The global semiconductor industry is growing with rising electronics use and integration across applications such as networking communication devices, data processing, industrial automation, consumer electronics, automotive, and government projects. Increasing global consumer electronics consumption is further supporting the growth.
Amid this backdrop, it could be wise to invest in fundamentally robust semiconductor stocks Qorvo, Inc. (QRVO), Silicon Motion Technology Corporation (SIMO), and Cirrus Logic, Inc. (CRUS) to thrive in the expanding semiconductor landscape.
The semiconductor industry is experiencing rapid expansion owing to technological transformations across sectors. Key technologies such as Artificial intelligence (AI), machine learning, cloud computing, 5G networks, autonomous vehicles, and big data analytics that rely heavily on semiconductor components are driving the industry growth.
Government initiatives are further boosting the sector's growth prospects. One such move includes the CHIPS and Science Act, which aims to strengthen U.S. semiconductor manufacturing, boost domestic production, and reduce supply chain vulnerabilities by investing in American chip-making capabilities.
That being said, the Semiconductor Industry Association (SIA) reported that global semiconductor industry sales totaled $149.9 billion during the second quarter of 2024, an 18.3% increase compared to the second quarter of 2023. Sales in June 2024 were $50.0 billion, a 1.7% increase compared to May 2024.
Looking ahead to 2025, the World Semiconductor Trade Statistics (WSTS) forecasts a 12.5% growth in the global semiconductor market, reaching an estimated valuation of $687 billion. This growth is expected primarily by the Memory and Logic sectors, with significant increases projected.
The Memory sector is forecasted to exceed $200 billion, representing an upward trend of over 25%, while the Logic sector is expected to surpass $200 billion, marking a growth of over 10%.
Considering these positive trends, let’s analyze the fundamentals of three solid Semiconductor & Wireless Chip stocks, beginning with #3.
Stock #3: Qorvo, Inc. (QRVO)
QRVO develops and markets technologies and products for global wireless, wired, and power markets. Its segments include High Performance Analog; Connectivity and Sensors Group; and Advanced Cellular Group. The company serves numerous sectors, such as consumer electronics, smart home/IoT, automotive, EVs, and more.
On January 31, QRVO announced an agreement to acquire Anokiwave, a leading supplier of high-performance silicon integrated circuits (ICs) for intelligent, active array antennas in defense and aerospace (D&A), SATCOM, and 5G applications.
Anokiwave’s high-frequency beamforming and intermediate frequency (IF) to RF conversion ICs could strongly complement QRVO’s RF front-end portfolio.
Over the past five years, QRVO’s revenue increased at a CAGR of 4.8%. Its EBIT and total assets rose at a CAGR of 2% and 1.7%, respectively. Moreover, the company’s normalized net income rose at a 2.8% CAGR over the same time frame.
For the fiscal 2025 first quarter that ended June 29, 2024, QRVO’s revenue rose 36.2% year-over-year to $886.67 million. Its non-GAAP operating income increased 110.1% from the prior-year quarter to $98.13 million.
Likewise, the company’s non-GAAP net income amounted to $83.52 million and $0.87 per share, up 148.7% and 155.9% year-over-year, respectively.
For the fiscal year ending March 2025, Street expects QRVO’s revenue to increase 4.5% year-over-year to $3.94 billion. Plus, the company has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of QRVO have gained 7.1% over the past three months and 16.9% over the past nine months to close the last trading session at $103.02.
QRVO’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, each weighted optimally.
QRVO has a B grade in Growth, Sentiment, and Quality. Within the Semiconductor & Wireless Chip industry, QRVO is ranked #15 out of 90 stocks.
Click here to see QRVO’s rating for Value, Momentum, and Stability.
Stock #2: Silicon Motion Technology Corporation (SIMO)
Headquartered in Hong Kong, SIMO provides negative-AND flash controllers for solid-state drives and other storage devices. It specializes in designing low-power semiconductor solutions for OEMs and mobile storage customers. The company's products are utilized in smartphones, tablets, and other electronic devices.
On August 5, SIMO announced the release of the world’s first PCIe Gen5 client SSD controller using Taiwan Semiconductor Manufacturing Company Limited’s (TSM) 6nm EUV process, SM2508, the best power efficiency PCIe Gen5 NVMe 2.0 client SSD controller for AI PCs and gaming consoles that offer a 50% reduction in power consumption compared to competitive offerings in the 12nm process.
The new PCIe Gen5 SSD controller will meet the unique demands of AI-capable PCs, delivering exceptional performance and power efficiency. This advancement ensures that SIMO stays ahead of evolving AI PC standards, positioning the company as a leader in high-performance and energy-efficient technology solutions for the future.
On June 3, SIMO launched the SM770 USB display interface SoC for USB docking stations to simplify connectivity for multiple 4K Ultra-High-Definition Displays with low latency and low power consumption.
The advancement would enable the creation of high-value USB display docking stations and adapters, addressing the demanding needs of today's professional environments and solidifying SIMO's market position.
Over the past five years, SIMO’s revenue increased at a CAGR of 11.2%. Its EBITDA and total assets rose at a CAGR of 3.6% and 8.2%, respectively. Moreover, the company’s normalized net income and EPS grew at a CAGR of 4% and 1.2%, respectively, over the same period.
During the fiscal 2024 second quarter that ended June 30, 2024, SIMO’s net sales increased 50.1% year-over-year to $210.67 million. Its non-GAAP gross profit grew 62.2% from the year-ago value to $96.84 million. Additionally, the company’s non-GAAP operating profit of $34.71 million indicates growth of 197.1% year-over-year.
Furthermore, the company’s non-GAAP net income and non-GAAP earnings per ADS were $32.46 million and $0.96, up 157.9% and 152.6% from the prior year’s quarter, respectively.
Street expects SIMO’s revenue and EPS for the third quarter (ending September 2024) to grow 21.7% and 35.6% year-over-year to $209.77 million and $0.85, respectively. Furthermore, the company has surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is remarkable.
Shares of SIMO have gained 3.1% over the past nine months to close the last trading session at $57.51.
SIMO’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
SIMO has a B grade for Growth and Value. It is ranked #8 among 90 stocks in the Semiconductor & Wireless Chip industry.
To access SIMO’s ratings for Quality, Stability, Sentiment, and Momentum, click here.
Stock #1: Cirrus Logic, Inc. (CRUS)
CRUS offers low-power, high-precision mixed-signal processing solutions for audio and high-performance mixed-signal applications. Its products include amplifiers, codecs, and digital signal processors. In addition, the company’s SoundClear technology features tools, software, and algorithms that enhance user experience.
On June 25, CRUS announced the latest devices in its Pro Audio product family: a series of digital-to-analog converters (DACs) and an ultra-high-performance audio CODEC. These solutions cater to recording artists, live performers, and audiophiles, providing transparent audio converters for seamless recording and playback.
With these flagship products, CRUS aims to set a gold standard in the audio electronics market. The advanced DACs and audio CODEC demonstrate the company's commitment to delivering superior audio quality, solidifying its reputation as a high-performance audio technology industry leader.
On February 5, CRUS entered a collaboration with Intel Corporation (INTC) and Microsoft Corporation (MSFT) on a new PC reference design to feature CRUS’ high-performance audio and power technologies and INTC's forthcoming client processor, codenamed Lunar Lake.
The collaboration aims to reduce heating, extend battery life, and enable smaller, thinner PC designs. By integrating CRUS's advanced technologies with INTC’s and MSFT’s innovations, the partnership is set to revolutionize the PC industry, positioning CRUS at the forefront of cutting-edge PC design and performance.
CRUS’ revenue has grown at a CAGR of 8.6% over the past five years. The company’s net income and EPS improved at CAGRs of 25% and 27.4% over the same period. Further, the company’s EBITDA grew at a CAGR of 17.5% over the same time frame.
For the fiscal 2025 first quarter, which ended on June 29, 2024, CRUS reported net sales of $374.03 million, increasing 18% year-over-year. Its income from operations grew 163% from the year-ago value to $46.79 million.
In addition, the company’s non-GAAP net income and non-GAAP EPS were $62.37 million and $1.12, respectively, indicating growth of 64% and 67.2% from the prior year’s quarter.
CRUS’ shares have gained 47% over the past six months and 35.6% over the past year to close the last trading session at $115.31.
CRUS’ sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, Quality, and Sentiment. CRUS is ranked #2 within the same industry among the 90 stocks.
In addition to the POWR Ratings we’ve stated above, we also have CRUS ratings for Stability and Momentum. Get all CRUS ratings here.
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QRVO shares rose $3.08 (+2.99%) in premarket trading Wednesday. Year-to-date, QRVO has declined -8.52%, versus a 10.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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