Right when the semiconductor sector was poised to spring back from a cyclical slowdown, the COVID-19 coronavirus pandemic is threatening its recovery.
Some segments of the semiconductor sector stay healthy, such as those exposed to cloud-computing data centers, analysts say. Other sections, comparable to consumer electronics and automotive, are at higher risk from adverse impacts from the pandemic and any ensuing recession, they say.
This week, Wall Street analysts have been picking which chip shares are the best and worst positioned in the present environment.
Wong has reduced his 2020 chip growth projections thrice in the past several weeks. He now expects global semiconductor sales to rise 3% this year. In 2019, global semiconductor sales plunged 12% from the previous year.
Intel and AMD get much of their sales from the data-center and pc markets.
On the flip side, Wong sees a higher risk for Nvidia and Texas Instruments. Nvidia gets more than 50% of its sales from PC gaming and automotive. TI receives more than 40% of its business from personal electronics and automotive, he says. Wong rates Nvidia stock as reduce and TI share as neutral.
On March 18, research agency IDC notified that Covid-19 will have a big impact on the global semiconductor business this year. It estimated a nearly 80% chance for a significant shrink in worldwide semiconductor earnings this year. IDC previously anticipated minor overall growth of 2%.