Semiconductor Stocks are on the move.....actually they have been on the move for some time and are now at the top....but for how long? The Fabless industry group has quickly ascended to the #2 of 197 industry groups as seen on the industry ranking chart at bottom of this post. I posted this for one of our members on his Discord channel because he had expressed interest in shorting certain stocks in the group a month or two ago....I suggested he reconsider for the group was making a strong move up. Now that they are at the top....shorting would be a lot less risky. But I prefer (and have to use in retirement accounts) to use Bear ETFs for betting against stocks or groups of stocks and SOXS fits that bill for me. I am not buying yet but may start adding small lots ($18+ / share with a 52-week high of $89.50) while we watch and see how well NVidia & AMD and others continue performing. And don't get me wrong....there are some semiconductor stocks that I will remain long in and continue reducing cost basis on - Mobileye is one of those. Here is a thorough assessment on these stocks for your review:
Semiconductor Stocks Climb Yet Inventories Bedevil Chip Industry; A Reality Check May Be Coming
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PATRICK SEITZ03:32 PM ET 03/15/2023
Semiconductor stocks were a godsend to investors in February as the overall market backed off from January's advance. After a strong first month of the year, chipmakers scored more gains. That was especially true for the fabless semiconductor industry, which rose another 6.3% on strength in stocks like Nvidia (NVDA), Monolithic Power Systems (MPWR) and Advanced Micro Devices (AMD).
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Yet during that same period, as chipmakers reported December-quarter earnings, a raft of data on shipments, prices and inventories showed the semiconductor industry still in a downturn.
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Cyclical investors, those practiced at speculating on semiconductor stocks' reversal from their deep, periodic downturns, were betting on a bottom.
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Old Industry Cycle, New Twist
But this cycle from the start has been unlike others in a long history of semiconductor industry booms and busts. The cycle made its way through the pandemic years of distorted demand trends and knotted supply chains. Then, as cyclical investors moved into many top stocks, leading them to flash early signs of an upturn, another factor also came into play. Another sort of optimism, fueled by views that increasingly diverse end markets signaled a more durable, stable chip industry, also helped bolster the upturn.
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Among fabless chip stocks, Nvidia surged more than 58% for the year through February. Monolithic Power rallied 37%. Among chip manufacturers, ON Semiconductor (ON), more commonly known as Onsemi, and STMicroelectronics (STM) surged 24% and 50%, respectively.
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Some semiconductor stocks continue to climb. Still, an array of fundamental chip industry metrics point to difficulties ahead. In particular, many semiconductor companies report stubbornly high inventories in their sales channels and with customers. A large segment of analysts accustomed to assessing chip cycles say investors who put the bottom in semiconductor stocks at the end of 2022 might be prematurely optimistic.
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"If you listen to all the (earnings) calls, no one has said that this is the bottom or that it's definitely going to get better soon," Robert Maire, an analyst with consulting firm Semiconductor Advisors, told IBD.
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SEMICONDUCTOR GROUPS: 2023 PERFORMANCE
Semiconductor-related groups are three of the 197 industries tracked by IBD. See how tracking industry performance can improve your investing results.
YTD gain*
S&P 500 1.4%
Nasdaq 9.2%
Chipmakers 13.6%
Fabless companies 22.9%
Mfg. equipment 13.8%
*Through 3/15/23
Pandemic Disrupted Semiconductor Industry Cycle
One thing is certainly true: The semiconductor industry's end markets are more diverse now than during past chip cycles. The determining factor in prior booms and busts was personal computer and smartphone sales. Now computer chips have made their way into many more devices. This lessens the industry's dependence on any one major product type.
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The present chip cycle shows memory chips, PC processors and chips for smartphones and consumer electronics clearly in a downturn. At the same time, chip sales in automotive and industrial markets have remained strong.
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But overall, the wild swings in demand for tech products during the Covid-19 pandemic have led to a steeper-than-usual down cycle, Semiconductor Advisors' Maire says.
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"The industry got whipsawed by Covid and the supply chain issues," Maire said. "We went from a shortage to an excess in a pretty short span of time."
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Semiconductor Stocks: Industry Recovery In Late 2023?
A clear risk factor for rising chip stocks is that the semiconductor industry still must reconcile its bloated inventories, Jefferies analyst Christopher Wood said in a recent note to clients. He warned of a "coming chip glut."
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"The market action is assuming, heroically, a bottoming out of the semiconductor inventory correction in the first half of this year and a presumed recovery in demand in the second half, of which there is for now no evidence," Wood said.
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Wall Street analysts generally expect sales in the broader chip market to turn positive in the second half of 2023. Many see PC chip sales as among the first segments that will turn around. That should help chipmakers AMD and its archrival Intel (INTC).
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Micron technician
A technician puts on covers for his shoes as he prepares to enter the clean room at the Micron Technology automotive chip manufacturing plant Friday Feb. 11, 2022, in Manassas, Va. (AP Photo/Steve Helber)
It is also possible, however, that the "orgy" of pandemic buying of PCs in 2020 and 2021 could also depress demand for three to four years, Wood says. Smartphone sales face a similar possibility, he says.
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"Meanwhile, chips used in the auto sector are now seeing a big surge in inventory," Wood said. "The previous shortage of automotive chips has led to substantial double ordering."
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Analysts see AMD sales and earnings falling through the first two quarters, then turning higher, according to FactSet. Intel is expected to shift from loss to profit in Q3 and post an earnings gain as sales edge higher in Q4.
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World Semiconductor Trade Statistics forecasts a 4.1% decline in semiconductor sales in all of 2023. Sales rose 4.4% in 2022 and surged 26.2% in 2021.
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Artificial Intelligence Spurs Semiconductor Industry Investments
Among the markets for more advanced chips, the data center market, tied to web services and cloud computing providers, is showing some signs of weakness. One clear exception is the portion of that market tied to artificial intelligence, especially graphics processors.
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Excitement around generative AI applications, such as ChatGPT, has provided a lift for certain semiconductor stocks seen as beneficiaries of the trend.
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Nvidia leads that group with its graphics processing units, accelerators, high-performance computing hardware and software. Other chip stocks likely to benefit include Broadcom (AVGO) for its application-specific integrated circuits and Marvell Technology (MRVL) for its high-speed networking and ASIC chips.
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As a result, Broadcom earnings and sales have powered ahead, paying little mind to the pandemic's potholes. For Marvell, analysts see sales and earnings declines for the first three quarters this year, turning to narrow gains in the fourth quarter.
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"There is a clear shift in spending priorities (by cloud service providers) to AI and technical infrastructure," Jefferies analyst Mark Lipacis said in a recent note to clients. "We view Nvidia as the biggest beneficiary of the shift in spend to AI, and Broadcom and Marvell as beneficiaries in networking upgrades and semi-custom chips."
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Downturn In Memory Chips
Like the prior chip cycle downturn, which lasted from late 2018 until early 2020, memory-chip makers have led the current correction. Micron Technology (MU) and other memory-chip makers started warning about weakness in the market in mid-2022.
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The big wrinkle with this cycle in semiconductor stocks is the disruption caused by the Covid pandemic. As the pandemic got underway in early 2020, work-from-home and remote education trends fueled a buying binge in PCs and tablets. Consumers also splurged on consumer electronics and home appliances as they sheltered in place.
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Then pandemic fears faded and the economy reopened. Consumers shifted their spending away from electronics. Analysts now project Micron will book losses in all four quarters of this fiscal year, dropping for the year to an estimated $2.20 loss per share, vs. an $8.35 profit for 2022.
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Sales are forecast to turn up in the quarter ending in September, with the company shifting from loss to profit in the December-ending quarter.
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Automakers Still Dealing With Chip Shortages
Automakers faced a severe shortage of chips during the pandemic. It was the result of a two-step process: first, they canceled orders ahead of a projected falloff in demand for new cars and trucks. But demand held steady. When carmakers went to place new orders, they found themselves at the back of the line at chip foundries. Only recently have the auto chip shortages started to ease.
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In general, automakers use older chip technology. The semiconductor industry's production capacity for those chips is more limited than for higher-margin, leading-edge chips, such as those made by Taiwan Semiconductor Manufacturing (TSM).
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Semiconductor companies serving the auto market include Onsemi and STMicroelectronics, as well as NXP Semiconductors (NXPI) and Texas Instruments (TXN).
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But across all of those segments of the chip landscape, unpredictable consumer behavior and knotted supply chains altered the traditional chip-cycle metrics.
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"Covid threw a wrench into the cycle," Bill Jewell, a consultant with Semiconductor Intelligence, told IBD.
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Factories shut down at the start of the pandemic and then reopened to chase a rapid acceleration in demand for PCs and other devices. Then consumers, after they had what they needed, stopped buying, Jewell says.
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"PCs and smartphones account for so much of semiconductor consumption, especially memory, that when those slow down, it has a big impact on the market," Jewell said. "Automotive and industrial markets are holding up but they are not as big as the personal computer and smartphone markets."
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For this year, analysts see STMicroelectronics earnings rising in Q1 and Q2 before undercutting year-ago levels. Sales and earnings forecasts for Onsemi, NXP and Texas Instruments are lower throughout the year.
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SEMICONDUCTOR STOCKS PERFORMANCE
Fabless
YTD gain* Stock Price
NVDA Nvidia 65% 234.78
LSCC Lattice Semiconductor 43% 87.14
MPWR Monolithic Power Systems 40% 468.58
CRUS Cirrus Logic 38% 99.2
AMD Advanced Micro Devices 35% 86.75
Chipmakers
ALGM Allegro MicroSystems 50% 43.71
STM STMicroelectronics 39% 46.38
ON Onsemi 30% 76.23
SWKS Skyworks Solutions 24% 110
TSM Taiwan Semiconductor 20% 85.51
* to March 15
Semiconductor Stocks Vs. 'Trough-Calling Euphoria'
Deutsche Bank analyst Ross Seymore sees the semiconductor industry situation as a hangover from pandemic disruptions.
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"After about two years of semiconductor shortages resulting in a revenue/margin 'party' for the sector, the sector's fundamentals have pivoted to the 'hangover' stage," Seymore said in a recent note to clients. The hangover is illustrated by chipmakers lowering their revenue and earnings estimates for the past two quarters in the face of record-high inventories, he said.
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Chip Stocks To Watch And Semiconductor Industry News
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Investors observing the recent weak earnings reports now anticipate a trough in the first half of 2023 and a fundamental recovery in the second half of the year, Seymore said. That optimism reflects in this year's rise of the Philadelphia Semiconductor Index, or SOX.
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Year to date, the SOX is up 15.5% vs. a 1.6% rise for the S&P 500. The SOX includes the 30 largest chip stocks traded in the U.S.
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"While we've seen this cyclical investing 'playbook' used successfully many times in the past, we also note that the timing and slope of the eventual recovery quickly becomes paramount once the trough-calling euphoria subsides," Seymore said.
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He added, "We remain somewhat concerned that the magnitude of inventory builds coupled with still mediocre demand may limit the slope of the revenue, margin and EPS (earnings per share) recovery — even if first-half 2023 is indeed the bottom."
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Chip Inventories Hit Record Highs
Aggregate inventory data across 26 of the largest semiconductor companies shows that inventories in the fourth quarter reached their highest levels since Deutsche Bank began collecting such data in 1994, Seymore said.
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"The industry has finally entered the hangover stage, with the primary concerns going forward focused on the duration/magnitude of the headache, and equally importantly the timing/slope of the eventual recovery," Seymore said.
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With such a cautious outlook, Seymore is focused on semiconductor stocks with reasonable valuations and company-specific catalysts. His favorite names include Broadcom, Marvell, MaxLinear (MXL), NXP Semi, Onsemi and Qualcomm (QCOM).
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Auto Chip Stocks Remain Strong Segment
Meanwhile, demand for automotive chips should continue to hold up in 2023, buoying companies like Allegro MicroSystems (ALGM) and NXP, Wells Fargo analyst Gary Mobley said in a recent note to clients.
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Production constraints caused by chip shortages hindered automobile sales for more than two years. And there remains a pent-up demand for new vehicles, Mobley said.
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Plus, automotive-chip makers are benefiting from increased semiconductor content in each vehicle. That is thanks to the trends of electrification and autonomy, he said.
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"As long as light vehicle unit production continues to improve toward normalized levels, higher (chip) inventories are needed," Mobley said.
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FactSet consensus estimates show earnings gains for Allegro over the next thee quarters before slowing. Sales gains are forecast for the next five quarters.
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'Soft Landing' For Semiconductor Stocks?
Most analysts are predicting a rolling recovery with some segments turning positive earlier than others.
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Evercore ISI analyst C.J. Muse has forecast a "soft landing" for chip stocks and the semiconductor industry rather than a harsh downturn. Also, the reopening of the China economy should help with the recovery, he said in a note to clients.
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Daniel Morgan, senior portfolio manager at Synovus Trust, underscored that the health of the semiconductor industry is a key barometer for the overall tech sector.
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"The semiconductor sector is the plankton of the technology and manufacturing ocean," Morgan said in a recent note to clients. "Everything requires chips in it to run. Typically, the chip sector will lead the technology sector out of the valley and will be one of the first sectors to show green sprouts foreshadowing a pending recovery."
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But Morgan added, "At this point there are few signs of a rebound."
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And the upshot for investors in semiconductor stocks? The downtrend in the chip cycle started in the third quarter of 2022. It could persist for six quarters, similar to the 2018-2019 downturn, Morgan said.
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A trip to Kedarnath from Delhi can be a memorable experience for those who seek adventure and spiritual enlightenment. Here's a rough itinerary to help you plan your trip:

Day 1: Delhi to Haridwar

• Take an early morning train or bus from Delhi to Haridwar (225 km, 5-6 hours).
• Check into your hotel and spend the evening exploring the city and attending the Ganga Aarti at Har Ki Pauri.

Day 2: Haridwar to Guptkashi

• Drive to Guptkashi (210 km, 8-9 hours) through scenic routes.
• Check into your hotel and rest for the night.

Day 3: Guptkashi to Kedarnath

• Take a helicopter from Guptkashi to Kedarnath (10-15 minutes).
• Check into your hotel and visit the Kedarnath temple.
• Spend the evening exploring the town and its scenic beauty.

Day 4: Kedarnath to Guptkashi

• Take the helicopter back to Guptkashi.
• Explore the town and nearby attractions such as the Triyuginarayan temple and Vasuki Tal.
• Stay overnight at your hotel in Guptkashi.

Day 5: Guptkashi to Delhi

• Drive back to Delhi (450 km, 10-11 hours).
• Reach Delhi by late evening.

Delhi to Kedarnath Trip

A Delhi to Kedarnath trip typically involves a combination of transportation modes such as flights, trains, buses, and taxis. Here's a general guide on how you can plan your trip:

1. Delhi to Haridwar: The nearest railway station to Kedarnath is Haridwar, which is located around 220 km from Delhi. You can take a train from Delhi to Haridwar, which takes around 4-5 hours. Alternatively, you can also take a bus from Delhi to Haridwar, which takes around 5-6 hours.
2. Haridwar to Guptkashi: From Haridwar, you can take a taxi or bus to Guptkashi, which is around 190 km from Haridwar. The journey takes around 7-8 hours, depending on the mode of transportation you choose.
3. Guptkashi to Kedarnath: From Guptkashi, you can take a helicopter, a pony, or trek to Kedarnath. The helicopter ride takes around 10-15 minutes, while the pony ride takes around 5-6 hours, and the trek takes around 14-15 hours.

Delhi to Kedarnath tour packages
There are many travel companies that offer Delhi Kedarnath tour packages. Some of the popular packages include:

1. Delhi to Kedarnath Yatra by Helicopter: This package includes a helicopter ride from Delhi to Kedarnath, VIP darshan at Kedarnath Temple, and accommodation in a hotel or a campsite.
2. Kedarnath Dham Yatra from Delhi: This package includes transportation from Delhi to Kedarnath, accommodation, and sightseeing of nearby attractions such as Badrinath, Gangotri, and Yamunotri.

Kedarnath trip budget
The cost of a trip to Kedarnath can vary depending on various factors such as mode of transport, accommodation, food, and other activities. Here is a rough estimate of the Kedarnath trip budget:

Transportation:

• Flights/Train/Bus to Dehradun/Rishikesh: Rs. 2,500 - Rs. 5,000 (depending on the mode of transport and season).
• Shared taxi/jeep from Dehradun/Rishikesh to Sonprayag: Rs. 1,500 - Rs. 2,500.
• Pony/Palki/Helicopter from Sonprayag to Kedarnath: Rs. 2,500 - Rs. 7,000 (depending on the mode of transport).

Accommodation:

• Budget guesthouses in Kedarnath: Rs. 500 - Rs. 2,500 per night.
• Luxury hotels in Kedarnath: Rs. 5,000 - Rs. 10,000 per night.

Food:

• Local food in Kedarnath: Rs. 200 - Rs. 500 per meal.
• Western food in Kedarnath: Rs. 500 - Rs. 1,000 per meal.

Other expenses:

• Entrance fees to Kedarnath Temple: Rs. 50.
• Personal expenses (shopping, etc.): Rs. 1,000 - Rs. 2,000.

Based on these estimates, a 3-day trip to Kedarnath can cost anywhere between Rs. 10,000 - Rs. 30,000 per person, depending on your preferences and travel style.