MKM Comments On Semiconductors, Says We Are Still In The 'Golden Age' Of Radio-Frequency

In a report published Tuesday, MKM Partners analyst Ian Ing argued that any near-term weakness in Radio-Frequency (RF) names represents a buying opportunity as RF names remain a relative value, trading at a discounted multiple to the S&P 500. "While we agree with consensus opinion that China has some present weakness, we see this as largely a low-end domestic mass-market phenomenon," Ing wrote. "Our checks suggest offsets via a combination of export markets (i.e., world phones with robust RF needs) and online sales channels that replicate XiaoMi Inc." Ing continued that the intense competitive environment and average selling price pressures in digital chip sets do not apply to RF. In fact, RF requirements and complexity continue to go up in the shift to higher-end and globally compatible phones.