Analysts at an Asian brokerage and investment group have picked four semiconductor stocks to play the “booming demand” for high-performance chips. “This old semiconductor migration locomotive still has steam in it yet, even amid the current industry downcycle, thanks to booming demand for high-performance chips,” CLST analysts Jason Tsang and Cathy Hsu said in a research note dated Aug. 23. CLST is CLSA’s broker-dealer and research provider in Taiwan. Semiconductors are used in products like tablets and smartphones, and the Covid-19 pandemic led to high demand for such goods, resulting in a shortage of some types of chips. Since then, supply and demand have become more balanced . CLST is buy-rated on Samsung , calling it a player with “leading edge manufacturing facilities.” “We expect Samsung Electronics (SEC) to retain its technological edge in DRAM and NAND through successful migration to advanced manufacturing processes thanks to its ongoing R & D investments,” the analysts said. DRAM refers to dynamic random-access memory, while NAND is a type of storage. Japanese firm Lasertec is also a buy for CLST because of its “enhanced product mix and potential share gain from key competitor.” Analysts expect it to take market share from fellow chip manufacturer KLA. Nvidia supplier CLST is also buy-rated on Japanese firm Advantest , which it described as “the world’s top semiconductor tester vendor,” adding that it “dominates in servicing AI-related customers such as Nvidia and AMD , as well as hyperscalers providing cloud-computing services.” South Korean firm SK Hynix is a buy for the bank too, which described it as a high bandwidth memory leader. “Memory stocks are soaring on anticipation of higher demand for high bandwidth memory (HBM) and DDR5 [memory] in AI servers, where Hynix now leads,” the analysts wrote. “We expect the total addressable market for semiconductor equipment to enjoy sustained growth on the back of rising demand for front-end wafer fab equipment from both new entrants and existing suppliers as they expand capacity,” the analysts said. Wafer fabrication is a key part of the manufacturing process, producing integrated circuits. “In addition to expanding shipment volumes, demand improvement, content growth, and value add should together drive a boom in the semiconductor equipment market,” the analysts wrote. — CNBC’s Michael Bloom and Arjun Kharpal contributed to this report.
