Unexpectedly no longer slowing growth of electronic components

For Mr. ZHUANG, who works in Shenzhen Huaqiang [9.38 1.52%] North as an electronic component business, the best time to make money this year has already passed. “The best prices in the second quarter were a little worse in the third quarter, and they were even worse than the third quarter in the fourth quarter. It was a bit better.” Mr. Zhuang is a Chaozhou native, and like him, he specializes in various types of electronic components. Seventy to eighty percent of them are Chaozhou people. He told reporters that the overall price of electronic components is now relatively stable, from the perspective of shipments, foreign orders are a little bad, and internal orders are not bad. He believes that foreign orders are mainly affected by the appreciation of the renminbi against the US dollar.

In the opinion of industry analysts, the period of over-expected growth of electronic components has passed and the growth rate of the industry will slow down. For the trend of the industry in the next year, institutions are generally expected to be a moderate growth year.

It is not only the factors for appreciation of the renminbi that Mr. ZHUANG said that led the organization to make the above judgments. The first is the cyclical changes in the industry itself. Ai Jian Securities analyst Zhu Zhiyong told reporters that this year's situation in the electronic components industry is rather special. According to past practice, the situation is usually better during the peak season in the third and fourth quarters. This year is the first half of the year. In the course of the economic recovery in the first half of the year, due to the previous reduction in production capacity and inventory, the electronic components industry increased demand for restocking and increased product prices. In the second half of the year, as investment increases and output increases, the restocking phase gradually comes to an end. Product prices gradually decline and the industry growth rate will slow. However, this does not mean the end of the industry cycle, but will return to normal growth. The appreciation of the renminbi will engulf corporate profits, but it is not expected to affect sales growth. It is expected that future sales will remain at high levels, but the growth rate of profit margins and profits will slow down.

Secondly, from the perspective of some industry priori indicators, such as capacity utilization data and inventory, the characteristics of staged highs of electronic components are also very obvious. AVIC Securities stated that the state of inventory growth has started to spread from the manufacturers to the supply chain, and this year's strong capital expenditures have also caused the market to worry about the reversal of supply and demand in the future. In fact, the beginning of the third quarter, the domestic component market has been eased out of stock, and the loosening of component prices is a common phenomenon. Recently, the Huaqiangbei Component Composite Index [2391.72 2.89%] is in a state of slow decline, indicating that the market is in a state of relatively balanced supply and demand. The pre-holiday and peak season stocking effects support this balance.

For the slowdown in the growth rate of the electronic components industry, overseas markets have given early warning. Global electronics stocks fell last week, and National Semi-Announcement issued a three-quarter performance warning that caused widespread concern in the industry. The world’s leading semiconductor company, Texas Instruments, revised downwards its forecast for the second half of the year and expressed caution about the future. The weakness of PC sales has become a common concern for Samsung and other electronics giants. At the same time, orders for notebook OEMs in Taiwan have picked up, but the situation is much worse than in previous years, and orders for December are still not seen.

Out of concerns about the overall slowdown in the industry, analysts have turned their investment focus on structural opportunities and the mining of industry stocks. In Zhu Zhiyong's view, the emergence of emerging consumer products has provided new and broad application areas for electronic products, and will play a revolutionary role in promoting the electronic components industry, such as touch screens, electronic paper, liquid crystal display related materials, OLED, etc. The investment opportunities are more in sub-sectors such as mobile smart terminals, LEDs, power devices, and new display devices.