Strong September for Semiconductor Sales

September saw strong semiconductor sales globally, reaching $61.1 billion, an 8.8% increase month-over-month, according to Citi analysts.

This figure aligns with the seasonal trend of 9.0% growth and exceeds Citi’s forecast of $58.8 billion due to "stronger microcontroller and microprocessor sales."

Year-over-year, September's sales rose by 23.3%, surpassing Citi's estimate of 18.6%.

Citi predicts 17% year-over-year growth in 2024, projecting sales to hit around $618.7 billion.

Despite robust Q3 results, showing an 11% quarter-over-quarter increase, Citi expects Q4 sales may dip slightly, estimating only a 1% quarterly uptick.

The bank noted a significant surge in semiconductor unit shipments, with September's units (excluding discrete semiconductors) rising by 24.6% month-over-month, exceeding the projected 17.9% growth. This growth was driven by above-seasonal Analog units. On a yearly basis, unit sales increased by 13.3%, surpassing the 7.3% forecast.

However, Average Selling Prices (ASPs) experienced a decline, with prices for non-discrete chips dropping by 13.4% month-over-month, worse than the predicted 11.4% drop, attributed to lower analog prices. Nonetheless, ASPs rose 10.6% year-over-year, remaining below Citi’s 13.2% projection.

Citi's top stock pick is Analog Devices (NASDAQ:ADI), noted for having lower downside risk in the automotive sector and anticipated gains from inventory replenishment.

Other Buy-rated stocks include AMD (NASDAQ:AMD), Broadcom (NASDAQ:AVGO), Micron Technology (NASDAQ:MU), and Texas Instruments (NASDAQ:TXN).

The firm expresses optimism for the semiconductor sector, bolstered by sustained demand across data centers, AI, and communication markets, which constitute 27% of semiconductor demand.