The Zacks Analyst Blog Highlights Texas Instruments, Analog Devices, Microchip Technology and NXP Semiconductors

For Immediate Release

Chicago, IL – February 22, 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: Texas Instruments TXN, Analog Devices ADI, Microchip Technology MCHP and NXP Semiconductors NXPI.

Here are highlights from Friday’s Analyst Blog:

Semiconductor Sales Hit All-Time High: 4 Solid Stocks to Buy

The semiconductor industry has been on rock-solid ground over the past couple of years, thanks to the pandemic that has seen demand for semiconductors soar. As more people have been working and learning from home since the onset of the pandemic, demand for computers, laptops and other communication devices have been on the rise, which is giving a boost to semiconductor demand.

This has, in fact, resulted in a supply crunch, which is making several industries, especially automobile, suffer. However, soaring demand is helping semiconductor manufacturers to earn more revenues. Thus, stocks like Texas Instruments, Analog Devices, Microchip Technology and NXP Semiconductors are expected to benefit in the near term.

Semiconductor Sales Soar

The Semiconductor Industry Association (SIA) said on Feb 14 that global semiconductor sales hit a record high of $555.9 billion in 2021, jumping 26.2% year over year. Semiconductor sales totaled $440.4 billion in 2020. This is also the first time that global semiconductor sales crossed the $500 billion mark.

A total of 1.15 trillion semiconductors were shipped in 2021, with companies ramping up production as demand continued to soar throughout the year. Moreover, semiconductor sales in December 2021 totaled $50.9 billion, up 28.3% year over year and 1.5% month over month, according to SIA.

Also, semiconductor sales for the fourth quarter were more than impressive. Sales in the fourth quarter of 2021 totaled $152.6 billion, jumping 28.3% year over year and 4.9% higher than the third quarter.

Story continues

Semiconductor Industry on a High

Demand for microchips has been soaring over the past couple of years now. Demand for electronic goods, networking and communication products soared as a result of the COVID-19 pandemic, which boosted demand for microchips even more.

According to SIA, annual sales of semiconductors rose across all regions like Europe, Asia, the Americas, China and Japan. According to SIA, several semiconductor product sectors stood out in 2021. Analog grew at the fastest pace of 33.1%, hitting $74 billion in sales in 2021. Logic ($154.8 billion) and memory ($153.8 billion) were the two most profitable semiconductor categories in terms of sales.

Moreover, as Internet of Things, artificial intelligence, and virtual reality expand in popularity and demand, so does the need for microchips. Semiconductor is a crucial component in the development of these cutting-edge technologies. As a result, demand for semiconductors is only expected to rise in the near future as demand for these services grows.

Microchip sales are also benefiting from rising 5G smartphone demand, with unit manufacturing more than doubling to 555 million in 2021 from 250 million in 2020.

Soaring demand for microchips is now hurting many companies as this has resulted in a major supply crunch. The automobile sector suffered throughout 2021 as a result of the increased demand for semiconductors, which caused carmakers to reduce production.

The semiconductor shortfall is far from finished and is expected to last for the rest of the year. Given that demand will persist, this will only benefit the sector.

Our Choices

Given the rising demand for semiconductors and continuing supply crunch, the semiconductor industry is only likely to benefit in the near term. Below are four chip stocks that investors can gain from in the current scenario.

Texas Instruments is an original equipment manufacturer of analog, mixed-signal and digital signal processing (DSP) integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe. Texas Instruments management’s strategy has been to build assets that would be fully utilized through their lifetimes and outsource any excess demand in peak situations to outside foundries.

Texas Instruments’ expected earnings growth rate for the current year is 10.1%. The Zacks Consensus Estimate for current-year earnings has improved 10.6% over the past 60 days. TXN holds a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed-signal and DSP integrated circuits. ADI’s product line is composed of amplifiers and comparators; analog to digital converters; digital to analog converters; video encoders and decoders; embedded processing products and DSPs; MEMS and temperature sensors; RF/IF components and converters; power and thermal management ICs, audio/video converters, amplifiers, CODECs, filters and processors. Analog Devices has manufacturing facilities in the United States, Ireland, and Southeast Asia.

Analog Devices’ expected earnings growth rate for the current year is 16.6%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. ADI carries a Zacks Rank #2 (Buy).

Microchip Technology has been consistently benefiting from the strength of analog and microcontroller businesses. MHCP’s dominance in 8, 16, and 32-bit PIC microcontrollers remains a major positive factor for driving the top line and bookings growth. Microchip Technology has acquired notable companies like Tekron International, Microsemi and Atmel to add strength to its product offerings.

Microchip Technology‘s expected earnings growth rate for the current year is 15.5%. The Zacks Consensus Estimate for current-year earnings has improved 2% over the past 60 days. MCHP carries a Zacks Rank #2.

NXP Semiconductors provides high-performance mixed-signal and standard product solutions that leverage its RF, analog, power management, interface, security, as well as digital processing expertise. NXPI seems well-positioned to capitalize on the level 2-5 automotive market. Additionally, NXP Semiconductors is the leader in general-purpose microcontrollers and application processors in industrial and IoT markets.

NXP Semiconductors’ expected earnings growth rate for the current year is 27.6%. The Zacks Consensus Estimate for current-year earnings has improved 8.1% over the past 60 days. NXPI carries a Zacks Rank #2.

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rent 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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