The global semiconductor market holds a positive outlook this year, expecting continued expansion fueled by rising consumer demand, advancements in technology, and increased investments. Factors such as the widespread adoption of AI and machine learning contribute to this optimistic anticipation.
Thus, investors could consider watching top chip stocks Sumco Corporation (SUOPY), Amkor Technology, Inc. (AMKR), and Taiwan Semiconductor Manufacturing Company Limited (TSM) for weekly gains.
The semiconductor market is poised for recovery in 2024, driven by increasing demand for AI, high-performance computing, smartphones, and automotive applications, coupled with rising prices and the shift to advanced processes in the industry.
Moreover, the Biden administration is set to announce billions in subsidies for top semiconductor companies before President Biden's State of the Union address on March 7 to boost advanced chip manufacturing in the United States.
On top of it, International Data Corporation (IDC) upgraded its Semiconductor Market Outlook, forecasting a 20.2% year-over-year growth in 2024 to reach $633 billion, up from $626 billion in the prior forecast. Moreover, AI silicon is expected to contribute nearly $200 billion in semiconductor revenues by 2026.
In addition, the market is growing due to high demand for consumer electronics, technology advancements, and automotive contributions, with collaboration, networking, and communications applications offering additional growth prospects. The global semiconductor market is projected to expand at a CAGR of 12.3% to reach around $1.88 trillion by 2032.
Furthermore, the global semiconductor manufacturing equipment market is set to grow, driven by demand for miniature devices, electronic product adoption, and advancements in cloud and 5G, with innovative business models and capacity expansion initiatives supporting growth from 2024 to 2030.
The global semiconductor manufacturing equipment market is expected to expand at a CAGR of 7.9% from 2024 to 2030.
Considering these conducive trends, let’s examine the fundamentals of three Semiconductor & Wireless Chip stock picks, beginning with the third choice.
Stock #3: Sumco Corporation (SUOPY)
Based in Tokyo, Japan, SUOPY manufactures and sells silicon wafers for the semiconductor industry globally, offering a diverse range of products. Its product range includes monocrystalline ingots and various processed wafers, serving diverse semiconductor needs.
On December 13, 2023, SUOPY joined a consortium appointed by the Japanese government to design and operate a 420MW offshore wind project off Enoshima Island, Nagasaki Prefecture. The project aligns with Japan's goals for carbon neutrality, targeting 10GW by 2030 and 30 to 45GW by 2040. Operations are planned to commence in August 2029.
In the nine months that ended September 30, 2023, SUOPY's net sales stood at ¥320.85 billion ($2.18 billion). The company reported operating income of ¥61.86 billion ($419.39 million). Its net income grew 7.9% year-over-year to ¥65.76 billion ($445.83 million). As of September 30, 2023, its total assets amounted to ¥1.03 trillion ($6.98 billion).
For the fiscal year ended December 31, 2023, the company projected its net sales and operating income to be ¥421.80 billion ($2.86) billion and ¥68.30 billion ($463.09 million).
Street expects SUOPY’s revenue to grow 7.9% year-over-year to $3.12 billion for the fiscal year ending December 2024.
The stock has gained 19.9% over the past three months to close the last trading session at $30.87. It gained marginally intraday.
SUOPY’s POWR Ratings reflect its positive prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SUOPY has an A grade for Momentum and Stability and a B for Value. Within the Semiconductor & Wireless Chip industry, it is ranked #16 out of 91 stocks.
In addition to the POWR Ratings stated above, one can access SUOPY’s additional Growth, Sentiment, and Quality ratings here.
Stock #2: Amkor Technology, Inc. (AMKR)
AMKR is a top semiconductor packaging and test services provider, offering design, testing, and packaging services for semiconductor devices. Its product line includes various packages used in networking, computing, storage, mobile consumer electronics, and other sectors.
On January 16, 2024, AMKR and GlobalFoundries Inc. (GFS) initiated their strategic partnership in Europe with a ribbon-cutting ceremony at Amkor’s Porto, Portugal facility. The collaboration involves the transfer of 50 tools and the establishment of a comprehensive EU supply chain for semiconductor manufacturing.
The partnership aims to strengthen the European Union's semiconductor capabilities, particularly in the automotive sector, contributing to a more resilient supply chain.
On December 26, 2023, AMKR paid a quarterly cash dividend of $$0.07875 per common share. The company pays $0.32 annually, which translates to a yield of 0.95% on the prevailing price level.
During the fiscal third quarter, which ended September 30, 2023, AMKR reported net sales of $ 1.82 billion. The company achieved a net income of $133.45 million and an operating income of $166.60 million. The company reported net income attributable to AMKR per common share of $0.54 and EBITDA of $333 million.
Additionally, for the nine months ended September 30, AMKR’s net cash flow provided by operating activities rose 27.6% year-over-year to $696.19 million.
For the fourth quarter of 2023, AMKR expects net sales to be $1.63 billion to $1.73 billion, a gross margin of 14% to 16%, and a net income of $80 million to $120 million ($0.32 to $0.49 per share).
AMKR’s revenue and EPS are expected to grow 2.5% and 45.5% year-over-year to $1.51 billion and $0.26, respectively, for the first quarter ending March 2024. The company surpassed the EPS estimates in three of the trailing four quarters.
AMKR’s shares have gained 62.5% over the past three months to close the last trading session at $33.22. It gained marginally intraday.
AMKR’s POWR Ratings reflect its sound prospects. The stock has an overall B grade, which translates to Buy in our proprietary rating system.
AMKR has an A grade for Momentum and a B for Value and Sentiment. Within the same industry, it is ranked #15.
To see AMKR’s additional POWR Ratings for Growth, Stability, and Quality, click here.
Stock #1: Taiwan Semiconductor Manufacturing Company Limited (TSM)
Headquartered in Hsinchu City, Taiwan, TSM is a leading global semiconductor manufacturer specializing in advanced integrated circuits. Its products serve diverse industries, including high-performance computing, smartphones, and automotive applications.
On November 14, 2023, TSM declared a quarterly cash dividend of NT$3.50 per share, payable on April 11, 2024. The company pays $1.92 annually, which translates to a yield of 1.66% on the prevailing price level. Its four-year average dividend yield is 2.15%. The company has raised its dividend payouts at a CAGR of 7% over the past five years. Moreover, the company boasts a 19-year record for consecutive years of dividend payments.
In the fourth quarter, which ended December 31, 2023, TSM’s net revenue stood at NT$625.53 billion ($19.62 billion). The company reported income from operations and net income of NT$260.21 billion ($8.16 billion) and NT$238.31 billion ($7.48 billion), respectively. Moreover, its EPS amounted to NT$9.21.
For the first quarter of 2024, the company expects its revenue to be between $18 billion and $18.80 billion.
Analysts expect TSM’s revenue and EPS to grow 24.4% and 20.9% year-over-year to $85.15 billion and $6.26, respectively, for the fiscal year ending December 2024. The company surpassed the EPS estimates in each of the trailing four quarters.
The stock has gained 37.7% over the past nine months to close the last trading session at $116.06.
TSM’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
TSM has an A grade for Momentum, Sentiment, and Quality. Within the same industry, it is ranked #11.
Click here for TSM’s additional Growth, Value, and Stability ratings.
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TSM shares were trading at $113.90 per share on Wednesday afternoon, down $2.16 (-1.86%). Year-to-date, TSM has gained 9.52%, versus a 2.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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