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The Zacks Analyst Blog Highlights Silicon Laboratories, MACOM Technology Solutions, Taiwan Semiconductor Manufacturing, STMicroelectronics N.V.

·7 min read

For Immediate Release

Chicago, IL – August 4, 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: Silicon Laboratories Inc. SLAB, MACOM Technology Solutions Holdings, Inc. MTSI, Taiwan Semiconductor Manufacturing Company Limited TSM and STMicroelectronics N.V. STM.

Here are highlights from Wednesday’s Analyst Blog:

4 Solid Stocks to Buy on Soaring Semiconductor Sales

The dream run for the semiconductor sector continues with sales hitting a record high in the second quarter of the year. Sales have increased in each of the months this year, indicating that soaring demand for semiconductors is helping manufacturers rake in higher revenues.

Semiconductor shortage has been crippling several industries but pent-up demand for microchips has been helping manufacturers. The demand for microchips has increased over the past few years as the Internet of Things (IoT), artificial intelligence, and virtual reality has become increasingly significant in our lives. Given this situation, stocks like Silicon Laboratories Inc., MACOM Technology Solutions Holdings, Inc., Taiwan Semiconductor Manufacturing Company Limited and STMicroelectronics N.V. are expected to benefit in the near term.

Robust Year for Semiconductors

After a robust 2020 and 2021, the semiconductor industry continues to flourish this year, with sales having increased in almost each of the months of 2022. The Semiconductor Industry Association (SIA) announced on Aug 3 that global semiconductor sales jumped a solid 13.3% year over year to $152.5 billion in the second quarter of 2022.

Moreover, sales jumped 0.5% quarter from the first quarter. In June, global sales came in at $50.8 billion.

“Global semiconductor sales were robust during the second quarter of 2022, increasing across all major regional markets and product categories compared to the second quarter of last year,” SIA president and CEO, John Neuffer, said.

Although the report said that sales have somewhat slowed lately amid multiple challenges like rising costs and a supply chain crisis, the industry is still growing. Even then, year-over-year sales in June increased 29% in the Americas, 16.1% in Japan, 12.4% in Europe and 11.9% in the Asia Pacific region.

This clearly shows how demand for microchips has increased over the past year.

Industry on Solid Ground

Although sales have been growing, the semiconductor industry has been facing challenges. The supply chain crisis that started during the peak of the pandemic, has continued and several industries are suffering due to an acute shortage.

In fact, this has also seen sales growth slowing to some extent. However, several governments including the United States, have addressed the crisis and are trying to help the industry. The U.S. Senate last week voted 64-32 to advance a key bipartisan bill aimed at giving a boost to domestic semiconductor manufacturing and helping the country compete with China.

President Joe Biden is likely to sign the bipartisan bill into law anytime. The $280 billion package will be in the form of subsidies and research funding.

Dubbed the Chips and Science Act, the legislation includes $52 billion for U.S. semiconductor manufacturing companies in the form of subsidies. This is likely to give a major boost to semiconductor production.

Additionally, it will provide semiconductor factories with a $24 billion investment tax credit. Biden and other experts have stated that the new act is crucial for the nation's economic health and national security as the world becomes increasingly dependent on technology. In this way, the act will help the United States to be more self-reliant.

Although the supply crisis is far from over, the new measure is anticipated to greatly ease this issue, which can only benefit the business going forward.

Our Choices

The semiconductor industry is only likely to benefit in the near term, courtesy of the new bill and surging demand. Given this scenario, these four chip stocks are likely to benefit in the near term.

Silicon Laboratories Inc. is a leading provider of silicon, software and solutions for the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. SLAB solves the electronics industry's toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity.

Silicon Laboratories’ expected earnings growth rate for the current year is 90%. The Zacks Consensus Estimate for current-year earnings has improved 14.2% over the past 60 days. SLAB sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MACOM Technology Solutions Holdings, Inc. is a provider of power analog semiconductor solutions to varied markets. MTSI develops and produces analog radio frequency, microwave and millimeter wave semiconductor devices, and components for applications in optical, wireless and satellite networks. MACOM Technology Solutions Holdings primarily serves three markets, namely, data center, industrial & defense and telecom.

MACOM Technology’s expected earnings growth rate for the current year is 30.7%. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the past 60 days. MTSI has a Zacks Rank #2 (Buy).

Taiwan Semiconductor Manufacturing Company Limited is the world's largest dedicated integrated circuit foundry. As a foundry, TSM manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes. Taiwan Semiconductor Manufacturing Company Limited’s goal is to establish itself as one of the world's leading semiconductor companies by building upon the strengths that have made it the leading IC foundry in the world.

Taiwan Semiconductor Manufacturing Company Limited’s expected earnings growth rate for the current year is 52.9%. The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the past 60 days. TSM sports a Zacks Rank #1.

STMicroelectronics N.V. is a global independent semiconductor company, which designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices. STMS’s products are used in a wide variety of microelectronic applications, including telecommunications systems, computer systems, consumer products, automotive products and industrial automation and control systems.

STMicroelectronics N.V.’s expected earnings growth rate for the current year is 70.8%. The Zacks Consensus Estimate for current-year earnings has improved 10.8% over the past 60 days. STM 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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