Few industries affected by the global supply chain slowdown are more serious than the semiconductor industry in 2021, and the chip industry is expected to be more stable this year. However, Wells Fargo & Co's assessment of the semiconductor equipment manufacturing industry suggests that in terms of the upcoming earnings season, investors should probably prepare for the ups and downs of the coming weeks.

Joe Quatrochi, an analyst at Wells Fargo & Co, said semiconductor equipment stocks were "likely to remain relatively volatile" in the short term, as any changes to quarterly results and sales prospects could affect share prices.

Quatrochi said KLA (KLAC.US) was his first choice among chipmakers and he believed KLA would benefit from Intel Corp's plan to increase capital spending. KLA is scheduled to report quarterly results on Jan. 27, and Quatrochi said he expected the company to outline its expectations for the wafer and wafer equipment business. At the end of December, Quatrochi upgraded KLA, believing that the company's share price had 10 per cent upside this year.

Quatrochi took a slightly more pessimistic view of Lam Research (LRCX.US), saying that continuing supply chain problems and increased production at Lam's new plant in Malaysia had had a negative impact on the company's gross profit margin. Quatrochi added that Lam will report quarterly results on January 26 and investors should pay close attention to what the company thinks of its memory chip business as it will have an impact on the company's share price.

Quatrochi believes ASML Holding NV (ASML.US) is facing a "difficult situation" because of a recent fire at a factory in Berlin. Before the Berlin fire, it was widely believed that ASML Holding NV's revenue in 2022 was more than 20 per cent higher than last year, but the "unknown impact" of the fire could affect investor sentiment in the upcoming earnings season, Quatrochi said. ASML Holding NV will announce his results next Wednesday.