The semiconductor industry in a deglobalization trend The semiconductor industry in a deglobalization trend The semiconductor industry in a deglobalization trend

The semiconductor industry in a deglobalization trend

Picture of Peter Garnry
Peter Garnry

Head of Equity Strategy

Summary:  The deglobalisation theme will drive everything in the economy over the next decade. Yesterday, the US government ordered Nvidia to halt sales of its most advanced AI chips to China because the US is fearing that they are increasingly used for military applications. This decision and the recent US CHIPS Act all point towards a future where the majority of semiconductors will be manufactured in the US and Europe for security reasons. While sentiment in semiconductor stocks is negative in the short-term we believe further declines will create a very attractive expected return path for the industry.

Nvidia’s new constraints in China is the canary in the coal mine

Yesterday, the US government instructed Nvidia to stop selling its top AI chips to China as it is feared they are not used solely for commercial purposes but increasingly in military applications. The US chipmaker has got some exceptions to the ban to provide support for certain US customers of its A100 chips through 1 March 2023, and it is also being allowed to finish its development of its H100. The immediate restrictions are impacting $400mn in revenue this quarter for Nvidia which is roughly 5% of revenue. It is clear that the US is intending to decouple its technology sector from China over the next five years and that jeopardizes 26% of Nvidia’s revenue in China.

Our semiconductor theme basket fell 1.9% yesterday and is down 31% this year compared to only 18% for global equity market. Sentiment is getting increasingly negative on semiconductors, but the industry is still valued 14% above the MSCI World on 12-month EV/EBITDA multiple suggesting higher growth expectations. However, with the energy cost shock sucking GDP out of the economy from consumption we could see further losses for semiconductors in the short-term due to lower demand from consumer electronics. This is also the reason why yesterday we shifted to being negative on the industry in our equity note.

However, longer term the falling share prices on semiconductors will create great opportunities and high expected returns for semiconductor stocks. Semiconductors will continue to be in high demand regardless of where they are produced. The US and Europe will end up producing a much larger share of the world’s semiconductors over the next five years which are part of the US’s industry policy described in its US CHIPS Act. The lower demand coming from the private sector in the short-term will be met by increases from the government side as the US and Europe are increasing military spending amid the ongoing war in Ukraine. Semiconductors will also continue to play an important role in the Internet of Things mega trend and generally our modern life, but it is also clear that Western semiconductor manufacturers will not be part of the future growth in China.

The table below shows the constituents in our semiconductor theme basket

NameMkt Cap (USD mn.)Sales growth (%)EBIT margin (%)Diff to PT (%)5yr return
Taiwan Semiconductor Manufacturing Co Ltd423,39129.344.760.0150.7
NVIDIA Corp347,03135.826.950.7230.4
Samsung Electronics Co Ltd251,56718.619.050.916.0
Broadcom Inc198,68219.537.434.1130.5
ASML Holding NV191,61815.633.338.1275.2
Texas Instruments Inc151,82216.951.57.2129.7
QUALCOMM Inc145,90029.435.839.8187.4
Advanced Micro Devices Inc132,90761.716.844.5524.2
Intel Corp130,407-5.418.927.73.1
Applied Materials Inc78,98516.331.044.4116.8
Analog Devices Inc77,50670.720.530.797.9
Micron Technology Inc63,22127.134.434.276.8
Lam Research Corp59,18417.831.232.5180.3
LONGi Green Energy Technology Co Ltd55,90938.410.844.7743.4
Synopsys Inc50,84121.422.925.6313.5
KLA Corp47,80333.139.723.5294.2
Tokyo Electron Ltd47,65731.828.426.4220.8
Cadence Design Systems Inc46,56913.630.213.6339.5
NXP Semiconductors NV43,17124.327.021.653.3
Marvell Technology Inc39,19459.72.060.0168.6
Microchip Technology Inc35,87326.630.230.659.3
STMicroelectronics NV31,45618.723.846.9146.3
Infineon Technologies AG31,22424.118.462.327.4
GLOBALFOUNDRIES Inc31,02035.8-0.916.6NA
ON Semiconductor Corp29,55528.827.710.8295.5
TCL Zhonghuan Renewable Energy Technology Co Ltd22,27096.610.746.3484.4
Kyocera Corp20,52917.28.37.729.1
Unigroup Guoxin Microelectronics Co Ltd19,02645.340.733.4668.9
Skyworks Solutions Inc15,97913.327.237.02.3
Will Semiconductor Co Ltd Shanghai15,403-
Aggregate / median2,835,70225.427.134.2168.6
Source: Bloomberg and Saxo Group
Semiconductor basket vs MSCI World | Source: Bloomberg and Saxo Group


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.