Since the news broke in November that Apple Inc. faced with a shortage of chips with its latest iPhone, the warnings about the impact have been intense and fast. Lolmmaker Volvo Group and electric car company Nio Inc. last week they joined a long list of car manufacturers who did not work the assembly lines.
The shortage of chips is due to the increasing demand for technical gears, mainly due to the epidemic, and the winter weather in Texas and fires in Japan add to the problem. It has been a blessing to companies like Applied Materials Inc. and Lam Research Corp. producing semiconductor machine manufacturers need to increase output.
Here’s a look at companies at high risk as global chip shortages continue, and how their shares are affected:
Automatic stocks are back roaring from their epidemic habits. Now both chip shortages and concerns about the resurgence of coronavirus have pulled Bloomberg’s global producer index down by 14% from its January 25 record high.
Volvo Group fell 7% on Tuesday after saying it would have to stop production due to a shortage of semiconductors trainers, while China’s Nio slipped by 4.8% on Friday when it said it would suspend production at Anhui province.
The fire on March 19 at a Japanese factory run by Renesas Electronics Corp., one of the largest manufacturers of auto chips, has hit the industry hard. It caused a 6.7% decline in General Motors Corp shares in three days last week. In Japan, shares of Toyota Motor Corp., which hit a six-year high on March 18, fell 6.1% in the next four studies.
“The automotive industry is facing a major disruption, as many OEMs are slowing down production or closing production facilities temporarily,” said Thomas Fitzgerald, fund manager at EdenTree Investment Management Ltd., referring to the first equipment manufacturers.
Chinese company Geely Automobile Holdings Ltd. dropped by 19% over the past three days last week after reporting disappointing salaries. Daiwa Securities cited a chip shortfall in stock reduction and cutting annual rates for the following year. China is facing its own unrelated chip supply problems.
Smartphones, Consumer Customers
Outside of the automotive industry, it is difficult to exclude the stock market impact on companies based on semiconductors. Apple shares, for example, did not respond in November to the impact of the deficit, and have risen more than 5% since then. Smartphone maker Xiaomi Corp. fell 4.4% on Thursday after warning that a shortage of shares could slow its growth in the next few areas.
One positive aspect of chip shortages: As consumer electronics demand is as strong as it is, it gives companies the power to raise prices and pass higher costs, said Neil Campling, an analyst at Mirabaud Securities. “Stock prices have not responded very well especially in the news, and I think that’s because part of the reason is that you see the end when these assets are needed,” he said.
ILenovo Group Ltd. said in August that its profit margins experienced a shortage of chip, and in November said it would not be able to fulfill all customer orders due to a shortage of items. However, demand for the company’s laptops is on the rise due to the purchase of people working from home, and stock has doubled since August.
Sony Corp. they said last month they may not be able to fully reclaim the demand for its new gaming console in 2021 due to production constraints. The stock hit a 21-year high in February, although 8.2% had plummeted since then.
While the core business of Samsung Electronics Co. for other companies to take advantage of equity demand, the South Korean company also has its own line of consumer products damaged. Samsung this month warned of problems, including a possible cancellation of its new Galaxy Note, which is one of its best-selling smartphones.
The makers of social media have always felt the pinch. Oddo BHF analysts have signaled in a DigiTimes report that the lead times for the delivery of social media sites have increased to 50 weeks, suggesting that chip shortages have also reached the communications segment and are likely to remain early next year.
While car manufacturers are struggling, the side behind the semiconductor deficit is that the companies that supply these chips can see the momentum in their business. Many semiconductor companies should report strong results in the first quarter and provide good guidance in the second, said Janardan Menon, an analyst at Liberia Capital Ltd.
“All of this is good news for the semiconductor vendor,” Liberia’s Mmenon said by telephone. “This kind of resilience – power consumption, rising prices, the strongest demand – always means their results are very strong.”
However, Menon warned that stock prices may not follow, given that the market is now concerned that a high semiconductor cycle is approaching.
European auto chip supplier Infineon Technologies AG has increased by 12% per annum while STMicroelectronics NV gained just 5.6%. In the U.S., Texas Instruments Inc. increased by 15%, while NXP Semiconductors NV and ON Semiconductor Corp. performed better, rising 25% and 24% respectively, compared to the 11% rise in the Philadelphia Semiconductor Index.
There are also a wide range of successors from shortages in the semiconductor industry, with chip foundries such as the leader of Taiwan Semiconductor Manufacturing Co working almost entirely to try to keep up with rising demand. TSMC shares have dropped by 12% from their record set on January 21 but have still increased by 11% per annum.
Manufacturers of equipment used to produce semiconductors are benefiting from the supply chain as emergency workers rush to increase capacity in their factories and governments concerned about national security risks are looking at ways to promote local production. The combination has created a financial environment that some analysts say will benefit the industry for years.
Applied Materials, a major machinery manufacturer, has seen its shares doubled in the past six months, while Lam Research has acquired 77% in the same period, almost double the return of the Philadelphia semiconductor index. ASML Holding NV increased by 74%.
TSMC committed $ 28 billion in spending by 2021, up from $ 17 billion last year, while Intel Corp. launched a $ 23 billion plan to pour billions of dollars into production facilities.
This article was published from a wire agency feed without text editing.