Tide Has Turned for Global Chipmakers: Analyst

Huang Junmin|Assistant Producer, CNBC Asia Pacific
Tuesday, 24 Apr 2012 | 6:49 AM ET

Better-than-expected quarterlyearnings from Texas Instrumentsovernight points to the fact that the tide has turned for global chipmakers, one analyst told CNBC Tuesday, who now expects strong revenue growth for many Asian chipmakers as well.

Alengo | E+ | Getty Images

"Earnings reports from major semiconductor makers like Intel, Texas Instruments and Qualcomm all speak of improving demand trends. So essentially the cyclical inflection point has now happened, and we are going to be growing for this year," Steven Pelayo, Regional Head of Technology Research, Asia-Pacific at HSBC, told CNBC Asia's "Cash Flow".

Pelayo said he expected revenue growth of 15 to 20 percent for most Asian chipmakers on the back of improving demand for mobile devices. Chips are used in everything from communications equipment to cars.

"Now you are getting sub-$200 smartphones and sub-$400 tablets and maybe that is going to be enough to drive demand and keep us going in the second half of the year," he said.

A study by market researcher, International Data Corp, expects shipments of smart mobile devices to grow 20 percent from 2011 to 1.1 billion units in 2013.

Pelayo has a buy rating on Taiwan's Taiwan Semiconductor Manufacturing Company (TSMC) and Advanced Semiconductor Engineering (ASE), saying they are well-positioned to benefit from the boom in demand for mobile chips.

TSMC and ASE have a forward price to earnings ratio of 14.8 and 13.2 respectively.

Disclosure: Steven Pelayo has no personal holdings in TSMC and ASE, but HSBC has company holdings in both.


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