The massive sell-off in semiconductor stocks this year has created a buying opportunity, Morgan Stanley said, naming two global chipmakers it expects to dominate, Morgan Stanley said. treat. Semiconductor stocks have fallen this year, amid a growing sell-off in the tech sector. But Morgan Stanley believes this has created an opportunity to invest in some of the “highest quality” and “most dominant” global semiconductor companies at attractive prices. In a note titled “Clash of Chips” from May 20, the bank’s analysts, led by Shawn Kim, note that there are three major players today: Semiconductor Manufacturing Co. led Taiwan, Samsung and Intel. Indeed, they say, the investment and operational excellence required to implement the most advanced process technologies for semiconductor chips has removed all but three of the companies from the industry. “As a leader, we expect TSMC and Samsung to continue to dominate advanced semiconductor manufacturing over the next decade, taking advantage of the large and rapidly growing foundry opportunity,” Kim said. Intel’s role is “less certain”, he added. TSMC and Samsung are the only two companies that run the most advanced semiconductor manufacturing, and count their biggest customers as Apple, Qualcomm, and Nvidia. So far, both TSMC and Samsung are down about 15 percent year-on-year, outperforming the iShares Semiconductor ETF, which is down more than 26 percent year-on-year. Demand for the most advanced semiconductors – the smallest and most powerful chips – has exploded as innovation in areas such as cloud computing, artificial intelligence (AI), smart vehicles and 5G develope. The bank predicts chip demand from high-performance computing, including the cloud and AI, will match demand for chips from smartphones within the next few years. TSMC “TSMC is a global leader in the semiconductor industry as a pure foundry – and currently dominates the leading edge semiconductor manufacturing sector in terms of technology and market share,” Kim said. According to Morgan Stanley, which operates the world’s largest semiconductor foundry, it has “serious” customers and is a “key player” for many technology trends. Fundamentals also showed outstanding profit growth at TSMC, the bank said. The company posted compound annual sales growth of 10% from 2015 to 2020, compared with Samsung’s 7%, according to Morgan Stanley. This is expected to continue into 2023, with TSMC expected to grow sales at a compound rate of 22%, compared with Samsung’s 15%. Samsung Morgan Stanley notes that Samsung’s vertical and horizontal integration gives it a “unique advantage” and adds that the company has a “undervalued and undervalued total market opportunity.” ” is $1.4 trillion. Kim estimates Samsung’s operating profit margin will remain steady at around 20 percent in 2024, with the company generating “massive” free cash flow of about $30 billion by 2023. Morgan Stanley’s price target for TSMC represents a potential 50% gain since May 24, while the bank’s 85,000 Korean won ($67.30) price target for Samsung represents the potential. up 27.8%. Its analysts are overrated for both stocks.
The semiconductor is seen on a circuit board.
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The massive sell-off in semiconductor stocks this year has created a buying opportunity, Morgan Stanley said, naming two global chipmakers it expects to dominate, Morgan Stanley said. treat.