Goldman Sachs Highlights Strong Semiconductor Shipments in August

Goldman Sachs has reported that semiconductor shipments in August surpassed typical seasonal trends, according to data from the Semiconductor Industry Association. Shipments of integrated circuits, excluding memory, rose by about 2% month-over-month, outperforming usual seasonal patterns. While most segments saw above-seasonal shipments, discrete, microcontrollers, and digital signal processors experienced worse-than-seasonal declines.

The firm noted that overall shipments are now 10% above long-term demand on a three-month moving average basis, up from 7% above trend in July. Analog shipments are also running approximately 10% above trend. Goldman Sachs attributes the limited areas of weakness to broader consumer electronics softness but expects shipments to remain above trend in the medium term due to prolonged below-trend shipments over the past four years.

Goldman Sachs continues to favor Microchip, NXP, and Analog Devices, focusing on companies that shipped furthest below trend during the downturn. Microchip has gained 25% over the past six months, with 16 analysts recently revising earnings upwards. InvestingPro analysis suggests the stock currently trades above its Fair Value estimate.

Microchip Technology recently reported fiscal first-quarter results that exceeded Wall Street expectations, with adjusted earnings of $0.76 per share on revenue of $1.48 billion. The company also provided optimistic guidance for the upcoming quarter. Shareholders approved an amendment to the company’s 2004 Equity Incentive Plan, authorizing an additional 12 million shares of common stock for issuance. Cantor Fitzgerald reiterated an Overweight rating for Microchip Technology with a $125 price target, while UBS adjusted its target to $120 from $130, maintaining a Buy rating.