Few semiconductor stocks held out around 2022.
We’ve all seen news stories about the global chip shortage causing headaches for all kinds of industries, from smartphone manufacturers to car companies to hardware producers. Many of us had also experienced bottlenecks firsthand when we went shopping for an item only to discover that there was nothing in stock. This has caused problems for many companies, but the semiconductor industry itself is not insulated from chaos, as companies that fail to meet production targets are being punished by Wall Street for not living up to previous expectations.
On top of these difficulties, new headwinds came in the form of new rules requiring US companies to apply for a license before selling semiconductors or manufacturing equipment to China, sending chip stocks tumbling. However, not all semiconductor stocks missed the target, and some companies in the sector weather the storm just fine. Below are some of the best semiconductor stocks performing artists.
Axcelis Technologies Inc. (Stock ticker: ACLS)
Midsize Semiconductor Service Inventory Based in Massachusetts, ACLS designs and manufactures ion implantation equipment and other high-tech equipment used in semiconductor wafer manufacturing worldwide. In other words, Axcelis does not make chips but manufactures equipment for other chip manufacturers. With supply chain bottlenecks in nearly every part of the industry, it is critical for semiconductor companies of all stripes to increase and maximize their capacity to meet demand. This naturally means big business for ACLS and is part of the reason this company expects a massive 30% growth rate in its top streak, even as other tech stocks have struggled.
Dako New Energy Company (DQ)
The only Chinese stock on this list, DQ deserves a mention because of its specialty. As the name suggests, Daqo engages in new energy technologies by manufacturing and selling photovoltaic products. Headquartered in Shanghai and with close ties to China’s top policymakers, it’s hard to imagine a future in which the nation doesn’t invest heavily in solar technology — and relies heavily on local Dako as a result. While there are supply chain challenges facing many semiconductor stocks in Asia, DQ’s unique position makes the stock worth a look.
Dako New Energy Company (DQ)
The only Chinese stock on this list, DQ deserves a mention because of its specialty. As the name suggests, Daqo engages in new energy technologies by manufacturing and selling photovoltaic products. Headquartered in Shanghai and with close ties to China’s top policymakers, it’s hard to imagine a future in which the nation doesn’t invest heavily in solar technology — and relies heavily on local Dako as a result. While there are supply chain challenges facing many semiconductor stocks in Asia, DQ’s unique position makes the stock worth a look.
Rambus Corporation (RMBS)
Rambus is a $3 billion semiconductor company involved in memory chips. It’s reasonably modest in size and fairly specialized in what it does, which means it flies under the radar of many investors. However, this stock has steadily proven itself to be holding strong even if it does so outside the bright lights of CNBC’s coverage. It has fallen in single digits over the course of the year and is significantly above its summer lows on the back of strong second-quarter results.
RMBS is also building for the future with its May acquisition of Hardent, a hardware design firm serving cloud data centers. This may not be the largest or most famous stock of semiconductors, but it is trending upwards in a challenging market that is poised for future growth once supply chain challenges and other economic turmoil appear in the rearview mirror.
Texas Instruments (TXN)
Texas Instruments is one of the world’s largest chip makers, with a value of $140 billion, and is among the most well-established semiconductor stocks. In this age of supply chain turmoil and talk of “strategic autonomy” as the US looks to avoid reliance on chips made in China, the fact that this US-based company goes a long way to assure partners and policymakers that it is not going to leave them reeling.
While it’s not a given that the most dynamic semiconductor stock out there, with forecasts for a slight dip in revenue this fiscal year, Texas Instruments’ long-term potential as we look beyond current challenges and into the future state of the technology looks very good thanks to its scale And its local roots alone. Also getting an impressive 3.2% return, there are plenty of reasons to give this semiconductor stock a shot.
Tower Semiconductor Limited (TSEM)
On the one hand, TSEM is the stock of this old news. Last February, Intel Corp. (INTC) announced a deal to acquire Tower for $53 per share in cash with a total enterprise value of approximately $5.4 billion. However, as is so often the case, the market has changed dramatically in just a few months, and now the market values Tower’s stock at around $43 per share as it awaits regulatory approval.
In any market environment, shares of the takeover target are sometimes traded at a discount as a hedge – just in case things go awry. But at $10 a share, the discount on TSEM may be too big for investors to miss. And if the deal hits a snag, the fact that Tower just posted record revenue in its fiscal second quarter means it has what it takes to make it even if it never becomes part of the Intel family.
Universal Display Corporation (OLED)
Universal Display’s business makes perfect sense when you look at the company’s name and ticker symbol. The company produces organic light-emitting diodes, or OLEDs, which are used in many lighting and display applications including computer monitors, televisions, and smartphone screens.
While there have been bottlenecks and supply chain disruptions for some of this company’s partners, the bottom line is that OLEDs are essential components in many digital devices – and that makes Universal Display a reasonably low-risk semiconductor even like other companies in the sector. Struggle.
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Vishay Intertechnology Inc. (VSH)
Another smaller company that specializes in semiconductors, Vishay specializes in metal-oxide-semiconductor field-effect transistors or MOSFETs. These tools can handle much higher power levels than other chips and have a wide range of applications in devices such as laptops and mobile phones. Vishay is down half as much as the S&P 500 has been this year, thanks in part to strong relationships with its partners and revenue that continues to rise slowly but surely even in the face of global supply chain disruptions.
Wolfspeed Inc. (WOLF)
Wolfspeed Semiconductor stock stands out as one of the few tech stocks that have held up somewhat this year, with shares trading near January 1 levels. Moreover, the $13 billion stock has rebounded sharply in recent months, nearly doubling from its June lows even as the market has reached a particularly difficult point in the past several weeks.
That includes a gain of nearly 30% during just one trading session in August after the company reported massive fourth-quarter financial results. WOLF has a modern foothold in the electric vehicle markets thanks to some specialized semiconductors, but the numbers show that there’s a lot of real performance out there to support the growth narrative.
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