broad-based semi-plays Lattice Semiconductor Corp (NASDAQ: LSCC) (Purchase, PT $95), Microchip Know-how Inc (NASDAQ: MCHP) (Purchase, PT $125), and Monolithic Energy Programs, Inc (NASDAQ: MPWR) (Purchase, PT $620) reported stable earnings and outlook. He believes the outcomes and outlook point out structural demand power outdoors of consumer-centric PC, shopper, and smartphone market segments. Curiously, demand dynamics could also be accelerating, with provide persevering with to be problematic for the subsequent a number of quarters.
Superior Micro Units, Inc (NASDAQ: AMD) (Purchase, PT $200) additionally reported earnings with a knowledge middle view that he noticed as an epic market share reversal of fortunes with Intel Corp’s (NASDAQ: INTC) slow-motion implosion. He believes the Road has but to completely acknowledge this zero-sum sport during which AMD knowledge middle share (~10% share in 2021 and ~20% in 2Q22) will seemingly go over 50% within the subsequent 18 months at $1 earnings per share per 10% phase share.
He added that Intel’s enterprise mannequin is essentially unsound in an atmosphere of lower than 50% knowledge middle share no matter authorities and Euro subsidies in non-core product areas.
Value Motion: ON shares traded decrease by 1.11% at $66.88 on the final examine Monday.
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