Semiconductor stocks have experienced significant multiple expansion since mid-March despite second-quarter chip sales "roughly flat compared to the first quarter," reported Semiconductor Industry Association (SIA).
SIA said, "worldwide sales of semiconductors were $34.5 billion in June 2020, an increase of 5.1 percent from the June 2019 total of $32.9 billion. Sales in June were 0.3 percent less than the May 2020 total of $34.6 billion. Sales during the second quarter of 2020 were $103.6 billion, an increase of 5.1 percent over the second quarter of 2019, but a small decrease of 0.9 percent compared to the first quarter of 2020."
Worldwide semiconductor revenue remains under peaks seen a few years back.
SIA pointed out sales increased on a YoY basis in the Americas (29%), China (4.7%), and Asia Pacific/All Other (0.4%), but notable declines were seen in Japan (-2.2%) and Europe (-17.1%).
Neuffer said, "sales into the Americas stood out in June, increasing nearly 30 percent year-to-year.”
Sales on an MoM basis increased in the Americas (3.1%) and Japan (1.1%), with declines in China (-0.4%), the Asia Pacific/All Other (-1.5%), and Europe (-6.0%).
Despite global chip sales roughly flat in the first half, the PHLX Semiconductor Sector's (SOX) enterprise value-to-sales (EV/sales) recently hit a new high on insane multiple expansion.
Investors are panic buying chip stocks, sending valuations to record levels as the global recovery falters, this has proved, again and again, over the last couple of years, to prelude a correction.
As for the overall technology sector, we've outlined "Nasdaq is on its final run and is going vertical, a classic end of bubble move." Related: The U.S. Dollar Is Losing Ground As A Reserve Currency
"The attempts by the government to pump up the economy with new money is resulting in it going straight into equities and straight into the tip of the equity spear, the giant high beta story stocks. This is a malfunction of the QE mechanism that supports asset prices and slowly trickles the benefits of this support down the pyramid of wealth. Now the game is up because the new money is going straight into this bubble of financial assets that are spiraling up out of control."
While worldwide semiconductor sales are flat in the first half, vertical moves in SOX and Nasdaq 100 indexes are reminiscent of blowoffs.
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