Thanks To Apple, This Analyst Is Optimistic On ARM, Microchip Technology And More Ahead Of Earnings

Zinger Key Points
  • Semiconductor stabilization: KeyBanc sees signs of recovery with improved bookings and shrinking inventories.
  • Green shoots in tech: KeyBanc's John Vinh reports recovery signs in data centers and auto, despite ongoing destocking.

This past week, eight companies in KeyBanc analyst John Vinh’s semi-coverage universe reported, from which he highlighted vital takeaways. The companies included Advanced Micro Devices, Inc AMDLattice Semiconductor Corp LSCCMonolithic Power Systems, Inc MPWRNXP Semiconductors NV NXPION Semiconductor Corp ONQualcomm Inc QCOMQorvo, Inc QRVO, and Skyworks Solutions, Inc SWKS.

He noted analog cyclical semis show incremental signs of stabilization and bottoming, with booking trends improving and channel inventory further decreasing.

Distributors Arrow Electronics, Inc ARW and Avnet, Inc AVT indicate that transportation in NA, A&D in EUR, datacenter, and consumer in Asia showed signs of green shoots; however, guidance reflects incremental softness on more aggressive customer destocking trends.

Automotive is correcting, but with the exception of Tesla, Inc. TSLA is not as bad as feared, while industrial appears further through the destocking process with indications of green shoots.

AI data centers remain robust, and traditional demand is gradually recovering, evidenced by new CPU platform ramps.

In conjunction with Apple Inc’s AAPL results and outlook, iPhone demand is mainly in line, with China’s better-than-feared and emerging market strength offsetting softer mature markets in RoW. 

Also SeeApple Delivered Much Better-Than-Feared ‘Jalen-Brunson-Like’ Quarter, Says Bullish Analyst: Why Betting Against Cupertino Is A ‘Wrong Move’

Additionally, high-end Android demand remains strong, while the mass market segment is weak. 

Looking into this week, Vinh has five companies scheduled to report. The companies include Arm Holdings Plc ARMCirrus Logic, Inc CRUSIndie Semiconductor, Inc INDIMicrochip Technology Inc MCHP, and Synaptics Inc SYNA

He expects solid results for ARM and CRUS for the mobile and consumer supply chain. CRUS’s guidance could see modest risk due to high AAPL exposure, and ARM should benefit additionally from continuous share gains in cloud and AI licensing momentum and healthy demand for high-end handsets. 

For SYNA, the analyst will seek in-line results and in-line slightly lower guidance, with lingering enterprise softness. 

On analog, Vinh expects solid results and guidance for MCHP, similar to NXPI and Texas Instruments Inc TXN, with booking trends stabilizing and inventory normalizing further. 

For Indie Semiconductor, Vinh projects in-line results and modest risks to guidance due to incremental auto weakness across both Internal Combustion Engine (ICE) Vehicle and Electric Vehicle (EV) (outside China).

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