JPMorgan Private Bank says three chipmakers could benefit in the longer run amid signs that global supply chain disruptions could be easing. "One of … the biggest development that we're watching next year in the [semiconductor] space is how supply bottleneck actually eases," Julia Wang, executive director and global market strategist at JPMorgan Private Bank, told CNBC's "Street Signs Asia" on Monday. "Our base case is that we're starting to see incremental signs of easing of bottlenecks in that space," she said. That means that companies that are more advanced in technological capability, such as Taiwan Semiconductor Manufacturing Company , could benefit. "It supports their production capabilities and at the same time we don't think it impacts much of their pricing power," Wang explained. "TSMC's in a different part of the market where they actually benefit from better supply chain next year and also maintaining their strong pricing power," she said, despite the memory and DRAM cycle appearing to turn down. As of Monday's close, shares of TSMC in Taiwan soared more than 13% year-to-date. In October, the Taiwanese chipmaker reported a net profit of 156.3 billion Taiwan dollars (around $5.61 billion) for the third quarter ended Sept. 30, above expectations of a 149 billion Taiwan dollars average of analyst estimates compiled by Refinitiv, according to Reuters. In the U.S. semiconductor space, JPMorgan also likes some chip stocks despite them being overall laggards. "We have been liking the semi space in the U.S. for some time," Wang said, naming AMD and Nvidia as two chip stocks that the Wall Street bank likes — though she warned that the shares have "run up quite a bit." As of Monday's close, shares of both companies listed in the U.S. have surged more than 20% each for November. Investment case for semiconductors The semiconductor sector as a whole is poised to benefit from being part of long-term growth drivers such as digitalization and automation — both of which are expected to accelerate as the world bounces back from the pandemic, the strategist said. Semiconductors also "benefit from being a little more defensive if you think about how the various factors stack up in a mid-cycle environment," she added. Defensive stocks are those that provide consistent dividends and relatively stable earnings, irrespective of the health of the broader economy. "They are a little bit more resilient when it comes to, you know, these typical midcycle volatilities like interest rate and growth slowdown worries," Wang said. Following unprecedented waves of stimulus introduced in 2020 to keep financial markets afloat as the global economy reeled at the onset of the pandemic, central banks around the world are now planning to gradually pull back on those measures as inflation becomes a concern. For one, the U.S. Federal Reserve announced Wednesday it will begin winding down the pace of its asset purchases later in November, signaling the first step toward pulling back on the massive stimulus it had been providing to keep markets and the economy afloat.
JPMorgan Private Bank says three chipmakers could benefit in the longer run amid signs that global supply chain disruptions could be easing.