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

Global sales of semiconductors rose year over year in July, according to the Semiconductor Industry…

Global sales of semiconductors rose year over year in July, 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 might stand to benefit in the near term.

Global Semiconductor Sales Increase YoY

Worldwide sales of semiconductors increased 4.9 % in July to $35.2 billion from $33.5 billion a year earlier. Also, sales in July were 2.1 % higher than the June total of $34.5 billion. Moreover, sales in the Americas remained strong in July, increasing 26% year over year, with improvement seen globally in both memory and non-memory products.

Regionally, sales increased on a year-over-year basis in the Americas (26.3%), China (3.5%) and Asia Pacific/All Other (1.4%), but declined in Japan by 0.4% and Europe by 14.7%. On a month-over-month basis, sales increased across all regions: Asia Pacific/All Other (4.5%), Japan (3.4%), Europe (3.2%), the Americas (0.9%) and China (0.5%).

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 now with economies finally opening up.

China — one of the biggest markets for chipmakers — is finally rebounding. Moreover, the SIA has projected worldwide sales of semiconductors to reach $426 billion in 2020, reflecting a 3.3% increase from the 2019 sales total of $412.3 billion. 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 despite the demand uncertainty, driving strong semiconductor content as OEMs position 5G in lower tiers to broaden the reach.

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.

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 the current year is 9.7%. The Zacks Consensus Estimate for current-year earnings has improved 12.1% over the past 60 days. Maxim Integrated Products has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Taiwan Semiconductor Manufacturing Company Ltd. TSM is the world’s largest dedicated integrated circuit foundry. As a foundry, the company manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes.

The company’s expected earnings growth rate for the current year is 46.1%. The Zacks Consensus Estimate for current-year earnings has improved 12.1% over the past 60 days. Taiwan Semiconductor carries a Zacks Rank #2.

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

The company’s expected earnings growth rate for next year is 18%. The Zacks Consensus Estimate for current-year earnings has improved 12.2% over the past 60 days. Analog Devices carries 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 next year is 5.5%. The Zacks Consensus Estimate for current-year earnings has improved 26.6% over the past 60 days. Texas Instruments sports a Zacks Rank #1 (Strong Buy).