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Global Semiconductor Sales Rise in Q3: 4 Solid Stocks to Buy

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Ritujay Ghosh
·4 min read
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Global semiconductor sales increased year over year in September. Also, the semiconductor industry put up a great show in the third quarter, according to the Semiconductor Industry Association (“SIA”). The global semiconductor industry, which plays a key role in the high-growth technology space, has been relatively less battered compared to other sectors by the coronavirus pandemic.

Moreover, with sales of smartphones gradually rebounding in major markets like China and more people spending time on their mobile phones, thanks to the pandemic, the semiconductor industry might stand to benefit in the near term.

Global Semiconductor Sales Increase YoY

Global sales of semiconductors jumped 4.5% in September to $37.9 billion, according to SIA. Also, September sales were 5.8% higher than the year-ago period. Besides, it was an overall great third quarter for the semiconductor industry. Worldwide sales of chips totaled $113.6 billion in the quarter, reflecting an increase of 11% from the second quarter and 5.8% year over year.

Regionally, on a month-over-month basis, chip sales jumped 7.9% in China, 3.3% each in Europe and Asia Pacific, and 2.2% in Japan. Similarly, sales increased 20.2% year over year in Americas, 6.5% in China and 2.9% in Japan.

Chipmakers to Gain in the Near Term

Although the semiconductor industry has shown steady growth, it has fallen short of other technology counterparts like Internet and cloud computing during the pandemic. However, sales are fast gathering pace once again.

Slowing smartphone sales during the coronavirus pandemic owing to shipments getting stuck became a major cause of concern for not only mobile manufacturers but also chipmakers. That seems to be changing now with economies having opened up.

Also, China, which one of the biggest markets for microchips, has finally started rebounding. Demand for semiconductors is also likely to get a boost from the 5G boom in Europe and parts of Asia, including China and Singapore. According to the IDC Semiconductor Application Forecaster, 5G volumes are likely to grow this year which is further going to help the semiconductor market.

Our Choices

With economies having finally reopened, smartphone sales rebounding and the 5G boom, it is likely that semiconductor manufacturers will benefit in the days to come. Below are four chip stocks that investors can gain from in the current scenario.

Maxim Integrated Products, Inc. MXIM 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 23%. The Zacks Consensus Estimate for current-year earnings has improved 12.6% over the past 60 days. Maxim Integrated Products holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NVIDIA Corporation NVDA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. 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 57.7%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. NVIDIA holds a Zacks Rank #2.

Texas Instruments Incorporated TXN 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 4.4%. The Zacks Consensus Estimate for current-year earnings has improved 8.3% over the past 60 daysTexas Instruments carries a Zacks Rank #2.

NXP Semiconductors N.V. NXPI 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 34.3%. The Zacks Consensus Estimate for current-year earnings has improved 24.9% over the past 60 days. NXP Semiconductors sports a Zacks Rank #1.

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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Maxim Integrated Products, Inc. (MXIM) : Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
 
NXP Semiconductors N.V. (NXPI) : Free Stock Analysis Report
 
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