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The Zacks Analyst Blog Highlights Analog Devices, Semtech, Vishay Intertechnology and Sumco

·7 min read

For Immediate Release

Chicago, IL – May 2, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Analog Devices ADI, Semtech Corp. SMTC, Vishay Intertechnology, Inc. VSH and Sumco Corp. SUOPY.

Here are highlights from Friday’s Analyst Blog:

Semiconductor Revenues to Hit Record Highs: 4 Stocks to Buy

Markets have been bleeding lately and tech stocks have been one of the biggest casualties. However, the semiconductor market seems not to have been affected much as soaring demand has been pushing sales. In fact, higher demand that led to a supply crunch for semiconductors last year is still far from over.

This has seen a steady rise in sales of semiconductors over the past several months and predictions are that revenues will hit a record high this year. Given this situation, stocks like Analog Devices, Semtech Corp., Vishay Intertechnology, Inc. and Sumco Corp. are expected to benefit in the near term.

Semiconductor Revenues to Hit New High

According to a new report from Gartner, global semiconductor revenues will hit a new high of $676 billion in 2022, increasing 13.6% year over year. Soaring demand for semiconductors will be the main driver for higher revenues.

Also, the average selling price of semiconductors has been on the rise owing to chip shortage, which should be the key driver for growth in the global semiconductor market. Of the total growth in 2022, semiconductor revenues from smartphones are expected to grow 15.2% this year, given that 5G smartphone production units are projected to grow 45.3% in 2022.

The report further states that the memory market will continue to lead the overall semiconductor device market. The memory market is expected to account for 31.4% of the overall semiconductor device market in 2022.

However, slowing growth in the PC and server markets is likely to slow semiconductor revenue growth in the coming days but the overall demand for semiconductors will continue as the supply crisis will continue for months, the report states.

Semiconductor Sales Continue to Increase

According to the Semiconductor Industry Association's (SIA) recent report, global semiconductor sales increased 32.4 percent year over year in February, to $52.5 billion from $39.6 billion the previous month.

According to SIA, February was a great month, with global semiconductor sales increasing by more than 20% year over year for the 11th consecutive month.

The demand for semiconductors has exploded in recent years. As more individuals stayed at home to work and learn during the COVID-19 epidemic, demand for electronic goods, networking, and communication equipment soared. Semiconductor sales got a boost as a result of this.

Moreover, as the Internet of Things (IoT), artificial intelligence, and virtual reality grow in popularity, demand for microchips will continue to soar. The development of these cutting-edge technologies is dependent on semiconductor technology. As a result, demand for semiconductors is only expected to rise in the coming years as the need for these services grows.

The increased demand for 5G devices is also benefiting microchip sales, with unit production more than tripling to 555 million in 2021 from 250 million in 2020 and is expected to grow another 45.3%, according to the Garner report.

Furthermore, the semiconductor scarcity is far from over and is expected to last the rest of the year. This will only benefit the industry because demand is likely to remain solid.

Our Choices

The semiconductor industry is only likely to benefit in the near term, given the surging demand for semiconductors and the ongoing supply shortage. In the current market, there are four chip stocks that investors might gain from.

Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed-signal and DSP integrated circuits. ADI's product line is composed of amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices has manufacturing facilities in the United States, Ireland, and Southeast Asia.

Analog Devices' expected earnings growth rate for the current year is 30.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. ADI carries a Zacks Rank #2.

Semtech Corp. designs, manufactures and markets a wide range of analog and mixed-signal semiconductors for commercial applications. SMTC's product line comprises Signal Integrity Products, Protection Products, Power and High-Reliability Products, Wireless and Sensing Products, and Systems Innovation Group. Semtech Corporation's devices are used in a variety of applications including computer, communications, industrial, military-aerospace and automotive.

Semtech Corporation's expected earnings growth rate for the current year is 29.5%. The Zacks Consensus Estimate for current-year earnings has improved 8% over the past 60 days. SMTC sports a Zacks Rank #1.

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 products are typically used to perform functions such as switching, amplifying, rectifying, routing or transmitting electrical signals, power conversion, and power management.

Vishay Intertechnology's expected earnings growth rate for the current year is 4.7%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. VSH carries a Zacks Rank #2.

Sumco Corp. manufactures and sells silicon wafers for the semiconductor industry. SUOPY offers monocrystalline ingots, polished wafers, annealed wafers, epitaxial wafers, junction isolated wafers, silicon-on-insulator wafers, and reclaimed polished wafers. Sumco Corporation operates primarily in Japan, North America, Asia and Europe.

Sumco Corporation's expected earnings growth rate for the current year is 32.7%. The Zacks Consensus Estimate for current-year earnings has improved 11.5% over the past 60 days. SUOPY sports a Zacks Rank #1.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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