After the chip giant Yingweida issued its performance guidance for 2019 on February 14, after-hours stock prices surged by more than 9%. In addition to Nvida, a number of chip companies have recently issued more than expected performance guidelines for 2019. In addition, a number of institutions expect industry demand to pick up in the near future, and chip stocks rebounded strongly. Among them, Meguiar Technologies, Ansenmei Semiconductor and other leading industries have won the market good, the stock price has risen by more than 30% since the beginning of the year.

Chip Stock Collective Carnival

On February 14, after the U.S. stock market, Nvidia announced its fourth quarter results for the fiscal year ended January 27. Although Yingweida's revenue fell 24% to $2.21 billion from a year earlier, its stock price rose sharply after the day, as Yingweida cut its quarterly performance guidelines sharply on January 28, saying that the deterioration of the macroeconomic environment had affected consumer demand for Yingweida Game GPUs. The negative factor had led to a 13.82% drop in the share price on that day, and the company expects a full fiscal year of 2020 (natural year 2019). Annual revenue was flat or slightly lower than the previous year, which was interpreted by the market as a healthy quarterly rise for Nvida later this year. The company's management said that in the first quarter of this year, the company expected channel inventory to be at a normal level, better than the "surplus" predicted at the end of last year.

Earlier, AMD, once known as S&P's first bull stock in mid-2018, reported its fourth quarter of 2018 earnings on January 29, showing record growth in data centre sales despite a decline in net revenue, and predicted a gross profit margin of more than 41% in 2019, the highest level in nearly eight years, which boosted AMD's share price by nearly 10% after the day's trading.

It is worth mentioning that the Philadelphia Semiconductor Index, which measures the U.S. chip semiconductor sector, rose 5.73% on Jan. 24 after Chip Leaders Sellings, Terida and Lamb Research released unexpected results.

With good performance, chip stocks have been reveling collectively this year. The share price of Ansenmei Semiconductor has risen 39.13% since the beginning of the year, 32.34% in the same period, 28.89% in Western China, 28.28% in AMD, 26.67% in Micro-Core Technology, 19.43% in Applied Materials, 18.45% in Seagate Technology and 17.86% in Yingweida Technology. The Philadelphia Semiconductor Index rose 16.97% over the same period, higher than the 10.72% increase of the S&P 500 Index. As of February 15, Factset data showed that 79% of Companies in the S&P 500 index reported fourth quarter results in 2018. Among them, 84% of Companies in the technology sector covering the chip industry exceeded expectations, which was only lower than the industrial sector, ranking second in the 11 sectors of the S&P 500 index.

Industry is expected to recover in the second half of the year

Analysts pointed out that due to the lack of demand drivers such as smart phones, the inflection point of product prices in the industry, and the confusing trading environment, downstream customers are cautious to stock up. In 2018, the chip industry entered a downward cycle. But in the second half of 2019, industry demand is expected to pick up, and the industry will enter an upward cycle by 2020.

UBS's latest research suggests that global chip demand may rebound later this year. Although the outlook for the first quarter of 2019 is not good, there may be a "cyclical bottom" of the industry in this quarter.

UBS is not the only institution to find signs that the overall market of chipmakers is bottoming out. Harlan Sur, an analyst at JPMorgan Chase, thinks the worst of the struggling chip industry may be over. If the market hasn't bottomed yet, the bottom should also be close to the favorable position in mid-January, Sur said. Over the past year or so, the chip industry's share price has plunged, but this is ready for a sharp rebound in many chip stocks.

Among the stocks, Nvida, Asme, Applied Materials, Lamb Research and other leading industry performance forecasts are optimistic about the recovery of the industry in the second half of 2009.

In addition, market analysts point out that companies involved in research and development and production of automotive chips, artificial intelligence chips and other hot areas are expected to experience explosive growth this year. Among the star companies, Qualcomm recently announced the expansion of its automobile computer chip lineup, and through cooperation with Amazon, it will provide users with more Amazon services on automobile computers. Currently, automobile manufacturers are planning to use the automobile chip of Qualcomm. Earlier this year, Amazon's AWS cloud service platform, Samsung Venture Capital and Avery Dennison participated in the B-round financing of Wiliot, a wireless technology company, to develop Bluetooth chips and lay out the Internet of Things. Intel was exposed earlier this year to work with Facebook to develop a new AI chip, which will be released in the second half of 2019.