The latest data on semiconductor sales is pointing to stabilization in the industry, suggesting that months of weakness and tepid demand could be nearing an end, analysts said on Monday.
The Semiconductor Industry Association said that monthly sales in May totaled US$33 billion, up 7.1 percent from April.
While the May data represented a year-on-year decline of 14.5 percent, it also represented a moderation from a 17.7 percent drop in April.
“While the industry is still working through a cycle, the [year-on-year] declines appear to be decelerating,” RBC Capital Markets analyst Mitch Steves wrote in a note.
“Given that forecasts were cut during a period where sentiment was heavily negative, we think there is upside bias to the numbers expected for 2019-2020,” Steves added.
The data comes at a time when analysts have been concerned about the prospects for the industry in the second half of this year.
A number of companies, notably Broadcom Inc and Micron Technology Inc, have issued cautious outlooks in the past few weeks.
However, the US and China declared a truce in their trade war over the weekend, with US President Donald Trump saying that he would delay trade restrictions against Huawei Technologies Co Ltd (華為), a major customer to a number of chipmakers.
Morgan Stanley wrote that the association’s data pointed to “some signs of life” after “an exceptionally weak April,” adding that sales — along with the product categories of micro, logic and memory chips — came in ahead of its expectations.
However, analyst Joseph Moore maintained his cautious view on the sector, saying that he saw “very challenging industry conditions,” despite the data.
The association’s data was also above Citigroup Inc’s estimate, said analyst Christopher Danely, who raised his full-year semiconductor sales forecast from US$408.2 billion to US$413.3 billion.
The outlook represents a full-year decline of 12 percent, compared with a previous view of a decrease of 13 percent.
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