The semiconductor industry has proved to be resilient despite broad economic weakness stemming from the COVID-19 pandemic. Companies in this space have capitalized on a pandemic-driven increased dependence by individuals and corporations on technology that requires microchips. The global semiconductor market is all set to witness robust, decade-long growth due to fast-paced progress on technologies such as AI, 5G, cloud computing, IoT and autonomous driving.
Given this favorable industry backdrop, chipmakers have been expanding their facilities to meet the surging demand.
Vishay Intertechnology, Inc. (VSH)
VSH is one of the world’s largest manufacturers and suppliers of discrete semiconductors and passive electronic components in the U.S., Europe, Asia, and internationally. The company’s components are used in virtually all electronic devices and equipment, including industrial, computing, automotive, consumer, telecommunications, military, aerospace, power supplies, and medical markets. VSH operates primarily in the following segments: Diodes, Optoelectronic Components, Resistors, Inductors, and Capacitors.
VSH recently extended its NCW AT family of wide terminal thin film chip resistors with a new line of devices in the 0612-case size, for powering electronics in automotive and industrial applications. The company has also introduced a new series of surface-mount multilayer ceramic chip capacitors (MLCCs) with a lead (Pb)-bearing termination finish. The capacitors are suitable for low Earth orbit (LEO) satellites and other space, military, and avionics applications that require tin whisker mitigation.
For the fourth quarter ended December 31, 2020, VSH reported top-line revenue of $667.2 million, representing a 9.4% increase year-over-year, which was driven by higher sales to automotive customers. Its operating margin for the quarter was 9%. At the same time, VHS’ product inventories were reduced by a further $24 million. The company delivered EPS of $0.26, rising 4% compared to the year-ago value of $0.10.
VSH designs its devices to increase the efficiency of high frequency applications by reducing switching losses regardless of the effects of temperature variances. This allows the diodes to operate at higher temperatures. With a year-to-date gain of 12.4%, the company’s product innovations, successful acquisition strategy, and “one-stop shop” service are driving its path toward global industry leadership. Wall Street analysts estimate VSH’s current year revenue and EPS will increase 15.5% and 71.7%, respectively, year-over-year.
VSH’s POWR Ratings reflect this promising outlook. VSH has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
VSH has an A grade for both Value and Industry. It is ranked #17 of 96 stocks in the Semiconductor & Wireless Chip industry.
In total, we rate VSH on eight different levels. Click here to check additional POWR Ratings for VSH (Growth, Stability, Momentum, Quality and Sentiment).
Kulicke and Soffa Industries, Inc. (KLIC)
Singapore-based KLIC is a leading provider of semiconductor, LED and electronic packaging and assembly solutions that support the global automotive, consumer, communications, computing, and industrial sectors. It operates in two segments – Capital Equipment, and Aftermarket Products and Services (APS).
Earlier this month, KLIC acquired a 100% equity stake in Uniqarta Inc, a technology company headquartered in Cambridge, USA. Thestrategic acquisition includes Uniqarta’s patent portfolio and other intellectual property rights. The company aims to strengthen and extend its overall mini and micro-LED technology portfolio.
Revenues for its last reported fiscal first quarter ended January 2, 2021 surged 85.6% year-over-year to $267.9 million, driven by increased demand in the general semiconductor, LED and automotive markets. KLIC continued to meet ongoing demand for its initial advanced display system, Pixalux, during the quarter. Its EPS came in at $0.77, rising 267% versus the year-ago value.
As a pioneer in the semiconductor space, KLIC has provided customers with market leading packaging solutions for decades. In recent years, the company has expanded its product offerings through strategic acquisitions and organic development, adding advanced packaging, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings. The stock is already up a whopping 51.3% year-to-date and could garner further momentum because analysts expect KLIC’s current year revenue and EPS to rise 78.4% and 236.8%, respectively, year-over-year.
The POWR Ratings are also high for KLIC.It has an Overall Rating of A, which translates to a Strong Buy. KLIC also has a B grade for both Growth and Momentum. It is ranked #5 in the A-rated Semiconductor & Wireless Chip industry.
Click here to see the additional POWR Ratings for KLIC (Value, Stability, Sentiment, Quality and Industry).
The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
Note that KLIC is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
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VSH shares were trading at $23.56 per share on Friday afternoon, up $0.28 (+1.20%). Year-to-date, VSH has gained 13.76%, versus a 4.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Sidharath Gupta
Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...
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