Stock Price Up 24% Since Early Year Due to Strong Performance
High Competitiveness in Automotive and Industrial Semiconductor Markets
Hantoo Securities "Valuation Burden Exists but Further Rise Possible"
[Asia Economy Reporter Minji Lee] Analog semiconductor supplier Texas Instruments (TI) is expected to see its stock price rise, driven by growth in the automotive and industrial semiconductor markets.
According to the financial investment industry on the 26th, Texas Instruments' stock closed at 200.65 on the 24th, up 1% from the previous trading day. It has risen 12% over the past six months and 24% since the beginning of the year. The stock price increase is analyzed to be the result of a combination of strong earnings and expectations for shareholder returns. As of last year, Texas Instruments ranked 7th in sales within the overall semiconductor market, focusing on the production of analog and embedded processing products. The sales proportion by end-industry is approximately 35% industrial, 20% automotive, 20% electronic devices, 18% communication, and 6% others.
Kyungmin Kim, a researcher at Hana Financial Investment, said, “The analog semiconductors produced by TI have high exposure to industrial and automotive sectors, so demand is determined in line with the global economy, which is why the upward trend has not been as prominent as other semiconductor companies like Nvidia or AMD. Although TI has reported strong earnings, the stock price did not respond due to conservative guidance, but this time it broke a 52-week high and continued its upward trend,” he analyzed.
TI's market share in the analog semiconductor market expanded from 28.7% in 2019 to 28.9% last year, and the sales growth rate in the first half of this year also exceeded that of other competitors, suggesting further market share gains. Looking at the first half sales growth rate, TI grew 35% year-over-year, surpassing competitors Analog Devices (23%) and ON Semiconductor (27%).
Notably, competitiveness in the automotive analog semiconductor market has improved, with market share steadily increasing from 26.7% in 2018 to 28.1% in 2019 and 29.6% in 2020. Recently, TI acquired the Rehi plant from Micron, and continuous external growth is expected due to increased supply volume.
The semiconductor market is predicted to grow at an average annual rate of 4.5% until 2025. Growth rates for automotive and industrial markets are expected to be 11% and 9.5%, respectively, significantly outpacing other industry sectors. Wonsik Lee, a researcher at Korea Investment & Securities, explained, “As electrification progresses, core automotive components are shifting from mechanical to semiconductor-based, and industrial semiconductor demand is steadily increasing due to expanded infrastructure investments by governments worldwide. Although the recent stock price rise means the current price-to-earnings ratio (PER) based on 2022 expected earnings is 24.4, indicating some valuation pressure, further stock price increases are anticipated.” Furthermore, it was pointed out that the status of suppliers is rising relative to demand sources within the semiconductor market, and that better performance of finished vehicles requires more analog semiconductors, which should also be considered as a factor.
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