OREANDA-NEWS. Within Singapore’s Information Technology (IT) sector, there are 12 stocks that represent the Semiconductors & Semiconductor Equipment industry, according to the Global Industry Classification Standard GICS®. According to GICS® these 12 Semiconductor stocks fit the criteria of business focus in either the manufacturers of semiconductors, semiconductor equipment or the related products. The 12 stocks have a combined market capitalisation of S$668 million.

The Semiconductor Industry

Semiconductors are materials which have a conductivity between conductors (general metals) and nonconductors or insulators (such as ceramics). Semiconductors are made from pure elements, typically silicon or germanium, or compounds such as gallium arsenide.

The world’s fourth biggest Semiconductor stock by market capitalisation, Avago Technologies, noted in its most recent Annual Report that the semiconductor industry is highly cyclical and is characterized by constant and rapid technological change and price erosion, evolving technical standards, frequent new product introductions, short product life cycles (for semiconductors and for many of the end products in which they are used) and wide fluctuations in product supply and demand. Avago Technologies designs, develops and supplies a broad range of analog semiconductor devices with a focus on compound III-V semiconductor-based products. The majority of its internal III-V semiconductor wafer fabrication is done in the United States and Singapore. Avago Technologies is incorporated under the laws of the Republic of Singapore.

Earlier this week, the Semiconductor Industry Association announced worldwide sales of semiconductors reached $28.9 billion for the month of November 2015, 0.3% lower than the previous month’s total of $29.0 billion and 3.0% down from the November 2014 total of $29.8 billion. In terms of regions, year-on-year sales were higher in China (5.3%), but down in Asia Pacific/All Other (-4.1%), the Americas (-7.1%), Europe (-8.0%), and Japan (-8.6%). However John Neuffer, president & CEO of the Semiconductor Industry Association, noted that, “the industry may narrowly surpass total annual sales from 2014 and is projected to post modest sales increases in 2016 and beyond.” 

Singapore’s Semiconductor Sector

The MSCI World Semiconductor & Semiconductor Equipment Industry Group Index comprises of global companies primarily involved in the design, distribution, manufacture, and sale of semiconductors. In 2015, the index generated a 4.6% total return in Singapore Dollar terms, and averaged a dividend yield of 2.1%. By comparison, the aforementioned 12 semiconductor stocks listed on SGX averaged a 2015 total return of 29.2% and dividend yield of 5.0%. Please note that due to one stock gaining more than 150% over the past calendar year, the average performance is higher than the median return of 23.4%.

The 12 Semiconductor stocks are detailed in the table below, and are sorted according to market capitalisation. To access the stock profile in SGX StockFacts, please click on the stock name.

Source: SGX, Bloomberg & SGX StockFacts (data as of 6 January 2016)

Largest Semiconductor stock

UMS Holdings manufactures high precision front-end semiconductor components; and offers electromechanical assembly and final testing services. It operates through two segments, Semiconductor and Contract Equipment Manufacturing (CEM). The Semiconductor segment provides precision machining components and equipment modules for semiconductor equipment manufacturers. The CEM segment supplies base components to oil and gas original equipment manufacturers. It primarily operates in Singapore and the United States, as well as in the People’s Republic of China, Poland, Malaysia, Taiwan, and South Korea.

In the third quarter of 2015, UMS Holdings saw revenue increase by 24% - from S$24.8 million in 3Q2014 to S$30.7 million in 3Q2015. Their net profit after tax increased by 56% from S$5.5 million in 3Q2014 to S$8.5 million in 3Q2015 and the board declared interim dividend of S$0.01 per share.