Positives and negatives for 2015 IC industry

A positive for the semiconductor industry this year is that it is the industry with the least correlation with the oil industry, says Bank of America Merrill Lynch Bank in its 2015 Semiconductor Playbook.

More M&A will make the industry attractive to investors as will an expected free cash flow of 6-7%.

The company expects 2015 growth of 6.8% down from 2014′s growth of 9.8%.

Positives are: a disciplined supply chain; mobile data/4G LTE adoption in emerging markets; a stabilising PC market; continuing cloud/data centre build-outs; supportive valuation with SOX

Negatives are: macro demand/oil volatility; Apple deceleration; limited op. leverage; reluctance of some investors to “chase” sector that has appreciated substantially in the past two years, and the stretch valuation of SMid-cap semis that are the subject of mergers and acquisitions.

Merrill Lynch plumps for six stocks for 2015: Intel, TI, Skyworks, Avago, NXP and RF Micro.

david manners

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