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5 Solid Stocks to Buy on Surging Semiconductor Sales
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In spite of several challenges, the semiconductor industry has managed to put up a great show. Higher demand for semiconductors has resulted in a supply crisis but has been driving the revenues of manufacturers.
President Joe Biden last month signed into law the Chips and Science Act 2022, which is aimed at boosting the production of semiconductors so that the United States can be self-reliant. However, it will take some time for the results to get reflected in reality.
Meanwhile, strong demand for semiconductors should help chipmakers in the coming days. Given this situation, stocks like Monolithic Power Systems, Inc. (MPWR - Free Report) , Silicon Laboratories Inc. (SLAB - Free Report) , Texas Instruments Incorporated (TXN - Free Report) , Vishay Intertechnology, Inc. (VSH - Free Report) and STMicroelectronics N.V. (STM - Free Report) are expected to benefit in the near term.
Semiconductor Sales Continue to Grow
The Semiconductor Industry Association (“SIA”) said on Sep 6 that global semiconductor sales increased 7.3% year over year in July to $49 billion from $45.7 billion a year ago. This comes after a solid 2020 and 2021 when semiconductor sales had hit a record high.
Although SIA said that sales have slowed in recent times, the industry is still expanding. This comes despite numerous obstacles like soaring prices and the supply-chain issue. On a year-over-year basis, sales rose 20.9% in the Americas, 15.2% in Europe, 13.1% in Japan and 4.1% the Asia Pacific region.
The surge in sales of semiconductors is attributed to the increased use of consumer electronics products across the world. The growth of artificial intelligence (AI), the Internet of Things (IoT) and machine learning (ML) technologies is also spurring demand for semiconductors. These advancements allow memory chips to process enormous data more quickly, creating massive demand for semiconductors.
The latest data from SIA came after the industry reported solid semiconductor sales in the second quarter of the year. SIA said in a separate report last month that global semiconductor sales grew an impressive 13.3% year over year to $152.5 billion in the second quarter of 2022.
Semiconductor Industry Poised to Grow
The semiconductor industry was already performing well and the pandemic gave further boost to demand. As millions worked and learned from home, demand for consumer electronics, communication devices and PCs shot up overnight, increasing the need for microchips.
However, the microchip industry has been struggling to meet this growing demand, resulting in a supply-chain crisis across the globe. This has prompted several governments to address the issue.
The United States is one of the market leaders but China has been leading the race for a long time. The sudden surge in demand for semiconductors has further made the United States struggle to meet demand.
This prompted the government to come up with a new act last month to enhance microchip production in the United States. The CHIPS and Science Act of 2022 is targeted at making the United States self-reliant in semiconductor production and not dependent on China. The $280 billion package will include funds for research and subsidies.
The legislation contains $52 billion in incentives for American semiconductor manufacturers. This will significantly increase the output of semiconductors.
Additionally, it would offer a $24 billion investment tax credit to semiconductor firms. As the globe becomes more dependent on technology, Biden and other experts believe that the new act would be essential for the country's economic health and national security. It would ensure America’s independence in this way.
According to a report from Vantage Market Research, the global semiconductor market is projected to hit $712.4 billion by 2028 and witness a CAGR of 8.8%.
Our Choices
The semiconductor industry is only likely to benefit in the near term, given the surging demand for semiconductors. The new act would further boost production and make the United States more self-reliant. Given this scenario, these four chip stocks are likely to benefit in the near term.
Monolithic Power Systems, Inc. designs, develops and markets high-performance power solutions. MPWR focuses on the market for high-performance analog and mixed-signal integrated circuits (ICs). Monolithic Power Systems’ products are widely utilized in industrial applications, telecommunication infrastructures, cloud computing, automotive and consumer applications.
Monolithic Power Systems’ expected earnings growth rate for the current year is 68.6%. The Zacks Consensus Estimate for current-year earnings has improved 8.2% over the past 60 days. MPWR has a Zacks Rank #2 (Buy).
Silicon Laboratories Inc. is a leading provider of silicon, software and solutions for the IoT, Internet infrastructure, industrial automation, consumer and automotive markets. SLAB solves the electronics industry's toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity.
Silicon Laboratories’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 20.5% over the past 60 days. SLAB sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Texas Instruments Incorporated is an original equipment manufacturer of analog, mixed-signal and digital signal processing integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe.
Texas Instruments’expected earnings growth rate for the current year is 13.2%. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the past 60 days. TXN has a Zacks Rank #2.
Vishay Intertechnology, Inc. is a global manufacturer and supplier of semiconductors and passive components. VSH’s products include metal oxide semiconductor field-effect transistors, Diodes and Optoelectronic Components.
Vishay Intertechnology’s expected earnings growth rate for the current year is 27.6%. The Zacks Consensus Estimate for current-year earnings has improved 10.4% over the past 60 days. VSH Intertechnology carries a Zacks Rank #2.
STMicroelectronics N.V. is a global independent semiconductor company, which designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices. STMS’s products are used in a wide variety of microelectronic applications, including telecommunications systems, computer systems, consumer products, automotive products, and industrial automation and control systems.
STMicroelectronics N.V.’s expected earnings growth rate for the current year is 79.6%. The Zacks Consensus Estimate for current-year earnings has improved 16.5% over the past 60 days. STM sports a Zacks Rank #1.
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5 Solid Stocks to Buy on Surging Semiconductor Sales
In spite of several challenges, the semiconductor industry has managed to put up a great show. Higher demand for semiconductors has resulted in a supply crisis but has been driving the revenues of manufacturers.
President Joe Biden last month signed into law the Chips and Science Act 2022, which is aimed at boosting the production of semiconductors so that the United States can be self-reliant. However, it will take some time for the results to get reflected in reality.
Meanwhile, strong demand for semiconductors should help chipmakers in the coming days. Given this situation, stocks like Monolithic Power Systems, Inc. (MPWR - Free Report) , Silicon Laboratories Inc. (SLAB - Free Report) , Texas Instruments Incorporated (TXN - Free Report) , Vishay Intertechnology, Inc. (VSH - Free Report) and STMicroelectronics N.V. (STM - Free Report) are expected to benefit in the near term.
Semiconductor Sales Continue to Grow
The Semiconductor Industry Association (“SIA”) said on Sep 6 that global semiconductor sales increased 7.3% year over year in July to $49 billion from $45.7 billion a year ago. This comes after a solid 2020 and 2021 when semiconductor sales had hit a record high.
Although SIA said that sales have slowed in recent times, the industry is still expanding. This comes despite numerous obstacles like soaring prices and the supply-chain issue. On a year-over-year basis, sales rose 20.9% in the Americas, 15.2% in Europe, 13.1% in Japan and 4.1% the Asia Pacific region.
The surge in sales of semiconductors is attributed to the increased use of consumer electronics products across the world. The growth of artificial intelligence (AI), the Internet of Things (IoT) and machine learning (ML) technologies is also spurring demand for semiconductors. These advancements allow memory chips to process enormous data more quickly, creating massive demand for semiconductors.
The latest data from SIA came after the industry reported solid semiconductor sales in the second quarter of the year. SIA said in a separate report last month that global semiconductor sales grew an impressive 13.3% year over year to $152.5 billion in the second quarter of 2022.
Semiconductor Industry Poised to Grow
The semiconductor industry was already performing well and the pandemic gave further boost to demand. As millions worked and learned from home, demand for consumer electronics, communication devices and PCs shot up overnight, increasing the need for microchips.
However, the microchip industry has been struggling to meet this growing demand, resulting in a supply-chain crisis across the globe. This has prompted several governments to address the issue.
The United States is one of the market leaders but China has been leading the race for a long time. The sudden surge in demand for semiconductors has further made the United States struggle to meet demand.
This prompted the government to come up with a new act last month to enhance microchip production in the United States. The CHIPS and Science Act of 2022 is targeted at making the United States self-reliant in semiconductor production and not dependent on China. The $280 billion package will include funds for research and subsidies.
The legislation contains $52 billion in incentives for American semiconductor manufacturers. This will significantly increase the output of semiconductors.
Additionally, it would offer a $24 billion investment tax credit to semiconductor firms. As the globe becomes more dependent on technology, Biden and other experts believe that the new act would be essential for the country's economic health and national security. It would ensure America’s independence in this way.
According to a report from Vantage Market Research, the global semiconductor market is projected to hit $712.4 billion by 2028 and witness a CAGR of 8.8%.
Our Choices
The semiconductor industry is only likely to benefit in the near term, given the surging demand for semiconductors. The new act would further boost production and make the United States more self-reliant. Given this scenario, these four chip stocks are likely to benefit in the near term.
Monolithic Power Systems, Inc. designs, develops and markets high-performance power solutions. MPWR focuses on the market for high-performance analog and mixed-signal integrated circuits (ICs). Monolithic Power Systems’ products are widely utilized in industrial applications, telecommunication infrastructures, cloud computing, automotive and consumer applications.
Monolithic Power Systems’ expected earnings growth rate for the current year is 68.6%. The Zacks Consensus Estimate for current-year earnings has improved 8.2% over the past 60 days. MPWR has a Zacks Rank #2 (Buy).
Silicon Laboratories Inc. is a leading provider of silicon, software and solutions for the IoT, Internet infrastructure, industrial automation, consumer and automotive markets. SLAB solves the electronics industry's toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity.
Silicon Laboratories’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 20.5% over the past 60 days. SLAB sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Texas Instruments Incorporated is an original equipment manufacturer of analog, mixed-signal and digital signal processing integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe.
Texas Instruments’expected earnings growth rate for the current year is 13.2%. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the past 60 days. TXN has a Zacks Rank #2.
Vishay Intertechnology, Inc. is a global manufacturer and supplier of semiconductors and passive components. VSH’s products include metal oxide semiconductor field-effect transistors, Diodes and Optoelectronic Components.
Vishay Intertechnology’s expected earnings growth rate for the current year is 27.6%. The Zacks Consensus Estimate for current-year earnings has improved 10.4% over the past 60 days. VSH Intertechnology carries a Zacks Rank #2.
STMicroelectronics N.V. is a global independent semiconductor company, which designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices. STMS’s products are used in a wide variety of microelectronic applications, including telecommunications systems, computer systems, consumer products, automotive products, and industrial automation and control systems.
STMicroelectronics N.V.’s expected earnings growth rate for the current year is 79.6%. The Zacks Consensus Estimate for current-year earnings has improved 16.5% over the past 60 days. STM sports a Zacks Rank #1.