Semiconductor have exhibited high sensitivity to the trade war because China is a strong driver for the chip-making sector, which includes several fast areas of growth including gaming and artificial intelligence. If the trade war is renewed, the barriers will raise costs for many of these multi-national companies.
“The semiconductor industry is expected to see demand pick up significantly in the second half of 2019 after gradually hitting the bottom, and Taiwan can compete well in the global market with its comprehensive IC supply chains, according to Bough Lin, chairman of Siliconware Precision Industries (SPIL), an affiliate of ASE Technology Holding,” reports DigiTimes.
Some market observers believe the rally in chip stocks can continue, particularly if investors remain enthusiastic about 5G. 5G technology will use a higher frequency band versus the current 4G technology standard, resulting in faster transmission of data.
Robust Semiconductor Demand
Over the course of market history, different industries have taken turns being important tells regarding broader market health. These days, some market observers believe semiconductor stocks and the related exchange traded funds are those tells.
“Lin continued that different firms show different inventory levels, and therefore it is difficult to predict when they can adjust inventory to proper levels,” according to DigiTimes. “Also, uncertainties still exist in the Europe, US, China and Southeast Asia markets, but they can little affect Taiwan’s semiconductor firms because the exchange rates of Taiwan’s currency remain stable.”
“In response to leading foundry house Taiwan Semiconductor Manufacturing Company (TSMC)’s recent announcement that it will kick off volume production of SoIC (small outline integrated circuit) solutions adopting 3D IC stacking technology in 2021, Lin said this is a positive development as TSMC has also maintained cooperation with other major semiconductor players in Taiwan,” according to DigiTimes.
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