The new year is shaping up to be a strong one for semiconductor stocks, an analyst at Mizuho Securities said, citing key trends.

First-Half Momentum For Semiconductors: Semiconductor companies are poised to see a constructive first half, with accelerating year-over-year momentum and favorable macroeconomic tailwinds, Mizuho analyst Vijay Rakesh said in a note.

Historically, the first year of presidency has seen the PHLX Semiconductor Sector INDEX (NASDAQ:SOX) advance 5%-50% year-over-year, the analyst said. 

Mizuho Projects Auto, Industrial, Handset Recovery: The new year is setting up for the strongest rebound in automotive, industrial and handset markets in the last five years, Rakesh said.

Light vehicle production is expected to increase by 14% in 2021 compared to a 4% CAGR for the last 10 years, the analyst said.

The year will mark the start of a multiyear 5G handset cycle, driving about 40% RF content growth and margin expansion in an already supply-constrained RF and processor supply chain, he said. 

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Outlook Positive For Semi-Cap Stocks: Improving supply chain and OEM inventory levels and tight DRAM are tailwinds for memory OEMs in 2021, with the Micron Technology, Inc. (NASDAQ:MU) power outage at the Inotera fab affecting February output, Rakesh said.

"On the NAND side, we see disciplined capex offset by Samsung NAND capacity adds driving a balanced recovery with NAND pricing improving in 2H21," the analyst said. 

Improving demand, with a first-half rebound in data center and servers; and a 5G ramp driving an increase in memory content for handsets should be supportive of memory, he said. 

Mizuho's top semiconductor stock picks for 2021 include:

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