Zhitong Finance learned that Citigroup is increasing its bullishness in the semiconductor sector after seeing stronger-than-expected semiconductor sales data in August. Analog Devices (ADI.US) remains Citigroup's top pick in the sector, while the investment bank also gives "buy" ratings to AMD (AMD.US), Broadcom (AVGO.US), Micron Technology (MU.US), Microchip Technology (MCHP.US) and Texas Instruments (TXN.US).
Citigroup analyst Christopher Danely wrote in an investor report: "We raised our 2024 semiconductor revenue forecast from 14% YoY to 17% YoY, or US$616.6bn, as we expect growth in Q3 and Q4 of 2024 to be above seasonal growth. We expect the number of products without discrete devices to grow YoY by 1%, and the average selling price to grow YoY by 18%."
Danely added that the strong performance in August was largely driven by DRAM chips, which "exceeded seasonality". Total sales in August were US$56.2bn, topping Danely's US$51.4bn estimate; sales rose 15.4% MoM, topping Danely's 5.7% MoM growth and 6.7% seasonal growth. Pricing "far exceeded seasonal factors", with the average selling price of products without discrete devices up 14.2% MoM, topping Danely's 2.7% and 5.7% seasonal average rise.
The average selling price of products without discrete devices rose 29% YoY, far topping Danely's 16.1% forecast. Danely wrote: "With a 19% YoY decline in 2023, the worst adjustment since 2001, we believe there will be inventory replenishment, and the YoY growth should continue to rise."