Volatility And A Murky Near-Term Outlook Hammer Renesas Electronics

I had previously said that I thought this year could be a little shaky for Japan’s Renesas Electronics (OTCPK:RNECY) (6723.T), the global leader in microcontrollers (or MCUs) and one of the leaders in semiconductors for autos, but I didn’t expect the sharp declines in the stock since July, nor the significant underperformance to peers like ON Semiconductor (ON), Infineon (OTCQX:IFNNY), or STMicroelectronics (STM) in what has admittedly been a weakening market for many chip companies.

Between inventory corrections in the auto channel, a much weaker outlook for industrial automation in China, and less near-term leverage to strong auto segments, the next few quarters could still be rough for Renesas. The long-term outlook remains favorable for the company, though, and the market seems to be pricing in an ugly correction. It may take a little while for this stock to shake off these worries, but the potential value makes this a name worth watching.

Readers should note that Renesas’s ADRs are not particularly liquid.

Read the full article:
Volatility And A Murky Near-Term Outlook Hammer Renesas Electronics