Citi keeps bullish stance on chips even as April sales below seasonal figures
Jun. 07, 2024 8:57 AM ET
By: Chris Ciaccia, SA News Editor
 oonal/E+ via Getty Images
Investment firm Citi is reiterating its bullish stance on the semiconductor industry, even as an industry trade group showed April sales came in below seasonal sales figures.
Sales for April came in at $44.9B, down 11.6% month-over-month, and up 17.3% year-over-year, according to the Semiconductor Industry Association. That was above Citi's estimate of $44.4B and above the seasonal estimate, which called for a 12.6% month-over-month decline and 16% rise year-over-year. Citi analyst Christopher Danely said weakness in dynamic random access memory and microcontrollers drove the decline.
Despite the weak April figures, Danely kept his forecast for chip sales to rise 11% year-over-year to $583.3B.
"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 an investor note.
Delving a little deeper, April units ex-discretes fell 14% month-over-month, below Danely's estimate of down 13.1% month-over-month and below the seasonal average, amid weakness in both analog and DRAM units. However, the average selling price ex-discretes rose 3.6% month-over-month, above the seasonal average of a 0.1% decline and Citi's estimate of a 0.8% month-over-month rise, driven by higher flash pricing.
The upturn in dynamic random access memory pricing has continued since 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 (NASDAQ: AMD), Broadcom (NASDAQ: AVGO), Analog Devices (NASDAQ: ADI), Microchip Technology ( MCHP) and ON Semiconductor ( ON). |
