4 Key Trends That Could Shake Up Semiconductor Stocks In 2021

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Semiconductor stocks have got off to a strong start in the new year. Following the Consumer Electronics Show (CES) 2021, an analyst at BofA Securities outlined the key emerging trends that could impact trading in semiconductor stocks.

Intel CEO Transition: Intel Corporation's (INTCappointment of industry veteran Pat Gelsinger to enhance technical depth among the top rank is a welcome development, analyst Vivek Arya said in a note.

Involvement of an activist investor, robust PC market, positive preannouncement for the fourth quarter and new 10nm product announcements at the CES, as well as the promise of 7nm improvements all led to the 16% year-to-date rally in the stock, the analyst added.

However, the CEO transition is unlikely to reverse Intel's market share loss to Advanced Micro Devices, Inc. (AMD), non-CPU building blocks including accelerators and DPUs and alternative ARM-based internal chip designs from customers such as Apple Inc (AAPL) and Amazon.com, Inc. (AMZN)  the analyst said.

Intel's manufacturing fixes, including partial outsourcing to Taiwan Semiconductor Mfg. Co. Ltd. (TSM), aren't likely to bear fruit before late 2022 or 2023, Arya said.

Related Link: Why Applied Materials Is Needham's Top SemiCap Pick For 2021

Taiwan Semiconductor Capex Boost 

The beneficiaries from Taiwan Semiconductor's surprising decision to boost capital spending by 50% are semiconductor capital equipment stocks such as Applied Materials, Inc. (AMAT), KLA Corp (KLAC), Lam Research Corporation (LRCX) and Teradyne, Inc. (TER), Arya said.

Semiconductor capital equipment stocks, the analyst said, will also benefit from Intel's desire to maintain its internal manufacturing, and the trend towards greater onshoring of semi production globally.

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