Citi stays bullish on chips as March sales surge; analog and microcontroller lead
Investment firm Citi is keeping its bullish stance on the semiconductor industry as an industry trade group showed that March sales came in well above seasonal sales figures.
Sales for March came in at $50.6B, up 16.4% month-over-month and 15.7% year-over-year, according to the Semiconductor Industry Association. That was above Citi’s estimate of $50.1B and above the seasonal estimate, which called for a 12% month-over-month rise and 14.1% year-over-year rise. Citi analyst Christopher Danely said all products were above the seasonal estimates, “most notably from analog and microcontrollers,” which were up 50% month-over-month.
“This data, together with recent commentary from the analog companies, support our view of an analog inventory replenishment in 2H24, and we remain bullish on the group,” Danely wrote in an investor note.
Delving a little deeper, March units ex-discretes surged 33.1% month-over-month, above Danely’s estimate of up 27.7% month-over-month and “well above” the seasonal average, amid strength in both analog and microcontroller units. However, the average selling price ex-discretes fell 13.5% month-over-month, below the seasonal average of down 3.8% month-over-month and Citi’s estimate of a 10.1% month-over-month decline, driven by lower analog pricing and higher memory 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).