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Jpmorgan chase: "lack of core" or easing in the middle of next year targeting Semiconductor investment opportunities in China

via:财联社     time:2021/11/20 6:15:20     readed:135

News from China Finance Union (Editor Liu Rui in Shanghai),The global chip shortage, which has been going on for about a year now, is still hurting production in industries as diverse as cars, home appliances, personal computers and smartphones. Some analysts and investors expect the "lack of core" to last until 2023, but jpmorgan is less pessimistic.

Gokul Hariharan, co-head of Asia-Pacific technology, media and telecoms research at jpmorgan, expects the global chip shortage to last until 2022 and to start improving by the middle of next year.He suggests exploring long-term investment opportunities in semiconductors, such as high-end computing globally and low-end semiconductor companies in China.

"We don't expect a shortage in 2023 - so that's probably the first thing we can say," Mr Hariharan said.

However, he added that 2022 remains "a bit tricky". He predicted that the situation could improve in the second half of next year as supply capacity increases, but that there could still be industry-wide shortages in the first half.

"It's not just semiconductor foundry companies, [integration equipment manufacturer] companies are adding capacity," he said. All IDM [integrated component manufacturers] in the US and Europe are also expanding their capacity -- many of which are expected to come online from the middle of next year."

Two structured investment opportunities

Mr. Hariharan advises investors to start looking at longer-term trends in semiconductors, which are more structural than cyclical.

He said, "Jpmorgan Chase." Very optimistic about two trends over the next three to five years." .

One is high-end computing. He points to ongoing disruption in high-end computing globally, which used to be very homogeneous but is becoming increasingly fragmented as more companies enter the space.

As the field becomes more fragmented, there will be more competition and innovation, which will surely lead to faster growth.

"So I think there is room, and we expect it to grow at double-digit rates over the next three to five years, maybe 15 to 20 percent," Hariharan said.

The second investment opportunity j.p. Morgan likes is Chinese semiconductor companies focused on long tail technology. These companies make a variety of less advanced chips for power management, microcontrollers, sensors and other consumer-related areas.

"We are seeing more and more Chinese companies targeting these long tail technologies," Hariharan said.

"The local demand [in China] is clear. Most of these companies currently meet only 5% to 10% of domestic demand. So the potential market could be five to 10 times bigger than the market they currently serve, "he added.

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