Citi stays bullish on chips as February sales top average; memory seen as key driver
Apr. 01, 2024 8:22 AM ET
By: Chris Ciaccia, SA News Editor
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Investment firm Citi is staying bullish on the semiconductor industry as an industry trade group showed that February sales came in above seasonality.
Sales for February came in at $43.6B, up 0.8% month-over-month, according to the Semiconductor Industry Association. That was below Citi's estimate of $44.9B, but above the seasonal estimate, which called for a 0.1% month-over-month decline, as Citi analyst Christopher Danely said the driver was higher dynamic random access memory sales.
Delving a little deeper, February units ex-discretes fell 9.1% month-over-month, below Danely's estimate of up 0.4% month-over-month and "well below" the seasonal average, as microcontroller units came in below the seasonal average. However, the average selling price ex-discretes rose 11.6% month-over-month, aided by higher microcontroller and memory pricing.
"With units down 19% in 2023, the worst correction since 2001, we believe there will be inventory replenishment in 2024 and we remain bullish on the group," Danely wrote in a note. "We maintain our 2024 semi sales forecast of up 11% [year-over-year]."
DRAM pricing rebounded in the second-half of last year and is expected to be up 53% year-over-year in 2024, Danely added.
Micron Technology (NASDAQ: MU) is still the firm's top pick, though it also has Buy ratings on AMD ( AMD), Broadcom ( AVGO), Analog Devices ( ADI), Microchip Technology ( MCHP) and ON Semiconductor ( ON). |
