For investors backing companies involved in the electronics supply chain, the past 12 months have been fairly miserable. Only Spectris (SXS) shares have made a meaningful gain – and even this was driven by an end-of-year rally following the company’s announcement in December that it would receive $345mn (£286mn) for the sale of its Red Lion Controls business, of which £150mn would be returned to shareholders through buybacks.
A sluggish semiconductor industry played a big part. Chip sales fell by 9.4 per cent last year, according to World Semiconductor Trade Statistics (WSTS), but the ramp-up of capacity the industry had embarked on to meet the massive increase in demand during the pandemic meant foundries were underutilised. UBS analysts expect this to change over the course of this year, with utilisation rates forecast to rebound from 70 per cent in the first quarter to 85-90 per cent by the end of the year, fuelled by “robust and broadening AI demand”.