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Global Semiconductor Sales Rise YoY in June: 5 Stocks to Buy

Ritujay Ghosh

Global sales of semiconductors rose year over year in May, 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 by the coronavirus pandemic.

Moreover, with the economy reopening, sales of smartphones rebounding in markets like China and more people spending time on their mobile phones, the semiconductor industry stands to benefit in the near term.

Global Semiconductor Sales Increase YoY

Worldwide sales of semiconductors increased 5.1% in June to $34.5 billion from $32.9 billion a year earlier. However, sales in June were 0.3% less than May’s total of $34.6 billion. Moreover, sales during the second quarter of 2020 were $103.6 billion, reflecting an increase of 5.1% over the second quarter of 2019.

Regionally, sales increased on a year-to-year basis in the Americas (29%), China (4.7%), and Asia Pacific/All Other (0.4%), but decreased 2.2% and 17.1% in Japan and Europe, respectively.

Chipmakers to Gain With Economy Reopening

Although the industry has shown steady growth, it has fallen short of other technology counterparts like Internet and cloud computing. Per the IDC Semiconductor Applications Forecaster, the coronavirus outbreak is going to impact the industry.

Slowing smartphone sales during the coronavirus pandemic was a cause of concern for not only mobile manufacturers but also chipmakers. However, this is slowly changing with economies finally opening up.

China — one of the biggest markets for chipmakers — is finally rebounding. SIA last month projected worldwide sales of $426 billion for semiconductors in 2020, reflecting a 3.3% increase from the 2019 sales total of $412.3. Also, the global semiconductor market is projected to grow 6.2% in 2021.

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

With economies reopening, 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.

Micron Technology, Inc. MU through 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 next year is 46.4%. The Zacks Consensus Estimate for current-year earnings has improved 15% over the past 60 days. Micron holds a Zacks Rank #2 (Buy).

Texas Instruments Incorporated TXN is an original equipment manufacturer of analog, mixed signal and digital signal processing (DSP) integrated circuits.

The company’s expected earnings growth rate for next year is 5.5%. The Zacks Consensus Estimate for current-year earnings has improved 26.6% over the past 60 days. Texas Instrumentssports a Zacks Rank #1 (Strong Buy).

STMicroelectronics N.V. STM is a global independent semiconductor company which designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices.

The company’s expected earnings growth rate for next year is 77.7%. The Zacks Consensus Estimate for current-year earnings has improved 18.1% over the past 60 days. STMicroelectronics holds a Zacks Rank #2.

Maxim Integrated Products, Inc. MXIM 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 next year is 14.9%. The Zacks Consensus Estimate for current-year earnings has improved 12.7% over the past 60 days. Maxim Integrated Products has a Zacks Rank #2.

Analog Devices, Inc. ADI is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed signal and DSP integrated circuits.

The company’s expected earnings growth rate for next year is 18.7%. The Zacks Consensus Estimate for current-year earnings has improved 8.9% over the past 60 days. Analog Devices carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
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