Take Advantage Of AI-led Recovery Of Chip Industry

The global semiconductor market is projected to rebound with a 13.1% growth in 2024, reaching a new high of $588.36 billion, driven by rising chip demand for artificial intelligence applications. This positive forecast by an industry group aligns with emerging signs of recovery in the sector, bolstered by the popularity of generative AI like OpenAI's ChatGPT, as well as an uptick in PC and smartphone sales.

Global semiconductor sales increased on a year-to-year basis in November for the first time since August 2022, an indication that the global chip market is continuing to gain strength as we enter the new year," said John Neuffer, the Semiconductor Industry Association (SIA) president and CEO. "Looking ahead, the global semiconductor market is projected to experience double-digit growth in 2024."

, a renowned semiconductor equipment company, and the world's No. 2 memory chip maker SK Hynix reported exceptional results, which further reinforce market confidence in the beginning of a recovery in the chip industry.

SEMI reckons growth this year will be driven by leading-edge logic foundries and applications including generative AI and high-performance computing (HPC), which it thinks will lead to a recovery in demand for chips.

Capacity expansion slowed in 2023 due to weakening semiconductor market demand and a resulting inventory correction – i.e. companies working through their existing stocks before placing new orders.

SEMI is not the only market watcher making this prediction. Gartner forecast in December that the semiconductor market would return to growth this year, citing the ongoing wave of interest in AI as likely to boost demand for memory chips in particular. SEMI foresees the DRAM sector of the market increasing in capacity by 5 percent to 4 million WPM in 2024, while 3D NAND flash is projected to rise 2 percent to 3.7 million WPM.

Micron Technology has been predicted that from 2024 to 2025, Micron Technology will experience "a meaningful recovery" in revenues, margins, and free cash flows. The recovery will be driven by the company's improved pricing, supply discipline, improving end markets, and incremental DRAM demand from AI. Muse advises investors to bulk up on Semiconductor stocks.

It is estimated to report its earnings on 27 March. Based on the technicals, Micron is on an uptrend, and it has been trading above the 50-day MA period. I reckon, we should be seeing a remarkable earnings report and price upside should be pretty much expected.

The country produced 351.4 billion ICs last year, compared with 324.2 billion in 2022, according to data published on Wednesday by China's National Bureau of Statistics (NBS). The NBS data counted a variety of chips to reach the total IC number, including logic, memory, analogue and special chips, plus sensors and chip modules.

Semiconductor Manufacturing International Corporation is one of the leading foundries in the world and is the front runner in manufacturing capability, manufacturing scale, and comprehensive service in the Chinese Mainland. SMIC announced that the company is scheduled to hold a board meeting on February 6, 2024 to approve the publication of the company's unaudited results announcement for the three months ended December 31, 2023.

The GF Score is found to be closely correlated to the long-term performances of stocks. As SMIC has a score between 81-90, it suggest Good outperformance potential.

I believe with the China recovery slowly step in, AI evolution is on-going, it is time to look at chips stocks, especially those doing memory and design, these 2 stocks that I have shared might have the potential based on what we have seen what ASML and SK Hynix has reported for their latest earnings result and outlook for 2024.

I will be monitoring Micron and SMIC for an entry price over the next 2 weeks, option trading might be possible as well. Hope to share it when ready.

Appreciate if you could share your thoughts in the comment section whether you think China recovery will speed up the AI-led recovery for the chip industry.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.