Investing in Semiconductors Tied to Tech Connectivity, Content and Storage: J.P Morgan's Senior Analyst Picks the Hot Spots for Chip Stocks

Wall Street Transcript

67 WALL STREET, New York - May 28, 2014 - The Wall Street Transcript has just published its Semiconductors Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Mobile Device Consumer Demand - Enterprise Data Storage Demand - Energy Efficiency, Cloud Computing and Telecommunications - Improvement from Cyclical Bottom - Semiconductor Capital Equipment Spending - Data Growth Trends - Semiconductor Revenues and Demand - Chinese Fabless Industry Growth

Companies include: Broadcom Corp. (BRCM), NVIDIA Corporation (NVDA), Micron Technology Inc. (MU), SanDisk Corp. (SNDK), Cavium Networks, Inc. (CAVM), Marvell Technology Group Ltd. (MRVL), China Mobile Limited (CHL), KLA-Tencor Corporation (KLAC), Western Digital Corp. (WDC), Seagate Technology (STX) and many others.

In the following excerpt from the Semiconductors Report, an expert analyst from J.P. Morgan (JPM) discusses the outlook for the sector for investors:

TWST: Could you begin with an introduction to your coverage of the semiconductor sector, including the subsegments and some of the specific names that you follow?

Mr. Sur: I cover the small and midcap semiconductor sector at J.P. Morgan. I cover the semiconductor capital equipment sector and a segment of the IT hardware sector, focused primarily on hard disk drives. The term small and midcap is a little bit misleading, because if you would review my coverage universe, it does include some large-cap companies, including companies like Broadcom (BRCM), NVIDIA (NVDA), Micron (MU) and SanDisk (SNDK).

I do cover quite a number of the smaller-cap companies as well, like an Audience (ADNC) or Cavium Networks (CAVM), for example. I tend to think about my semiconductor coverage universe as those companies that are tied to faster-growing segments or trends within the tech industry.

TWST: What are those faster-growing segments or trends that you want to see the semiconductor companies exposed to?

Mr. Sur: We tend to be pretty thematic as it relates to our research. It's important for us to understand the cyclical dynamics within the semiconductor industry, but our view is that investors in semiconductor stocks tend to end up making money on those companies that have a propensity to outgrow the overall semiconductor industry over a period of time. That can be achieved by being tied to faster-growing segments within technology. We tend to focus on those companies that have core competencies: CCS or connectivity, content and storage.

When we think about some of the faster-growing trends, faster-growing themes within technology, such as next-generation data center, things like 4G smartphones, things like enterprise storage and next-generation storage technologies, one of the pervasive themes from a semiconductor perspective is that all of these require a heavy silicon content that revolves around chips that connect or provide connectivity, chips that do the content processing and obviously chips that store the information. Our focus is semiconductor companies that have big exposure to connectivity, content and storage.

TWST: What are the end markets or themes that you don't want to see semiconductor companies exposed to right now and why?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments (0)