DeepAR Forecasts US Semiconductor Market Amid Tariff Risks
Bernstein has recently published an in-depth analysis examining the delicate balance of supply and demand for analog and discrete semiconductors within the U.S. market. This research comes at a crucial time, considering the potential imposition of Section 232 tariffs, a trade measure that could significantly alter the landscape for key industry players. The analysis specifically scrutinizes the implications for major semiconductor firms, including Texas Instruments, Analog Devices, Infineon Technologies, and Renesas.
Analysts, led by David Dai, highlight a potential scenario where U.S. demand for these foundational electronic components could surge. This would occur if more manufacturing of “end applications”—the products that utilize these semiconductors—successfully returns to American shores. However, their current findings indicate that there isn’t yet a substantial supply-demand imbalance that would necessitate a significant expansion of analog and discrete manufacturing capacity within the United States. This suggests that while future growth is possible, immediate pressures for domestic capacity build-out are not currently overwhelming.
The specter of Section 232 tariffs casts a long shadow, creating varying degrees of risk for the companies under review. Infineon Technologies and Renesas Electronics are identified as having the highest exposure to these potential tariffs. Their vulnerability stems from their comparatively smaller production footprint within the U.S., meaning a larger proportion of their supply chain could be impacted by import duties. Conversely, U.S.-based giants Texas Instruments and Analog Devices appear to be in a more advantageous position. Their significant domestic manufacturing presence insulates them considerably from the direct effects of such tariffs, potentially strengthening their competitive standing in the market.
Further insights from the analysis, derived from a sophisticated DeepAR forecasting model, paint an interesting picture of market valuation. The model indicates that the stock prices of all four aforementioned semiconductor companies—Texas Instruments, Analog Devices, Infineon, and Renesas—are currently trading below the model’s projected point forecast line. This suggests an underlying potential for growth. Crucially, the analysis posits that these stocks have considerable room to appreciate, particularly if the companies effectively adapt to the ongoing shifts and potential disruptions within the global supply chain. This adaptability could involve strategic adjustments to manufacturing locations, sourcing, or product lines to navigate the evolving trade environment. The interplay between trade policy, domestic manufacturing trends, and corporate strategy will thus be pivotal in shaping the future performance of these semiconductor stalwarts.