Intel, And Other Winners From Seasonal Strength In iPhones And Internet Of Things

Analysts at Bank of America Merrill Lynch hosted 16 semiconductor companies as part of its Global Tech Conference in San Francisco on June 6 and 7.

Key Takeaways

Bank of America's Vivek Arya noted three main takeaways from the event.

Demand across the auto, industrial, gaming, mobile and data center segments remain strong.

Companies are taking a very disciplined and low supply approach which is driving extended lead-times. Overall sentiment remains "positive but not exuberant" due to positive macro trends but investments also happen to be under appreciating secular and structural positives.

Nvidia

• NVIDIA Corporation (NASDAQ:NVDA) offered no incremental data but the overall positive was positive.
• Of particular note, the company believes it has established a wide competitive moat in the automotive sector as it is on its third product iteration in ADAS and autonomous driving with a wider network of partners.

Skyworks

• Skyworks Solutions Inc (NASDAQ:SWKS) believes it is well positioned to service key customers in mobile given its leading tech portfolio across RF, Bluetooth, Wi-Fi, ZIgbee and more.
• The company also confirmed it has a "strong backlog visibility" and "nothing has changed" in its business outlook for the bottom half of 2017.
Skyworks also has an "underappreciated" exposure to the emerging Internet of Things market and a potential future catalyst coming from autonomous and driving/connected cars.

AMD

• Advanced Micro Devices, Inc. (NASDAQ:AMD) believes that the launch of new products will help the company regain market share it lost over time.
• Management believes its EPYC (i.e., Zen) server chip can boost its market share from less than 1 percent today to 10 percent in just two years.

Cypress Semiconductor

• Cypress Semiconductor Corporation (NASDAQ:CY) succeeded in transforming itself from a discrete chip supplier to an embedded systems solutions provider.
• A 15 to 20 percent growth rate in the IoT segment is sustainable over the long-term.
• The company remains on track to boost its gross margins by 800 basis points to 48 percent.

Maxim

• Maxim Integrated Products Inc. (NASDAQ:MXIM) said it is seeing a good demand environment but "not yet overly robust."
• The company's longer-term focus is to stabilize and diversify its consumer business with ideal end exposure of 20 to 25 percent of sales.
• Management also sees multiple levers to see future margin expansion.

Cavium

• Cavium Inc (NASDAQ:CAVM) sees its overall trends remaining healthy, including a 10-percent growth rate of its base business.
• Sales of new products are expected to more than double to $100 million-plus this year.

Intel

• Intel Corporation (NASDAQ:INTC)'s business should be viewed as a combination of value and growth as management is diversifying away from CPUs in PCs and services to the $250 billion silicon TAM.
• Intel highlighted its ability to target the "full rack" and not just the CPU in the server.
• Management believes that Moore's Law is still "alive" and it will introduce 10nm at the end of 2017 and will be followed up with a 7nm in 2020 or 2021.

Texas Instruments

• Texas Instruments Incorporated (NASDAQ:TXN)'s tone was "neutral to positive" as management is known to offer a conservative tone.
• The company did say that lead times remains stable with some pockets of tight demand.
• Over the longer term the company is positive on the growth prospects in the industrial and auto markets.

Microchip

• Microchip Technology Inc. (NASDAQ:MCHP) reiterated its prior view that the business environment remains "very strong."
• The company's "Microchip 2.0" initiative of becoming a total system solutions based business remains on track with market share gains.
• The company remains committed to returning cash to shareholders but patience will be needed for investors hoping for any M&A deals.
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