What Q4 Semiconductor Earnings May Have in Store for Investors



Semiconductor stocks in 2019

2019 started on a good note for the semiconductor industry, as the stocks recovered after falls in the fourth quarter of 2018. The VanEck Vectors Semiconductor ETF (SMH) rose 4% in the first 11 days of January 2019 after falling 18.2% in the fourth quarter of 2018. However, SMH fell 1.7% on January 14 as analysts downgraded memory chip stocks Micron and Western Digital (WDC).

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Fourth-quarter semiconductor earnings are around the corner, and the tone will be set by the earnings of TSMC (TSM) and Texas Instruments (TXN) on January 17 and January 23, respectively. These companies’ earnings are used to measure the industry’s performance, as they have a broad customer base and exposure to almost all semiconductor end markets.

TSMC’s and TXN’s stocks fell 17% and 13% in the fourth quarter of 2018 as demand slowed in the semiconductor industry. These stocks fell 2.3% each on January 14, in line with SMH’s movement. Investors might see weak earnings from these companies because of their exposure to Apple (AAPL).


The third week of January could see movement around the processor markets as Xilinx (XLNX) releases its fiscal 2019 third-quarter earnings on January 23 and rival Intel (INTC) releases its earnings for the fourth quarter of 2018 on January 24. Both the companies enjoyed growth in the December 2018 quarter driven by strong demand from the data center and networking markets.

XLNX’s stock rose 6.2%, and INTC’s stock fell 0.8% in the fourth quarter of 2018, outperforming the semiconductor market, which was in a downtrend. Investors can expect some good earnings figures from these stocks because of their high exposure to the fast-growing data center and 5G (fifth generation) markets.


Top-performing semiconductor stock Advanced Micro Devices (AMD) plans to release fourth-quarter 2018 earnings on January 29. A day after AMD, Qualcomm (QCOM) plans to release its fiscal 2019 first-quarter earnings. The stocks of these companies are largely being driven by company-specific news. They are witnessing a strong demand environment and have strong growth potential but are currently surrounded by near-term headwinds. In this series, we will look at each of these companies and understand what their upcoming earnings have in store for investors.

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