Semiconductor stocks lagged behind the broader market Wednesday after South Korea announced plans for the world’s largest chip-making complex and one analyst pointed to shorter lead times at chip makers could result in cancellations.
Earlier Wednesday, Samsung Electronics Co. 005930 said it would contribute about $228 billion over the next 20 years to building what South Korea is billing as what will be the largest single chip-making complex in the world. American depositary shares of direct competitor TSMC fell 3% in recent activity.
In a Wednesday note, Susquehanna Financial analyst Christopher Rolland said lead times — or the time it takes between placing an order and it being fulfilled — for the industry contracted for the ninth month in a row, another indication that the pandemic-triggered chip shortage of about two years is well behind us.
“We have heard from numerous companies this earnings season that FPGA LTs have been improving,” Rolland said. “We think this contraction may suggest the FPGA-heavy Networking end market may also be slowing,” meaning a negative for companies such as AMD, Broadcom, Marvell Technology Inc. MRVL .