After the global semiconductor market experienced strong growth this year, the growth rate is expected to slow down next year, but Wells Fargo believes that many chip stocks will be available for the future and they are optimistic about Intel, Micron, and AMD.
Wells Fargo analyst David Wong reported that the semiconductor industry began to recover from the second half of 2016. This trend continues this year and is expected to continue next year, but growth may slow in 2018. He pointed out that the growth of the semiconductor industry has been below standard for several years, and suppression of demand broke out in 2016, which prompted the semiconductor market to recover. The growth rate of global GDP in 2017 and 2018 will remain within the range of 3.4-3.5%. The data shows that in the semiconductor terminal market created from 2012 to 2016, there has been a considerable amount of suppressed demand, which has promoted The semiconductors recovered in 2017 and 2018 and may continue into 2019.
In terms of memory, memory sales are expected to grow by nearly 60% in 2017 and continue to expand in 2018. However, the growth rate will slow down significantly. It is expected that the growth rate in early 2018 will be close to 40% and will be reduced to less than 10% by the end of the year. For example, in the DRAM and NAND markets, although the market growth will be slower and slower, the current price increase of DRAM and the shift to “3-D†NAND will be good for memory manufacturers such as Micron. In general, the continuous growth of the storage market will have a positive impact on memory chip manufacturers and semiconductor equipment manufacturers, but it should also be noted that the high growth level of the storage industry in 2017 may be at risk of sudden braking.
According to supply chain news, DRAM will continue to be out of stock in the first half of next year. Although the industry intends to increase production capacity, new production capacity will be depleted by the end of next year and early next year. Therefore, DRAM supply growth in the first half of 2018 can only rely on 1x. Nano upgrade, the overall demand is still in short supply, prices continue to rise, South Asia Branch, Winbond, A-DATA, etc. will continue to benefit. The shortage of NANDFlash and NORFlash in the first half of next year will be resolved. Including Samsung, Toshiba, SK Hynix, and Micron to accelerate 3D NAND production capacity and technology conversion in the second half of the year, the yield rate has continued to increase. After the production capacity is released next year, it will be fully available. NORFlash is also due to the storage capacity of the Yangtze River in the mainland and the launch of SMIC's production capacity. Together with Powerchip's investment in the OEM market, the production capacity will increase in the first half of next year, and the demand side will enter the traditional off-season. The market conditions are expected to balance supply and demand.
David Wong thinks that driverless cars are another bright spot in the semiconductor industry. He is particularly optimistic about Intel's development in this area and believes that through the acquisition of Mobileye Intel has achieved a leading position in the field of driverless car chips.
In March 2017, Intel announced that it had acquired an Israeli information technology company Mobileye for 15 billion U.S. dollars. It won an important bargaining chip for autopilot technology. It also laid the ground for the future of autopilot in the world of Intel, Qualcomm and Nvidia. Intel's 7QFinFET technology EyeQ4 driverless chip will be available next year, EyeQx chip from Mobileye, 2020 EyeQ5 chip operating system. The main opponent of EyeQ5 is NVIDIA Xaiver or DrivePX2 platform.
Electronic products account for 80% of today's automotive innovations. With the increasing level of automation, automotive semiconductor components will continue to increase. Therefore, David Wong said analog chip manufacturers Maxim, TI, ADI, etc. will also benefit from self-driving cars and the overall automotive market.
In addition, he is optimistic about the server chip, especially in the field of machine learning related, he said: "We believe that the data center is the key to some important new growth areas in the future, including artificial intelligence, autopilot, Internet of Things, and 5G communications." In this regard, AMD's new chip Epyc will have a brilliant performance in 2018.
In the past, AMD has been the second supplier of x86 processors. However, many years ago, AMD's server products began to lag behind Intel's performance, and its share of server processors has dropped to a negligible level. In mid-2017, AMD introduced a new server processor EPYC series, which seems to have very competitive performance characteristics. Wells Fargo believes that EPYC provides AMD with the ability to re-compete with x86 server processors, so AMD will begin to gain a certain market share in the server processor market, and its shipments will grow from less than 1% in 2017 to 2018. 5% at the end of the year, 10% at the end of 2019, revenue growth to 3% market share at the end of 2018 and 6% at the end of 2019.
In this regard, data from the Semiconductor Research Center of the State Semiconductor Consulting Group shows that the server demand of the data center will be the key to the growth of the overall server market. It is estimated that global server shipments will grow by 5.53% in 2018, and Intel and AMD will convert the new server platform. Will contribute to the growth of the market.
For Nvidia, he believes that the company will face a sharp slowdown in 2018, and its growth rate will drop significantly relative to the high level in the past two years.
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