SIA Data: Semiconductor shipments in March were above seasonal norms, with marked improvement in analog chips

Overview

This report analyzes global semiconductor shipment trends based on March data released by the Semiconductor Industry Association (SIA). The key finding is that semiconductor shipments in March exhibited broad, above-seasonal growth. The three-month moving average shows that the gap between shipments and the long-term demand trend narrowed from 8% in February to 4%, indicating sustained industry recovery. Goldman Sachs expects shipments to move closer to trend levels and remains optimistic about the analog chip segment, continuing to recommend Microchip, NXP, and Analog Devices.

Core views

The overall trend has improved significantly: According to SIA data, integrated circuit shipments (excluding memory) rose 29% month-over-month in March, far above typical seasonal norms. With the exception of discrete devices, DRAM, MPUs, and DSPs, most sub-segments posted above-seasonal growth. The three-month moving average indicates that current shipments are now only 4% below the long-term demand trend, a notable narrowing from 8% in February—consistent with management comments suggesting shipments are aligning more closely with end-demand, though the pace of improvement remains cautious. Sub-segment performance varied: Analog chip shipments were 2.0% below trend, a substantial improvement from 6.5% in January; microcontroller (MCU) shipments lagged 26.0% behind trend, slightly better than the 27.5% shortfall in January. In the memory space, DRAM revenue grew 10% month-over-month and shipments rose 5%, roughly in line with typical seasonality; NAND revenue surged 34% month-over-month and shipments climbed 15%, both above seasonal norms. Stock selection preferences are clear: Goldman Sachs continues to favor Microchip, NXP, and Analog Devices, focusing on names with the largest gaps between shipments and trend levels, as well as companies with differentiated supply-chain management capabilities. All three stocks carry a Buy rating, with price targets of $65.60, $194.55, and $318.34, respectively.

Analysis framework

Goldman Sachs employs an analytical framework comparing industry data with historical seasonality: First, it obtains SIA’s monthly shipment data—covering revenue, shipments, and average selling price (ASP); then it contrasts current figures with historical seasonal norms to identify sub-segments that are either above or below seasonality. A three-month moving average smooths short-term fluctuations, calculating the gap between current shipments and the long-term demand trend and tracking whether this gap is narrowing or widening. Finally, it cross-checks these findings against management commentary on demand and inventory to validate the data and derive investment implications. This approach helps investors pinpoint turning points in industry cycles and select names best positioned to benefit from cyclical recovery.

Methodology notes

• Industry / sector analysisSupply-demand framework

  Judging industry supply-and-demand conditions by comparing shipment data with long-term trends

  When shipments fall short of the long-term trend, it suggests weak demand or excess inventory; as the gap narrows, supply and demand are improving. This report uses this method to conclude that the semiconductor industry’s destocking phase is nearing its end.

• Cycle & prosperityProsperity inflection

  Tracking changes in industry prosperity using a three-month moving average

  The moving average smooths short-term volatility, making trend direction clearer. This report shows the gap narrowing from 8% to 4%, indicating the industry is on a recovery path.

• Industry / sector analysisVolume-price decomposition

  Breaking down revenue changes into shipment volume and average selling price variations

  Revenue equals shipments multiplied by ASP; disaggregating allows us to determine whether growth stems from higher volumes or price increases. This report applies this decomposition to each sub-segment.

• Event games & behavioral financeExpectation gap / guidance

  Using corporate commentary to validate the authenticity of data trends

  Raw data can be noisy; cross-referencing with management remarks on demand and inventory helps confirm trend reliability. This report employed this method to ensure the observed improvement is sustainable.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Analog Devices Inc.

  Beneficiary: Improved analog chip shipments; the company’s shipments remain well below trend yet possess strong supply-chain differentiation

  Strengths

  Differentiated supply-chain management, high shipment elasticity

  Comparison

  Alongside Microchip and NXP, a top analog chip pick at Goldman Sachs

  Risks

  Industry recovery may proceed more slowly than expected

• Microchip Technology Inc.

  Beneficiary: MCU shipments lag 26% behind trend, leaving significant room for recovery; the company boasts differentiated supply-chain capabilities

  Strengths

  Large gap between shipments and trend, strong recovery elasticity, differentiated supply-chain management

  Comparison

  Like Analog Devices and NXP, a preferred analog chip stock at Goldman Sachs

  Risks

  Industry recovery may be slower than anticipated

• NXP Semiconductors NV

  Beneficiary: Improvement in analog chip shipments; the company excels in differentiated supply-chain management

  Strengths

  Differentiated supply-chain management, high shipment elasticity

  Comparison

  Alongside Analog Devices and Microchip, a top analog chip pick at Goldman Sachs

  Risks

  Industry recovery may fall short of expectations

Key data

• IC shipments (excluding memory), month-over-month change+29%March data, well above typical seasonal norms
• Gap between shipments and long-term trend4%Three-month moving average; 8% in February, showing improvement
• Analog chip shipments vs. trend2.0% below6.5% below in January, a significant improvement
• MCU shipments vs. trend26.0% below27.5% below in January, slight improvement
• DRAM shipments, month-over-month change+5%Below typical seasonal norms
• NAND shipments, month-over-month change+15%Above typical seasonal norms
• Analog Devices target price$318.34Buy rating
• Microchip target price$65.60Buy rating
• NXP target price$194.55Buy rating

Impact & implications

Implications for the industry: Shipment data trending toward the long-term norm suggests the semiconductor sector’s destocking phase is drawing to a close and demand is gradually normalizing. This bodes well for the analog chip segment, which has been particularly affected by inventory adjustments. Implications for investment targets: Goldman Sachs favors names with the largest gaps between shipments and trend levels, reasoning that such firms will exhibit greater elasticity during cyclical recovery. It also prefers companies with differentiated supply-chain management, as they are better equipped to navigate fluctuations in supply and demand. The slowdown in DRAM shipment growth may indicate uneven recovery in memory demand; investors should monitor whether the divergence between NAND and DRAM persists.

Risks

• The slowdown in DRAM shipment growth may signal uneven recovery in memory demand
• Industry recovery remains cautious, with shipments still falling short of actual end-demand

What to watch

• Whether subsequent SIA monthly shipment data continue to show improvement
• The pace at which shipment gaps in various sub-segments narrow relative to long-term trends
• Changes in management commentary regarding demand normalization and customer inventory levels