美国半导体展望：就像糖果店里的孩子

1、13 January 2019 Americas/United States Equity Research Semiconductor DevicesSemiconductorsResearchAnalystsJohn W.Pitzer212 5384610 HYPERLINK mailto:john.pitzer john.pitzerAdaMenaker212 3253472 HYPERLINK mailto:ada.menaker ada.menakerCharlesKazarian212 5384160 HYPERLINK mailto:charles.kazarian charle

2、s.kazarianJeffPullen212 3253837 HYPERLINK mailto:jeff.pullen jeff.pullenSECTOR FORECAST2019 Outlook: Like a Kid in a Candy StoreReset 1H, Rebound 2H. We entered 2018 cyclical cautious, hopeful secular drivers would re-assert in 2H18. China/Macro and Handset/Crypto have lengthened/deepened the correc

3、tion albeit models still support a modest reset. With 3% Global GDP, CY19 Semi (ex-Memory) growth will be 0.5% vs. CY18 of 7.6%. Trough in C2Q at -2.0% y/y; rebound to +4.1% y/y by C4Q.Stocks Discounting Much. After increasing 7 of 9 yrs and outperforming 4 of 5, the SOX declined 8% in 2018, underpe

4、rforming the SPX by 200 bps. Peak-trough stocks declined 25% vs. prior 12 cycles of 26%, relative underperformance was 1,480 bps vs. prior 12 cycles of 1,150bps.but FTM EPS Is Not. SOX FTM EPS is still too high. SOX FTM EPS peaked 10/5/18 at $100 but has only declined by 5% to-date the average peak

5、to trough revisions over the last 12 cycles (ex 2009 financial crisis) has been 30% w/ the mildest correction in 2014 at 16%, and the severest in 2002 at 65%.Cycle Metrics Mostly Benign. The CY18 upturn was well-behaved, with 8 of 10 cyclical metrics below prior peak median. The duration/magnitude o

6、f Semis over-shipping end-demand has been 86%/23% of normal. In C4Q/C1Q Semis are under-shipping end demand for the first time since 1H16 an historically bullish tactical indicator.Valuations Compelling If Reset Is Modest. Stocks are currently trading at EV/FCF of 14x, a 32% discount to SPX well bel

7、ow 5-yr average of 24%. Assuming average reduction in FTM EPS, stocks would be trading at a 3% discount to SPX, assuming mildest/severest reduction, stocks would be trading at 19% discount/94% premium.Secular Drivers Are Intact. Semis/SCE moving from GDP/Semi minus growth to GDP/Semi plus growth. Se

8、mis are more integral to the Global Economy with fewer producers driving increased value. SOX EPS of $100 is 110% higher than any other peak and while cyclically “scary”, growth was M&A, buybacks, and improved profitability, NOT cyclical excess.Data Is Unifying Theme. We view Semis as the cheapest,

9、most levered play on the Data Economy. AI/ML lowers the cost of analytics for the first time, driving elasticity of use-cases underpinning a Silicon TAM of $750 bn by 2025 (6.8% CAGR). A 1% value capture of Global COGS, OpEx and CapEx would increase Silicon TAM by $420 vs. CY18 TAM of $474 bb.2019 F

10、ocus Areas: (1) Cyclical bottom/Valuation, (2) Infrastructure/5G, and(3) Analytics/DataCenter. Avoid Handsets until 2020. Our top 3 ideas are MU, XLNX, and NXPI and by theme: (1) NXPI, MCHP, MRVL (2) XLNX, ADI, KEYS and (3) MU, NVDA, INTC. In SCE/EDA our top ideas include: LRCX, AMAT and SNPS. Be ta

11、ctical into C4Q Earnings Season; more aggressive after.DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Creditto do in its As a be have a of of as a in Executive SummaryCYC

12、LICALCYCLICALSECULARSemi Industry Growth Forecast: We expect Semi Rev to decline 3.0% in CY19, the first y/y decline since 2015 (-0.5% y/y) and a significant deceleration from the 14.3% growth in CY18 and the 3/5 year CAGR of 12.1% and 8.9%.Ex-Memory, we are modeling Semi Rev +0.5%y/y, the slowest s

13、ince 2015 (+0.3%y/y), vs. 7.6% in CY18 and below Street estimates embedding 3.6% y/y growth. We model C1Q Rev 100 bps below seasonal vs Street 50 bps above seasonal.After peaking in C2Q18 at up 11.9% y/y, we see ex-memory Rev turning negative inC1Q at down 0.1% y/y, troughing in C2Q at down 2.0% y/y

14、 with C3Q declines moderating to down 0.2% y/y, and returning to growth in C4Q at up 4.1% y/y.The industry should begin to show accelerating growth exiting CY19 as comparesstart to moderate with C4Q18 up 1.0% y/y versus C1Q-C3Q18 up 10 y/y. Our preliminary 2020 growth estimate is +5.0%, +5.5% ex-Mem

15、ory.Semi WFE Forecast: After growing 35%/8% y/y in CY17/18, we expect CY19 WFE to decline 17% y/y to $42b, lower than current bottom-up Street estimates which embed a6% decline. CS Japan forecast is $40b, down 20% y/y. We expect C1Q19 to be an absolute WFE bottom ($9.5bn, down 35% y/y), recovering t

16、o 11% y/y by C4Q19; we see upward bias to WFE in 2H.We are expecting CapEx to Rev of 19.1%, below the 5- yr avg of 19.3% but above the10-year avg of 17.9%, with Memory CapEx to Rev of 27.5%, below the 5/10 year avg of 32%/29.2%, and logic CapEx/Rev at 15.2%, above the 5/10 year avg of 14.7%/14.3%.We

17、 are expecting NAND/DRAM/Foundry spending to decline 28%/23%/4%, andLogicspending to remain roughly flat. Relative to linearity, we expect C2H to be stronger representing 55% of overall WFE, vs. 5-year average of 50%.We are expecting a likely resumption of WFE growth in 2020 to up 14% y/y to $48Bwhi

18、ch should provide the basis for Semi Cap companies to see growth of 14-15% y/y given 15% y/y growth inServices.Our Cyclical View: While less exposure to PC/Handsets with new applications across Industrial, Auto, and Infrastructure is a clear positive, the start to CY19 is a stark reminder that Semis

19、 are and always will be cyclical an underappreciated view for most of CY18.PC/Handsets are still 40% of Rev dwarfing any other application. Supply is stillfungible across end-markets, and lengthening lead-times and upward ASP still creates incentives for end-customers to build inventory.While Semis

20、will not be as cyclical as the 1990s, it is likely to be MORE cyclical thanthe last 7-9 years especially if our structural thesis of rising ASPs and slowing supply growth continues.While increased cyclicality tends to dampen multiples, we continue to argue that improving structural growth and return

21、s should provide the means for a re-rating oftheSemiconductor sector over time especially as the Data Economy accelerates.The Cycles Impact on 2019: Our analysis supports a mostly well-behaved upturn with 8 out of 10 cyclical metrics below historical medians and most importantly Semi over- shipping

22、which while 86% of normal duration was only 23% of normal magnitude. We expect any excesses to be worked thru by C1H19.While Semi Rev (ex-Memory) was above seasonal from C3Q16 to C2Q18 (aggregateof 1,700 bps) C1Q15 to C2Q16 was below seasonal (aggregate of 1,580 bps). Seasonal growth from C4Q14 impl

23、ies C4Q18 Semi Rev only 4 ppts above trend and C1Q19 only 1 ppts above trend.While Nov IC Units (ex-Memory) are currently 6-7% above trend and C3Q SupplyChain Inventory of 43 days is at the high-end of its post crisis range of 38-44 we expect C3Q18 thru C1Q19 Semi Rev (ex-Memory) 8-9 ppts below seas

24、onal.Importantly, after Semis over-shipped end-demand from C3Q16-C3Q18 we expect Semis to under-ship end-demand in C4Q18/C1Q19/C2Q19 which has historicallyproved to be a bullish tactical indicator.Stock Discounting Most of a “Normal” Correction. After increasing 7 of 9 yrs and outperforming 4 of 5 y

25、rs, the SOX declined 8% in 2018 underperforming the SPX by 200 bps and by 1,290 bps since 3/12/18 the worst underperformance since 2012.Peak-trough underperformance for the SOX vs the SPX was 1,480 bps in CY18, witha bottom on 12/12/18. P-T underperformance over prior 12 cycles averaged 1,730 bps wi

26、th a range of 640 bps (2016) to 3,350 bps (2005).The SOX is down 20% off the peaks vs median/average declines over the past 12cycles of 26%/30%. A normal correction would imply 6-10% further downside. However, 4 periods saw 30-35% declines implying 10-15% downside.The SOX typically troughs 5-6 month

27、s after it peaks, with a high of 8 months. Using 8/27 peak levels (when the SOX re-approached the 3/5 peak) would imply a bottom inlate Jan thru late Feb, or late April at the high-end.FTM EPS Is NOT Discounting Enough. SOX FTM EPS peaked on 10/5 at $100 and has declined by only 5% to-date. While st

28、ocks reflect negative sentiment with the SOX down 20% from peaks, FTM EPS is still too high and needs to come down in 1H19.The average peak to trough EPS revisions over the last 12 cycles (ex 2009 financialcrisis) has been 30% with the mildest correction in 2014 at 16% and the severest correction in

29、 2002 at 65%; 2009 was 140%.The SOX EPS typically troughs 6-7 months after it peaks, with a high of 12 months(2007). Using the 10/5 peak implies a EPS trough in early April to early May, with the high-end implying EPS doesnt trough until early October.While expect most to meet C4Q guidance (aggregat

30、e Rev down 4.0% q/q vs seasonal up 0.5% q/q), C1Q Rev of down 4.0% q/q vs seasonal of down 4.6% q/qlikely has 3-5 ppts of downside more for handsets, less for infrastructure.Semis and the Macro: CS Macro is estimating 2019 GDP of 3.1% y/y, down from 3.8% in CY18. Recent China data points and China/U

31、S Trade tensions have skewed expectation to the downside. 2015 was the only year since 2000 that Semi Rev declined with GDP growth of at least2.5%.Semi Rev growth has a 0.78 correlation to ISMs Global Manufacturing Index withhigher elasticity to accelerations than decelerations (2x-3x vs 2.5% averag

32、e 2.3x (1x 3.7x)., Semi Rev has been up every year since 2000 when realGDP grows at least 2.5%.Our View on China Trade: While limited domestic Chinese production insulates US Semis from direct tariffs by China, US Semis are impacted directly/indirectly by China/US Trade tensions as China represents

33、50% of ship-in Rev and 25% ofconsumption.China is 19% of Global GDP but approximately 25% of PCs, 24% of Handset, 30%of Auto, and 22% of Infrastructure CapEx, per SIA. Macro weakness in China, whether trade related or not, will impact Semidemand.China/US tensions are more than trade deficits. IP pro

34、tection is key; which isparticularly germane to Semis. While NT volatility is likely (incl. potential for SCE embargos worst case), ultimately Semis win in an environment where IP is respectedespeciallyMemory.Given MOFCOMs (now decade-long) history of using regulatory approval to extract concessions

35、, we expect delays and blocks to continue especially as CIFUS becomesincreasingly concerned by said concession. M&A will happen, but the process will be longer.Our Secular View Growth to Reaccelerate: Semi Rev represented 0.50% of nominal GDP, well below peak of 0.61% in 2000 and the same level as 1

36、994/95, despite Semis being a more indispensable commodity today than 23 years ago.Relative declining chip value over the last 2+ decades was caused by ASP pressures after 30+ years of upward bias. Rising barriers to entry, consolidation, and slowingsupply growth provide the foundation for better pr

37、icing.Semis are poised to transition from GDP-minus to GDP-plus growth. In addition, SemiCap should move from Semi-minus to Semi-plus growth after 15 years of 300 mm productivity gains which now appears to be in arrears.We see LT growth in Semis increasing from 3-5% to 7-9% and for Semi Cap from2-4%

38、 to 8-10%. Neither scenario incorporates our view on “Data” as a demand driver which could add an additional 1-300 bps to LT growth rates.SOX EPS Growth More Structural than Cyclical: While EPS peaked at $100 in Oct well above prior peak of $48 in Oct. 2014 and well above the implied trend line grow

39、th of$60 EPS looks more structural than cyclical: (1) Content Growth, (2) New Applications/End Markets, (3) Improved profitability, and (4) M&A/Buybacks.Over the past 12 cycles median T-P EPS growth has been 24% with the largestgrowth post financial crisis of 120% in 2014 ($22 to $48) and overall at

40、 777% in 2004 ($3 to $24). Median P-T EPS decline has been 27% with the largest decline post crisis of 38% in 2011 ($40 to $25) and overall at 65% in 2002 ($8 to $3).After EPS troughed in 2/16 at $39, it grew 155% to $100 over 32 months. While thisupturn has been the most pronounced since 2010 it is

41、 broadly similar to the 11/12- 10/14 upturn when EPS grew 120% over 22 months. Further, that EPS upturn was only followed by a 16% EPS decline versus the 5% we have seen to-date.EPS growth above trend (i.e. above $60) was 40-50% driven by M&A/Buyback, 15- 20% by improved profitability, and 15-20% by

42、 new applications/end markets.Overshipping cycle to date has still been significantly more modest than typical.Our View on Memory Cyclical and Structural: While we are modeling the first y/y decline in Memory (-10% y/y) since 2016, we still see more evidence to support structural improvements: (1) C

43、onsolidation, (2) Structurally slowing supply growth, (3) CapEx reductions ahead of peak profitability, and (4) New Demand drivers in Data Center/infrastructure.We expect CY19 DRAM/NAND Rev to decline -9%/-12% y/y versus 2018 of+47%/+29%. We model CY19 DRAM/NAND bit growth of 16%/35%. We model DRAM/

44、NAND ASPs to decline 25%/40%. We expect ASP stability in DRAM/NAND by 3Q19 and 4Q19 respectively.We model DRAM/NAND CapEx down 23%/25% y/y, yielding DRAM CapEx/Rev of18% below the 10 year average of 23% and NAND CapEx to Rev of 39%, below the 10 year average of 45%. DRAM/NAND CapEx peaked in 1Q18.Hi

45、gh exposure to Smartphones is a headwind (DRAM 33%, NAND 38%). Accelerating Compute TAM, 5G and SSDs are tailwinds. MUs F2Q19 Rev decline of 25%, theworse since 2009 implies materially under-shipping demand.The Data Economy Represents Upside: In C2Q14 we introduced our “Data Paradigm” consisting of

46、4 key areas: Creation, Storage, Transmission and Analytics. We view Semis are key enablers to and the most levered, cheapest investments on Data Driven Economy.Meaningful cost declines in Create, Store, Transmit have to date been matched bycost increases in Analytics its why we only analyze 1% of th

47、e data we create. AI structurally lowers the cost of analytics leading to elasticity of use-cases.AI is a silicon-centric solution, which should allow Semis to capture value in the globaleconomy after 20+ years of losing value. A 1% value capture by AI would expand Semi TAM by $420 bb against a CY18

48、 TAM of $470 bn.We see Data adding 1-300 bps to our LT Semi growth rate of 7-9% andcouldunderpin a Semi TAM which approaches $750 bb by 2025 we are on record in 2015 saying $500 bn by 2020.China Inc. Continues to Invest: Government-aided entities continue to invest in Semis to bridge the gap between

49、 domestic Semi production (7%) and consumption (25%); we are currently tracking 15 active fab projects, not to mention continued ecosystem investment in design and back-end. Efforts to buy IP via acquisitions have largely been halted by regulators.We are modeling China domestic CapEx for CY18/CY19 a

50、t $7.25bn/$8.3bn up 76%and 14% y/y respectively, with a bias towards brick and mortar, and estimate domestic China WFE for 2018/2019 at $3.2bn/$3.6bn up 60% and 13% y/y respectivelyGiven that China is still in the learning phase, we see no material impact to global supply in NAND/DRAM until at least

51、 until 2020 (with very limited NAND supply in2019). Given the potential threat, we continue to closely monitor the progress.Efforts continue to be hampered by lack of IP UMC has abandoned its DRAM workwith JHICC after the US government indicted it for IP theft, and added it to the Entity List, which

52、 prohibits US companies for supplying it with equipment or components.Our View on PCs (10% of Semi Rev): Our models embed PC units declining 1.1% y/y in CY19, largely consistent with CY18 expected decline of 1.0% y/y, but above the CY12- 17 CAGR of 6% declines when annual units contracted from 360m

53、to255m.We expect Consumer PCs to decline 2.1% y/y vs CY18 down 3.6% y/y reflectingeasing CPU shortages, still strong enthusiast demand, a lessening headwind from memory ASPs and a more stable replacement cycle.We expect Corporate PCs to decline 0.3% y/y vs CY18 up 1.3% y/y reflectingcontinued Win10

54、upgrades offset by more difficult compares. We would note that Win10 upgrade-driven demand is expected to moderate by C2H19/CY20.We expect CY19 PC MPU Rev to grow 3.4% y/y versus up 10.1% in CY18 as ASP growth moderates to 2.2% from 7.3% and unit growth moderates to 1.1% y/y from2.5%. At 10% of Semi

55、 consumption ex-Memory, PCs still matter albeit less.Our View on Smartphones (25% of Semi Rev): Our models embed Smartphones to be down 1-3% y/y in CY19, versus down 3.5% y/y in CY18, and below IDC expectations for 2.5% y/y growth driven by elongating replacement cycles ahead of 5G in 2H19/2020.Smar

56、tphones are fully penetrated and dependent on replacement cycles. We seedownside bias until 5G SKUs create an upgrade catalyst; CY20 could be a stellar year. Every 3 month change in replacement rate drives 300 bps of unitgrowth.We embed CY19 iPhone units down 6% y/y in CY19 versus down 5% y/y in CY1

57、8and flat y/y in CY17. The 1/2/19 negative pre implies iPhone F1Q units down 16% y/y against what should have been easy compares of down 1% y/y inF1Q18.Relative to China (40% of units) would note that demand trends have continuedto come in below expectations, and expectations for limited spec develo

58、pment suggest the potential for continuedweakness.Our View on Wireless Infrastructure (10% of Semi Rev): Our EU colleague, Achal Sultania recently raised his CY19 Wireless CapEx forecast to +4% y/y vs. +2% y/y in CY18 and -4% y/y in CY17, driven by massive MIMO upgrades and 5Gramps.While 5G has been

59、 a discussion point for a quite some time, U.S. Semi nameslevered to 5G and Massive MIMO have just recently seen accelerating Comms growth, a trend we see continuing throughoutCY19.Underpinning the recent growth has been a pick-up in 5G development in North America, Korea, and Japan along with a con

60、tinuation of massive MIMO upgrades. EUCapEx has stabilized and LatAm/Russia is likely to accelerate in 2H19.China (22% of Wireless CapEx) will be highly dependent on resolution of tradedisputes as potential chip embargos to Huawei/ZTE could add to 1H volatility. Share shifts among global OEMs could