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Investing.com - Bernstein SocGen Group downgraded Sumco Corp (TYO:3436) (OTC:SUOPY), a $3.87 billion semiconductor wafer manufacturer, from Market Perform to Underperform on Friday, while slightly raising its price target to JPY1,290.00 from JPY1,260.00. According to InvestingPro analysis, the stock appears overvalued at current levels.
The downgrade comes as Sumco’s stock has posted impressive gains, with a 49.42% year-to-date return and trading near its 52-week high of $23.58, driven by artificial intelligence (AI) optimism, according to Bernstein SocGen analyst David Dai. InvestingPro subscribers have access to 10 additional key insights about Sumco’s valuation and growth prospects.
The research firm noted that AI wafer demand in 2025 is projected to reach only 469 kwpm (including HBM, DRAM, and advanced logic for AI servers), representing just 8% of global 12-inch wafer demand.
Even with aggressive assumptions of 170% growth in AI wafer demand by 2027 to 1,267 kwpm, this would only increase raw wafer demand by 4-5% annually, the firm stated.
Bernstein SocGen expects raw wafer demand to grow at a 9% CAGR, with actual wafer shipment growth projected to be "much slower due to height inventory levels," while NAND wafer growth will be limited as bit growth will be achieved through more layers rather than increased wafer demand.
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