Demand for semiconductors has been on the rise and supply crunch has been a growing problem for several industries, especially automotive and electronic goods. This crisis is not likely to end anytime soon.
However, the semiconductor industry has been the lucky winner of the situation, with sales skyrocketing like never before. After a successful 2020, the trend has been continuing in 2021, with semiconductor sales growing every month.
Semiconductor Sales Rise
According to the Semiconductor Industry Association (SIA), worldwide sales of semiconductors soared 21.7% year over year in April to $41.8 billion from $34.4 billion. On a month-over-month basis, microchip sales grew 1.9% to $41 billion in April.
Regionally, semiconductor sales increased 25.7% in China on a year-over-year basis, followed by Asia Pacific/ All Other (24.3%) and Europe (20.1%). Sales grew 17.6% and 14.3% Japan and the Americas, respectively. On a month-over-month basis,sales grew 3.3% in the Americas, 2.6% in Japan, 2.3% in China, 1.6% in Europe and 0.5% in Asia Pacific/All Other.
Semiconductor Sales Poised to Grow
The semiconductor shortage has been hurting many industries. The U.S. government has addressed the issue of semiconductor shortage but the crisis is far from over. The pandemic saw people working and learning from home, which gave a boost to the sales of PCs and other personal gadgets. Also, sales of electronic goods saw a jump during the peak of the pandemic.
This eventually gave a boost to the demand for microchips. Rising demand and supply crisis are now posing problems to several industries particularly carmakers, who have been compelled to slash production.
This rise in demand is directly benefiting the semiconductor industry. The World Semiconductor Trade Statistics (WSTS) expects semiconductor sales to grow further in the coming months. According to WSTSSpring 2021 global semiconductor sales forecast, microchip sales will jump 19.7% to $527.2 in 2021 from $440.4 billion in 2020.
The WSTS also said that as the gap between demand and supply narrows, growth will somewhat slow but still will be high. WSTS projects global semiconductor sales to grow 8.8% in 2022.
Microchip demand is also likely to get a boost with the 5G boom in Europe and parts of Asia, including China and Singapore. IDC expects 5G volumes to grow this year,which should act as a tailwind to the semiconductor market.
Our Choices
The semiconductor market is likely to continue thriving in 2021.Below are five chip stocks that investors can gain from in the current scenario.
Maxim Integrated Products, Inc. (MXIM – Free Report) is an original equipment manufacturer of semiconductor analog and mixed-signal integrated circuits. The company has a broad product portfolio that includes analog-to-digital converters, amplifiers and comparators, communications devices, data converters, and management components, sensors and wireless products.
The company’s expected earnings growth rate for the current year is 38.5%. The Zacks Consensus Estimate for current-year earnings has improved 5% over the past 60 days. Maxim Integrated Products holds a Zacks Rank #2 (Buy).
MACOM Technology Solutions Holdings, Inc. (MTSI – Free Report) is a provider of power analog semiconductor solutions to varied markets. The company develops and produces analog radio frequency, microwave and millimeter-wave semiconductor devices, and components for applications in optical, wireless and satellite networks.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. MACOM Technology Solutions carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NXP Semiconductors N.V. (NXPI – Free Report) provides high-performance, mixed-signal and standard product solutions that leverage its RF, analog, power management, interface, security, as well as digital processing expertise.
The company’s expected earnings growth rate for next year is 22.6%. The Zacks Consensus Estimate for current-year earnings has improved 7.9% over the past 60 days. NXP Semiconductors carries a Zacks Rank #2.
NVIDIA Corporation (NVDA – Free Report) is the worldwide leader in visual computing technologies and inventor of the graphic processing unit. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
The company’s expected earnings growth rate for the current year is 58.4%. The Zacks Consensus Estimate for current-year earnings has improved 18.5% over the past 60 days. NVIDIA has a Zacks Rank #1.
Texas Instruments Incorporated (TXN – Free Report) is an original equipment manufacturer of analog, mixed-signal and digital-signal processing integrated circuits.
The company’s expected earnings growth rate for the current year is 23.8%. The Zacks Consensus Estimate for current-year earnings has improved 9.2% over the past 60 days. Texas Instruments carries a Zacks Rank #2.
Micron Technology, Inc. (MU – Free Report) through its global brands, namely Micron, Crucial and Ballistix, manufactures and markets high-performance memory and storage technologies, including Dynamic Random Access Memory, NAND flash memory, NOR Flash, 3D XPoint memory and other technologies.
The company’s expected earnings growth rate for the current year is 96.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. Micron carries a Zacks Rank #2.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
