Semiconductor Sales Soar in Q1 on Increased Demand: 5 Winners

·5-min read

The global semiconductor industry has been on a roll for over a year now. Surging sales of electronic goods during the pandemic and growing demand from carmakers have seen semiconductor sales rising at a rapid pace. According to the Semiconductor Industry Association (SIA), global semiconductor sales put up a great show both in the first quarter as well as in March.

Higher demand has resulted in a shortage of microchips. Given this scenario, the semiconductor industry is only likely to flourish in the near term.

Global Semiconductor Sales Soar

The SIA said on Apr30 that global semiconductor sales jumped 3.6% to $123.1 billion in the first quarter from fourth-quarter 2020. On a year-over-year basis, sales grew 17.8% in the first quarter. Moreover, microchip sales grew 3.7% in March to $41.0 billion on a month-over-month basis.

Notably, SIA also said that demand across various categories of products drove sales in the first quarter. These include the electronic goods segment and the automobile industry.

Regionally, a year-over-year sales increase was witnessed in all major markets. Sales in Asia-Pacific grew 19.6%, while in China it soared 25.6%, followed by 9.2% in Americas and 8.7% in Europe. On a month-over-month basis, sales increased 5.8% in Europe and 3.4% in Asia Pacific, while China witnessed growth of 5.3%.

Microchips Demand Poised to Grow

Last year proved to be outstanding for the semiconductor industry despite the pandemic wreaking havoc for most other industries. In fact, the semiconductor industry was one of its rare beneficiaries.

Increased sales for electronic goods and videogames coupled with rising demand from carmakers have been helping the microchip industry. After a great 2020, the semiconductor industry started this year on a high too. Sales were up an impressive 8.3% year over year to $117.5 billion in the fourth quarter and the first quarter held on to the momentum, in fact proving to be even better.

Demand for microchips has also been getting a boost from the 5G boom in Europe and some Asian countries like China and Singapore. However, this has resulted in a supply crunch, which is now hurting some industries especially automobiles.

Our Choices

The semiconductor market is set to continue thriving in 2021.Below are five chip stocks that investors can gain from in the current scenario.

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

The company’s expected earnings growth rate for next year is 28.9%. The Zacks Consensus Estimate for current-year earnings has improved 12.1% over the past 60 days. Silicon Laboratories holds a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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 38.5%. The Zacks Consensus Estimate for current-year earnings has improved 5% over the past 60 days. Maxim Integrated Products holds a Zacks Rank #2 (Buy).

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 23.3%. The Zacks Consensus Estimate for current-year earnings has improved 10% over the past 60 days. Texas Instruments carries a Zacks Rank #2.

NVIDIA Corporation NVDA is the worldwide leader in visual computing technologies and inventor of the graphic processing unit. 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 35.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the past 60 days. NVIDIA has a Zacks Rank #2.

MACOM Technology Solutions Holdings, Inc. MTSI is a provider of power analog semiconductor solutions to varied markets. The company develops and produces analog radio frequency, microwave and millimeter-wave semiconductor devices, and components for applications in optical, wireless and satellite networks.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. MACOM Technology Solutions carries a Zacks Rank #2.

Zacks Top 10 Stocks for 2021

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