The author is an analyst of NH Investment & Securities. He can be reached at firstname.lastname@example.org. -- Ed.
The impact of Covid-19 on sales at many semiconductor companies, including AMD, is likely to be minimal. Server demand looks solid, backed by increased telecommuting and online education. The 2Q20 NAND contract price is expected to rise 15% q-q.
Semiconductor firm earnings forecasts seeing only slight adjustments
Despite Covid-19’s shock to the financial markets, earnings forecasts for semiconductor companies remain largely intact. AMD has said that it expects Covid-19 to have little impact on product sales, forecasting its 1Q20 sales at US$1.75bn, a figure in line with its guidance range. In addition, the firm has stated that orders for EPYC server processors are skyrocketing, thanks to a Covid-19-driven server demand uptick. AMD is planning to release its Zen3 processors (adapting the 7nm EUV process) by end-2020, aiming to increase its server processor market share to 10%.
Turning to Apple, we note that the firm has made no adjustment to its AirPods shipment forecast, with supply chain sources saying that Apple’s 2020 AirPods shipment target of 90mn units remains intact. Meanwhile, demand for iPads has climbed significantly on growing demand for telecommuting and online education in China. Minimum delivery lead time when ordering an iPad from Apple’s online store currently stands at 15 days?prior to the outbreak of Covid-19, most iPad models were available for next-day delivery.
2Q20 NAND contract price to rise 15% q-q
Taiwanese media has quoted industry officials as saying that the 2Q20 NAND contract price will rise 15% q-q, a level matching our estimate prior to the outbreak of Covid-19. We view this figure as indicating that NAND supply-demand conditions should remain largely intact in 2Q20, despite the Covid-19 situation. Of note, the forecasted 2Q20 NAND price rise appears to be driven by mobile products, with tight NAND supply offsetting the sluggish mobile handset demand seen from 1Q20.