UMS (SGX: UMSH) is up some 6% today. There's no particular news to drive this share price change - in our opinion this is a change in the market view of the general prospects in this sector. Markets can indeed take their time but they do get there in the end. When the world out there changes then prices of stocks will change to reflect that new reality.
The issue here is that the global semiconductor industry is changing. As we said yesterday about AEM SGD:
“It looks just like a change in the general view of AEM and its prospects. Which does make a certain amount of sense. As we've pointed out about Nvidia earlier today the development process of a new technology is from general purpose chips to application specific. AI is going to move from GPUs to ASICs soon enough. As Brainchip Holdings is showing, this is already happening. Each new ASIC - and there will be many, one for each intended purpose. For that's the point, to optimise a known process - will require testing. Boom times for semiconductor testing equipment manufacturers.”
UMS share price from SGX
As we also pointed out there is also that bane of a rational world, politics, involved here. The issue being that China wants to be making more advanced semiconductors. America wants to lower its dependence upon foreign semiconductors. The EU has the usual plans to do something or other. And so on - what's happening is that the former global and single market for semiconductors is breaking up into trading blocs and national champions. That's obviously a very silly idea from a global economic point of view.
However, there's an obvious effect of this. Those who make the equipment, or supply the services, for semiconductor manufacturing are going to see business boom. It's not necessarily true that this shift in the structure of the industry is going to lead to more semiconductors being made. But they are going to be made in more places, on shorter production runs. That means an increase in machinery and services because those are sold into production runs, not really by volume of chips made in toto.
Of course it's exactly this which will reduce the productivity overall of the global semiconductor industry. But clouds and silver linings and all that, it also means an increase in business for those supplying into that same industry.
The nett effect of this is that the global changes to chip fabrication should be a boom time for the people who service the chip fabrication industry. Because the place you want to be in a gold rush is as the guy selling shovels. Sure, you never do hit the home run of the major strike. But you also do get a piece of the action from everyone who enters the rush, winners and losers both. Worth recalling that absolutely none of the fortunes of the California gold rush still exist - except for Levi Strauss who were the people clothing those miners.
So, who else out there will see business boom after UMS?