Even the best parties eventually end, and investors seem to be preparing for the end of this powerful semiconductor boom, or at least they’re not as interested in Infineon (OTCQX:IFNNY) at this point in the cycle. While the SOX index has risen about 13% since my last update on Infineon, the shares have only risen around 4%, and the year-to-date underperformance is likewise around 10%.
I understand why investors would be concerned about signs that demand is starting to decelerate and that increased industry-wide capacity in 2022 will embolden customers to cancel their excess orders (double-ordering to ensure they get what they need). It will almost certainly cause a period of de-rating in the chip sector, and chaos for some operators, but I believe Infineon will come out of it in fine shape, and I’d stay alert to weakness as an opportunity to add shares.
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