Semiconductor Industry Growth to Slow in 2011
"The memory segment is likely to see the largest ASP [average selling price] drop in 2011. These dynamics also also create risk to margins across the industry following 2010's record levels," Seymore says.
Overall, semiconductor stocks are anticipated to perform in-line with the broader market this year, rather than leaping ahead by a wide margin as they did last year, says Seymore, who notes he favors companies who have already taken a hatchet to inventory levels and whose valuations do not rely on specific revenue, margins and earnings growth potential.
Seymore pointed to Intel (INTC), Marvell Technology Group (MRVL) and On Semiconductor (ONNN) as companies that have taken those measures and are ones to watch.
The industry has indeed been on a rocket ride, with the closely watched Semiconductor Industry Association noting that the first half of last year posted more than a 50% increase in year-over-year revenue to $144.6 billion.