Outlook remains sunny from Phoenix
■ EU read-across from TMT conference. Credit Suisse hosted its annual
TMT conference last week in Scottsdale, Arizona featuring around 150
companies and 500 investors. We hosted presentations and/or 1-1
meetings with around 40 companies in the global semiconductor space,
including 5 from Europe, plus Ericsson in the telecom equipment space.
Within EU semis, we hosted fireside sessions with Infineon,
STMicroelectronics, ams and Dialog, along with ASML (covered by our US
colleague Farhan Ahmad). Overall the tone from semiconductor companies
remained positive across all days at the conference.
■ Secular drivers in Auto/Industrial semis; inventory levels still low.
Companies remained confident about the long-term growth opportunity in
both Auto and Industrial semis driven by content due to electrification,
(semi) autonomous driving, factory automation to name a few. Most
companies noted that channel inventory remains at low levels leading to
continued elevated lead times. Infineon believes that half of its 8% sales
CAGR for Auto business can be driven by EV and ADAS. STM noted
increasing traction for its SiC solution for electric cars, and low inventory
levels across its distribution channels in all regions US, EU and Asia.
■ iPhone X suppliers maintaining commentary about C1Q. While there
are some market concerns around iPhone X demand potentially slowing as
wait times for the device have been coming down, we note that companies
presenting at our conference (like AMS, Qorvo and Amkor) reiterated their
comments for seasonal decline in C1Q sales to be better than normal
driven mostly by iPhone X ramp timing.
■ Infineon (OP) – confident for FY18, investing for future. IFX noted that
it is well placed to benefit in its Auto business given its IGBT technology for
car electrification has a solid pipeline of design wins ranging until 2027, as
mass adoption for SiC technology in cars may only happen beyond 2023
(already strong in SiC for industrials). We believe IFX is well placed to
benefit from rising content in auto and industrial, along with potential for
margin expansion. Hence, we reiterate our OP rating (TP €26).
■ STM (N) – upbeat on SiC and 3D. Contrary to IFX, STM management
expects SiC related revenues to show significant growth in 2018. The
company is on track to deliver 9% growth in its overall Auto related
business. On 3D, STM believes its sensor technology along with
system/software complexity should allow it to maintain first mover
advantage.
■ AMS (OP) – still early for 3D. Management had a confident tone around
potential upside to its 2019 sales guidance underpinned by 3D content
increase at an existing customer, along with the opportunity in China
beyond 2018 and proliferation of technology into categories outside of
smartphones. We reiterate our OP rating and TP of SFr90, with potential
upside of SFr115 in our blue-sky scenario.