About Rajvindra Gill
Rajvindra Gill, then managing director of semiconductor equity research at Needham, appeared on CNBC in August 2022 to discuss NVIDIA ahead of its earnings. He stated that he was "hoping for a kitchen sink quarter," referring to a period where a company takes all expected charges at once. Gill noted continued risks to NVIDIA's October guidance, citing the transition of Ethereum to proof-of-stake and weak demand in China and Europe. He said that gaming headwinds persisted due to a weak Chinese economy and falling GPU pricing, adding that he did not believe the gaming segment was "out of the woods yet." Gill also said he was closely watching NVIDIA's data center business, which had decelerated, and its gross margins after a $3 billion inventory charge.
In a January 2020 appearance on CNBC, Gill argued that any trade resolution, even a suboptimal one, would drive chip stocks higher. He said business in China was "frozen" due to tariff uncertainty and that distribution inventories were at historical lows, suggesting a restocking cycle could follow a trade deal. Gill also cited a return to spending by hyperscalers like Facebook, Google, Microsoft, and Amazon as a positive catalyst for Intel and NVIDIA. He highlighted 5G as a growth driver, stating that RF semiconductor content per phone could increase two to four times, and named Skyworks and Corvo as beneficiaries. Gill also expressed a positive view on Micron, predicting its valuation would expand as the memory market recovered.
Source: AI-verified profile updated from Rajvindra Gill's recent appearances.
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Transcript (8 segments)
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Rajvindra Gill0:10
We anticipated a bottom in the cycle, and so they bought stocks pretty aggressively. A lot of these stocks were trading at five-year valuation lows, sometimes seven-year lows at the beginning of the year. So we saw the semiconductor index up about 60%, that's almost double from the Nasdaq. Now whether that can continue next year, I think it will. The main takeaway is that any trade resolution, even if it's suboptimal, is going to drive chip stocks higher for a couple of reasons. Number one, business on the ground in China is pretty much frozen. All the companies I talked to that sell into China, nobody wants to build any inventory because they don't know what the tariff rates are going to be. So if you're a big Chinese company or a small company, you're not building inventory. Once we know what the tariff rates are going to be, then they're going to start to rebuild.
This inventory correction that has lasted more than a year, we're coming to the bottom. So if we see a stimulus plan coming out of China, if we see a resolution on trade, then we're going to see a restocking and demand. So demand is going to start to pick back up again, and since there's a limited amount of inventory, you can see a pretty big rebuild.
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Interviewer1:29
Where does Intel versus AMD go from here? Because Intel's been having PC chip supply issues for years, and AMD could do well for a little while but only until Intel got its act together. But things seem to have changed over there. Is 2020 going to be a pivotal year to see whether the whole narrative on that kind of mega battle in chips has changed?
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Rajvindra Gill1:53
Well, I mean, this has been a historical narrative. Intel has had an inventory correction and hyperscaler spending for the past year. They've now returned to start building out their data center, which is having a positive impact on Intel, on Nvidia, and other companies in the supply chain. So there are going to be a number of catalysts next year for the semiconductor industry. In addition to some sort of trade resolution, we're going to have 5G on the smartphone side. All my conversations in Asia, all my discussions, are talking about anywhere between 175 million to 250 million 5G phones next year. We have 20 operators that are ready to deploy 5G services. The RF content, the radio frequency content, the semiconductor content is going to go up 2 to 4 times per phone because we have more frequency bands, more antennas, more power amplifiers, more filters.
In the semiconductor industry, memory pricing has bottomed. In NAND and DRAM, there are checks indicating that NAND pricing could be up 30 to 40% next year. So we're kind of getting into a recovery in memory as well.
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Interviewer3:26
So it begs the question, what is your top pick within the sector? Because I feel like it's an important conversation to have. These are certainly key trends in 2020, but many of them I think have already been anticipated by investors.
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Rajvindra Gill3:38
No, I think that's a fair point. The valuations are getting stretched. We're talking about back to kind of peak levels we were at three or four years ago. However, the only thing I would say is consensus estimates for the group are factoring in maybe about 2% year-over-year growth in the first half versus the first half of last year. So we're... on semiconductor, which basically supplies image sensors, power management chips for autonomous driving, electric vehicles, as well as computer vision and three automation. We can forecast $3 of long-term earnings over the next two to three years. The stock's around $25, so on a long-term earnings basis, it's cheap. We also like Micron. We think Micron's valuation is going to start to expand on a price-to-book basis as investors realize we're coming out of a recovery and going into a recovery, and we're seeing a lot of demand for NAND and DRAM. Micron's trading only about 1.7 times book value. Its median book value over seven to eight years is 2 times. So just getting to 2 times book value, you're going to get a $70 price.
We've talked to our building aggressively, whether it's Apple, Samsung, or the Chinese OEMs. They're building aggressively for 5G. Whether they sell through or not is going to be another story, but they're building for it.
