• Semiconductor uptrend intact; revenue to grow at 5-year CAGR of 8%
  • Rosy outlook for end markets, catalysed by structural changes and digital transformation
  • Growing importance of semiconductor supply chain in Asia; Singapore stands out in our transferability index
  • Picks are foundries TSMC and UMC; equipment maker AEM, UMS; services providers Inari, Frencken.

Long-term uptrend intact. Revenue for the semiconductor industry is expected to grow by 26.9% y-o-y in 2021 and 8.9% in 2022, and CAGR of 8% in 2020-2025 led by various demand drivers. We are now near the peak of the cycle, expected to be in 2022. 2023 could see a surge in new capacity, leading to a drop in prices of chips and a 3.7% decline in revenue. Thereafter we expect to see a slower CAGR of 5% in 2023-2025. 

Rosy outlook for end markets. 5G will boost demand for smartphones while the structural changes due to the pandemic will continue to drive demand for PCs, tablets, and servers. There is also more room to play in the gaming segment. Internet of Things (IoT) is fuelling digital transformation and higher demand for advanced chips while automotive is recovering from a weak 2020.


Growing importance of semiconductor supply chain in Asia. Besides Taiwan, the world largest chipmaker, other ASEAN countries are also gaining traction on the back of the supply chain disruptions. Singapore scores the highest among the ASEAN-6 countries in our transferability index.

Stock picks. Our picks in the foundries space are TSMC and UMC; equipment-related manufacturer AEM and UMS; backend semiconductor services provider Inari and Frencken, involved in both front and backend space.