Researchers at Gartner, Inc. recently released a bullish forecast for 2017 semiconductor sales, which bodes well for the individual companies as well as the index funds in the industry.
The firm expects worldwide semiconductor revenues to jump 12.3% from 2016 levels to $386 billion this year. Gartner noted that favorable conditions seen at the end of last year have accelerated, although a slowdown is expected in 2019 as supply begins to exceed demand.
The researchers commented via press release:
“While price increases for both DRAM and NAND flash memory are raising the outlook for the overall semiconductor market, it will also put pressure on margins for system vendors of smartphones, PCs and servers,” said Jon Erensen, research director at Gartner. “Component shortages, a rising bill of materials, and the prospect of having to counter by raising average selling prices (ASPs) will create a volatile market in 2017 and 2018.”
Gartman noted that the biggest pricing increases so far this year have been in the PC DRAM segment. The price of those modules has doubled in the past nine months or so.
On the semiconductor ETF side of things, The iShares S&P NA Technology Semiconductor Index Fund ETF (NASDAQ:SOXX) was unchanged in premarket trading Monday. Year-to-date, SOXX has gained 5.86%, versus a 4.02% rise in the benchmark S&P 500 index during the same period.
Meanwhile, the VanEck Vectors Semiconductor ETF (NYSE:SMH) was unchanged in premarket trading Monday. Year-to-date, SMH has gained 6.43%.