0425 GMT - The semiconductor sector is likely in the early stage of a downcycle, Morningstar analyst Phelix Lee says in a research note. Valuations of chip manufacturers have declined amid uncertainty about U.S. tariffs, he says, fueling fears about chip demand and long-term investments. "Capital spending by select U.S. and Chinese tech firms are slated to exceed $300 billion in 2025, growing more than 40% year-on-year, posing a much higher hurdle to sustain the momentum into 2026," Lee says. These signs point to "a cautious demand outlook for the next 24 months," he adds. Morningstar thinks investors should opt for best-in-class stocks such as TSMC and GlobalWafers.(sherry.qin@wsj.com)

(END) Dow Jones Newswires

June 19, 2025 00:25 ET (04:25 GMT)

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