Merrill Lynch & Co, ranked second in global semiconductor research, recommended Taiwan Semiconductor Manufacturing Co (
Intel is Merrill's favorite US computer chip stock amid rising demand for notebook computers, Joseph Osha, head of US chip research, said during a presentation to reporters in Seoul yesterday.
Icheon, South Korea-based Hynix is Merrill's most preferred memory chip stock and Taiwan Semiconductor Manufacturing Co (台積電) is the top pick for custom-made semiconductors, analysts Simon Woo and Daniel Heyler said.
Merrill's semiconductor research team, second behind Credit Suisse First Boston by Institutional Investor magazine last year, recommends investors focus on specific companies that are outperforming the US$227 billion industry. Shares of the world's top 20 chipmakers have gained 24 percent this year, outpacing the 6.9 percent gain by Morgan Stanley Capital International Inc's World Index during the period.
"We've been pretty much stock-picking in this environment," said Heyler, head of Pacific Rim chip research. "You're not going to hear Merrill Lynch go out and say this is a big cycle turn up or down, we do think it's a gradual recovery."
Hoya is Merrill's top chip-related stock pick in Japan because of demand for components used in hard-disk drives, Hiroshi Yoshihara, head of Japanese Semiconductor Research, said.
STMicroelectronics NV is the broker's top European chip stock recommendation, Andrew Griffin, global coordinator for semiconductor research out of London, said.
California-based Novellus Systems Inc is Merrill's top recommendation among semiconductor-equipment stocks, said Thomas Diffely, who covers the industry out of San Francisco.
Intel, the world's biggest chipmaker, will benefit from rising demand for its Centrino processors used in notebook computers and will probably fend off rival Advanced Micro Devices Inc's attempts to win share in the market segment, said Osha, ranked the No. 2 US chip analyst by Institutional Investor this year.
Prices of processors used to run desktop computers will probably fall as demand stalls, and AMD will probably grab market share for processors used in servers, he said.
Still, competition between Intel and AMD will intensify next year when the companies are scheduling three new 12-inch microprocessor factories to go online, which may lead to overcapacity, Osha said.
"I can't remember the last time that's happened," Osha said. "It's kind of like two freight trains running into each other."
Suwon, Korea-based Samsung Electronics Co, the second-largest chipmaker, will probably continue to narrow the gap with Intel because of rising demand for its NAND flash memory chips that store songs and data in consumer electronics such as Apple's iPod Nanos and Sony Corp's PlayStation Portable game consoles, said Woo, who heads memory chip research. Woo last month raised his projections for global NAND flash sales next year by 25 percent to US$16 billion.
Samsung is the world's biggest NAND maker, followed by Toshiba Corp and Hynix, according to market researcher ISuppli Corp.
"When you look at semiconductors overall, NAND has the fastest growth and stocks with exposure to it will continue to outperform next year," Woo said.
Demand for artificial intelligence (AI) chips should spur growth for the semiconductor industry over the next few years, the CEO of a major supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said, dismissing concerns that investors had misjudged the pace and extent of spending on AI. While the global chip market has grown about 8 percent annually over the past 20 years, AI semiconductors should grow at a much higher rate going forward, Scientech Corp (辛耘) chief executive officer Hsu Ming-chi (許明琪) told Bloomberg Television. “This booming of the AI industry has just begun,” Hsu said. “For the most prominent
Former Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Mark Liu (劉德音) yesterday warned against the tendency to label stakeholders as either “pro-China” or “pro-US,” calling such rigid thinking a “trap” that could impede policy discussions. Liu, an adviser to the Cabinet’s Economic Development Committee, made the comments in his keynote speech at the committee’s first advisers’ meeting. Speaking in front of Premier Cho Jung-tai (卓榮泰), National Development Council (NDC) Minister Paul Liu (劉鏡清) and other officials, Liu urged the public to be wary of falling into the “trap” of categorizing people involved in discussions into either the “pro-China” or “pro-US” camp. Liu,
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China has threatened severe economic retaliation against Japan if Tokyo further restricts sales and servicing of chipmaking equipment to Chinese firms, complicating US-led efforts to cut the world’s second-largest economy off from advanced technology. Senior Chinese officials have repeatedly outlined that position in recent meetings with their Japanese counterparts, people familiar with the matter said. Toyota Motor Corp privately told officials in Tokyo that one specific fear in Japan is that Beijing could react to new semiconductor controls by cutting the country’s access to critical minerals essential for automotive production, the people said, declining to be named discussing private affairs. Toyota is among
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