Chip Boom Ignites: Citigroup Ups Forecast as Semiconductor Sales Soar
1min read Recent reports indicate that August witnessed a surge in semiconductor sales, leading Citigroup to amplify its bullish stance on the sector. Analog Devices (ADI.US) continues to be Citigroup's top pick, supported by strong sales data exceeding expectations.
According to Citigroup analyst Christopher Danely, the forecast for 2024 semiconductor sales has been revised upward, projecting a 17% year-over-year increase to reach $616.6 billion. This adjustment is based on anticipated growth in the third and fourth quarters of 2024, surpassing typical seasonal rates. Danely highlights a 1% year-over-year increase in non-discrete semiconductor volumes and an 18% rise in average prices.
The impressive performance in August was primarily driven by DRAM chips, with total sales reaching $56.2 billion, significantly higher than the initial estimate of $51.4 billion. Sales showed a 15.4% month-over-month increase, outpacing Danely's prediction of a 5.7% rise and a typical 6.7% seasonal uplift. Pricing exceeded seasonal expectations, with the average price of non-discrete products climbing 14.2%, surpassing the forecasted 2.7% increase.
Year-over-year, the average sale price for non-discrete products soared by 29%, well above the anticipated 16.1% rise. Despite a 19% decline in volumes in 2023, the most significant drop since 2001, Danely anticipates a rebound driven by inventory replenishment, suggesting continued sales growth.