Semiconductor Sector Falls 8% This Week, UBS and Barclays Maintain Bullish Outlook

This week, the semiconductor sector experienced a significant decline, with the Philadelphia Semiconductor Index dropping 8% for the week and 17% for the month, potentially ending a three-month streak of gains. The Roundhill Storage ETF (DRAM) fell 17% this week, while the VanEck Semiconductor ETF decreased by 7%. UBS forecasts that the earnings of the Philadelphia Semiconductor Index constituents will grow by 92% this year, with an additional 40% growth expected by 2027. Ulrike Hoffmann-Burchardi, UBS's global equity head, stated that demand for computing power remains higher than available supply, and supply chain capacity constraints are unlikely to ease significantly in the short term, thus maintaining a positive outlook for the semiconductor industry. Barclays' trading department noted that there are currently no signs of panic in semiconductor trading, with recent selling appearing more like passive deleveraging rather than a full-scale withdrawal by investors. WSTS data indicates that the global semiconductor market is expected to grow by 90% by 2026, followed by a further 27% increase in 2027; industry sales saw a year-on-year growth of 106% in April, accelerating to 119% in May. However, Deutsche Bank strategist Maximilian Uleer expressed concerns about the industry's outlook and its high weighting in the market. Wells Fargo's Ohsung Kwon pointed out that semiconductor market sentiment has experienced one of the most severe declines in history over the past four weeks.

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