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4 Top-Ranked Semiconductor Stocks to Buy Amid Industry Growth
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The global semiconductor industry is constantly facing chip shortages due to supply-chain disruptions across the world resulting from the coronavirus pandemic-induced lockdowns. Rising COVID-19 cases and the resultant lockdowns in China also remain concerns.
Further, the ongoing geopolitical tensions, currency fluctuations, the Russia-Ukraine conflict, and the subsequent inflationary pressure and fears of global recession are negatively impacting the semiconductor industry.
Consequently, weak demand in consumer end-markets remains a major headwind. Per a Gartner report, demand for consumer PC and business PC is expected to fall 13.1% and 7.2%, respectively in 2022 from the year-ago levels. Overall, global shipments of total devices (PCs, tablets and mobile phones) are likely to decline 7.6% in 2022.
The impact of the above-mentioned factors can be seen in the July 2022 performance of the underlined industry.
According to the latest report from the Semiconductor Industry Association, global semiconductor industry sales were $49 billion in July, with a sequential decrease of 2.3%.
Nevertheless, July sales increased 7.3% from the prior-year figure, reflecting a strong growth potential.
Factors Driving Growth
Year-over-year growth was attributed to the increasing adoption of automotive, industrial tools & equipment, networking & communication products, and autonomous & electric vehicles.
The growing usage of advanced technologies like AI, IoT and Virtual Reality in various sectors, including healthcare, defense, retail and agriculture, is also contributing well to the industry growth.
The dominant position of the United States in the global semiconductor market remains noteworthy. Recently, the US government announced plans to invest $50 billion in strengthening domestic chip production.
Apart from the United States, other major economies are making huge investments in the semiconductor industry to reduce import dependency.
In December 2021, the government of India announced a package of Rs 76,000 crore to set up semiconductor manufacturing plants in several states to become self-reliant in this sector.
In February 2022, the European Commission, under the EU Chips Act, plans to invest €43 billion in boosting semiconductor supply in Europe by 2030.
These factors are expected to continue driving growth in the semiconductor industry.
Per a World Semiconductor Trade Statistics report, the worldwide semiconductor market is expected to reach $633 billion in 2022, with a year-over-year increase of 13.9%. The same report indicates that the market is likely to progress 4.6% in 2023.
The Mordor Intelligence report states that the Semiconductor industry landscape is expected to be worth $906.3 billion by 2027, witnessing a CAGR of 8.23% between 2022 and 2027.
Stocks to Buy
Given the upbeat scenario, here are four semiconductor stocks that are well poised to capitalize on the above-mentioned prospects. Apart from strong fundamentals, these stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Taiwan Semiconductor (TSM - Free Report) has been reaping the benefits of strong high-performance computing platform, IoT, and automotive related demand. Solid momentum for 7-nanometer and 5-nanometer technology is contributing well to top-line growth.
TSM’s consistent efforts to expand consumer product portfolio will continue to help it gain momentum across various end markets served. This apart, Taiwan Semiconductor’s growing strategic partnerships with customers and strength in the foundry industry remains a tailwind.
Taiwan Semiconductor flaunts a Zacks Rank of 1 at present, with a Growth Score of B. The long-term earnings growth rate for the stock is currently projected at 24.2%.
Taiwan Semiconductor Manufacturing Company Ltd. Price and Consensus
ASE Technology (ASX - Free Report) is benefiting from increasing demand in multi-die and co-packaging platform. ASX recently unveiled an advanced packaging platform named VIPack, for enabling vertically integrated package solutions. The launch of VIPack remains a positive as it represents ASE’s next-generation 3D heterogeneous integration architecture that extends design rules and achieves ultra-high density and performance.
Dolid demand for traditional electronic manufacturing services and SiP services are contributing well to top-line growth. Additionally, ASX’s ability to cater to high volume and reliable business needs remains noteworthy.
ASE Technology holds a Zacks Rank of 2 at present, with a Growth Score of A. The long-term earnings growth rate for the stock is currently projected at 23.1%.
ASE Technology Holding Co., Ltd. Price and Consensus
Monolithic Power Systems (MPWR - Free Report) is benefiting from solid demand across the automotive, industrial, computing and storage, and communications markets. MPWR is on track to expand capacity in 2022 well beyond $2 billion, which will ramp up new product revenues. It is likely to gain from the rapid deployment of 5G on the back of a robust portfolio of legacy routers, wireless applications and 5G networking infrastructure-related products.
Monolithic Power Systems is witnessing sales growth in infotainment, lighting and Advanced Driver Assistance Systems products in the automotive market, which remains a positive. Moreover, MPWR’s deep-rooted partnerships with leading auto suppliers are expected to continue driving its top line in the days ahead.
Monolithic Power Systems, currently carrying a Zacks Rank of 2, has a Growth Score of B. The long-term earnings growth rate for the stock is currently projected at 25%.
Monolithic Power Systems, Inc. Price and Consensus
Vishay Intertechnology (VSH - Free Report) is steadily gaining from its robust resistor, diode, capacitor, inductor and optoelectronics product lines. Further, a recovery in the automotive sector and strong momentum across the industrial, telecommunications, power supplies markets are driving the top line.
In addition, Vishay Intertechnology’s robust magnetics is continuously driving the specialty business. Further, growing momentum across the areas of power transmission and electro cars with the help of robust capacitors is a tailwind. Additionally, VSH’s firm focus on expanding its manufacturing capacities remains a major lever.
Vishay Intertechnology is currently Zacks #2 Ranked and has a Growth Score of B. The long-term earnings growth rate for the stock is currently projected at 22.7%.
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4 Top-Ranked Semiconductor Stocks to Buy Amid Industry Growth
The global semiconductor industry is constantly facing chip shortages due to supply-chain disruptions across the world resulting from the coronavirus pandemic-induced lockdowns. Rising COVID-19 cases and the resultant lockdowns in China also remain concerns.
Further, the ongoing geopolitical tensions, currency fluctuations, the Russia-Ukraine conflict, and the subsequent inflationary pressure and fears of global recession are negatively impacting the semiconductor industry.
Consequently, weak demand in consumer end-markets remains a major headwind. Per a Gartner report, demand for consumer PC and business PC is expected to fall 13.1% and 7.2%, respectively in 2022 from the year-ago levels. Overall, global shipments of total devices (PCs, tablets and mobile phones) are likely to decline 7.6% in 2022.
The impact of the above-mentioned factors can be seen in the July 2022 performance of the underlined industry.
According to the latest report from the Semiconductor Industry Association, global semiconductor industry sales were $49 billion in July, with a sequential decrease of 2.3%.
Nevertheless, July sales increased 7.3% from the prior-year figure, reflecting a strong growth potential.
Factors Driving Growth
Year-over-year growth was attributed to the increasing adoption of automotive, industrial tools & equipment, networking & communication products, and autonomous & electric vehicles.
The growing usage of advanced technologies like AI, IoT and Virtual Reality in various sectors, including healthcare, defense, retail and agriculture, is also contributing well to the industry growth.
The dominant position of the United States in the global semiconductor market remains noteworthy. Recently, the US government announced plans to invest $50 billion in strengthening domestic chip production.
Apart from the United States, other major economies are making huge investments in the semiconductor industry to reduce import dependency.
In December 2021, the government of India announced a package of Rs 76,000 crore to set up semiconductor manufacturing plants in several states to become self-reliant in this sector.
In February 2022, the European Commission, under the EU Chips Act, plans to invest €43 billion in boosting semiconductor supply in Europe by 2030.
These factors are expected to continue driving growth in the semiconductor industry.
Per a World Semiconductor Trade Statistics report, the worldwide semiconductor market is expected to reach $633 billion in 2022, with a year-over-year increase of 13.9%. The same report indicates that the market is likely to progress 4.6% in 2023.
The Mordor Intelligence report states that the Semiconductor industry landscape is expected to be worth $906.3 billion by 2027, witnessing a CAGR of 8.23% between 2022 and 2027.
Stocks to Buy
Given the upbeat scenario, here are four semiconductor stocks that are well poised to capitalize on the above-mentioned prospects. Apart from strong fundamentals, these stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Taiwan Semiconductor (TSM - Free Report) has been reaping the benefits of strong high-performance computing platform, IoT, and automotive related demand. Solid momentum for 7-nanometer and 5-nanometer technology is contributing well to top-line growth.
TSM’s consistent efforts to expand consumer product portfolio will continue to help it gain momentum across various end markets served. This apart, Taiwan Semiconductor’s growing strategic partnerships with customers and strength in the foundry industry remains a tailwind.
Taiwan Semiconductor flaunts a Zacks Rank of 1 at present, with a Growth Score of B. The long-term earnings growth rate for the stock is currently projected at 24.2%.
Taiwan Semiconductor Manufacturing Company Ltd. Price and Consensus
Taiwan Semiconductor Manufacturing Company Ltd. price-consensus-chart | Taiwan Semiconductor Manufacturing Company Ltd. Quote
ASE Technology (ASX - Free Report) is benefiting from increasing demand in multi-die and co-packaging platform. ASX recently unveiled an advanced packaging platform named VIPack, for enabling vertically integrated package solutions. The launch of VIPack remains a positive as it represents ASE’s next-generation 3D heterogeneous integration architecture that extends design rules and achieves ultra-high density and performance.
Dolid demand for traditional electronic manufacturing services and SiP services are contributing well to top-line growth. Additionally, ASX’s ability to cater to high volume and reliable business needs remains noteworthy.
ASE Technology holds a Zacks Rank of 2 at present, with a Growth Score of A. The long-term earnings growth rate for the stock is currently projected at 23.1%.
ASE Technology Holding Co., Ltd. Price and Consensus
ASE Technology Holding Co., Ltd. price-consensus-chart | ASE Technology Holding Co., Ltd. Quote
Monolithic Power Systems (MPWR - Free Report) is benefiting from solid demand across the automotive, industrial, computing and storage, and communications markets. MPWR is on track to expand capacity in 2022 well beyond $2 billion, which will ramp up new product revenues. It is likely to gain from the rapid deployment of 5G on the back of a robust portfolio of legacy routers, wireless applications and 5G networking infrastructure-related products.
Monolithic Power Systems is witnessing sales growth in infotainment, lighting and Advanced Driver Assistance Systems products in the automotive market, which remains a positive. Moreover, MPWR’s deep-rooted partnerships with leading auto suppliers are expected to continue driving its top line in the days ahead.
Monolithic Power Systems, currently carrying a Zacks Rank of 2, has a Growth Score of B. The long-term earnings growth rate for the stock is currently projected at 25%.
Monolithic Power Systems, Inc. Price and Consensus
Monolithic Power Systems, Inc. price-consensus-chart | Monolithic Power Systems, Inc. Quote
Vishay Intertechnology (VSH - Free Report) is steadily gaining from its robust resistor, diode, capacitor, inductor and optoelectronics product lines. Further, a recovery in the automotive sector and strong momentum across the industrial, telecommunications, power supplies markets are driving the top line.
In addition, Vishay Intertechnology’s robust magnetics is continuously driving the specialty business. Further, growing momentum across the areas of power transmission and electro cars with the help of robust capacitors is a tailwind. Additionally, VSH’s firm focus on expanding its manufacturing capacities remains a major lever.
Vishay Intertechnology is currently Zacks #2 Ranked and has a Growth Score of B. The long-term earnings growth rate for the stock is currently projected at 22.7%.
Vishay Intertechnology, Inc. Price and Consensus
Vishay Intertechnology, Inc. price-consensus-chart | Vishay Intertechnology, Inc. Quote