Bernstein’s Positive View on Japanese Semiconductor Stocks

Investing.com– Bernstein initiated coverage of Japanese semiconductor stocks with a positive outlook, anticipating growth from both global chip demand and the artificial intelligence (AI) sector.

The brokerage noted that following a significant correction from their July peak, semiconductor valuations are now considerably more attractive, particularly in the semiconductor production equipment (SPE) area.

Bernstein highlighted the strength of Japan’s SPE sector, especially amidst efforts by major world governments to establish local production capacities.

Top Picks in the Sector

• Disco Corp (OTC:DSCSY) (TYO:6146): Rated Outperform
• Advantest Corp (TYO:6857): Rated Outperform
• Tokyo Electron Ltd. (TYO:8035): Rated Outperform

Screen Holdings (TYO:7735) and Kokusai Electric Corp (TYO:6525) were rated as Market Perform, while Lasertec Corp (TYO:6920) received an Underperform rating.

Bernstein displayed the most optimism toward Japanese SPEs, predicting faster-than-average growth in that sector driven by AI demand.

Materials and Analog Sector Outlook

In terms of Japan’s chipmaking materials and the analog sector, Bernstein adopted a neutral stance. The materials sector is expected to encounter some challenges due to competition and overcapacity.

• Hoya Corp (TYO:7741): Rated Outperform
• SUMCO Corp. (TYO:3436): Rated Market Perform
• Ibiden Co Ltd (TYO:4062): Rated Underperform

In the Analog sector, Bernstein projected short-term weakness due to high inventories but foresees robust long-term growth, especially linked to the AI industry.

• Renesas Electronics Corp (TYO:6723): Rated Outperform, due to its engagement with AI servers.