The research firm further added that since 1995, the average semi-downturn lowered sales by about 9% " including 15% in memory but only 5%-7% in non-memory, core semis."
The chip demand will be under pressure starting in the second half of 2022 and 2023 due to rigid monetary policies, geopolitical turmoil, and consumer weakness, BofA said. The tight supply of semiconductors has "distorted" visibility and near-term consumer challenges could have a vast effect on the data center/cloud where demand has thus remained strong.
Keeping all the views regarding the latest trends in the semiconductor market, BofA Securities downgraded Skyworks Solutions (SWKS) and Qorvo (QRVO) to underperform from neutral due to the rising competition from Qualcomm Incorporated (QCOM), maturity of the 5G smartphone cycle, and elevation in inventory.
The research firm also downgraded Texas Instruments Incorporated (TXN) and Teradyne (TER) to neutral from buy as the surge in capital expenditures will affect free cash flows. Additionally, Teradyne's high exposure to Apple (AAPL) makes the company especially vulnerable to the large volatility in iPhone demand and Apple design complexity.
BofA Securities, on the other hand, upgraded Cadence Design Systems (CDNS) and Synopsys (SNPS) to neutral from underperform as it anticipates the demand for chip design software to increase but the restrictions on Chinese customers is a risk that still looms.
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
Price: 93.59, Change: -2.63, Percent Change: -2.73
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