Two differences in the US semiconductor sector since late December 2020:
1. Equipment companies' stock prices hit new historical highs first, showing independent trends.
2. Companies like Taiwan Semiconductor experienced a slower start in their stock price movements.
In order to study the subsequent trend rules, we first divide the semiconductor cycle into demand cycle and supply cycle.
To study the law of the supply cycle, we divide the supply into three major parts:
1. Manufacturing: fab, IDM, assembly and testing;
2. Equipment: front-end, back-end;
3. Materials: mainly large silicon wafers.
Whenever the economic cycle approaches, the supply cycle will follow a certain pattern:
1. Equipment first: The prosperity of upstream equipment is the most sensitive and leading, as the period of equipment preparation, transportation and installation is close to one year, so midstream manufacturers will start orders one year in advance, leading to the early prosperity of the equipment sector;
2. Manufacturing relay: Midstream manufacturers will enjoy active restocking at this stage (early production expansion focuses on price increases with slight volume increase, while later production expansion focuses on volume increase with slight price increase);
Material shortage: After the large-scale expansion of manufacturing in the middle reaches, both capacity and materials will increase significantly, leading to a supply shortage of materials, thus forming a cyclic "silicon wafer crisis".
Based on the above, we can derive our semiconductor investment clock, as shown in Figure 1:
Let's review the operation of the previous semiconductor cycle from Q3 2016 to Q1 2018, which basically follows this pattern:
1) From Q3 2015 to Q4 2017, global semiconductor equipment giants (Applied Materials, Lam Research, kla corp, ...