The COVID-19 pandemic has created economic turmoil; however, many semiconductor manufacturing companies are staying healthy during this bear market.
Semiconductor Manufacturing Stock to Watch
People have changed lifestyle practices, which have caused a shift in consumerism.
As workforces are transitioning to remote working, organizations are having to adapt the way they do business.
Some industries have been hit hard, such as the travel and tourism sector, but some trades have flourished amid this coronavirus bear market.
The technology sector tends to be cyclical in terms of demand fluctuating with GDP growth, but current technology is surpassing other stocks. Most of this relates to the high-demand products and services they are providing in this shelter in place economy.
As the pandemic worsens, many companies will not only survive but may thrive in this turbulent economy. The surge in demand for products will see stocks soar.
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After a few volatile weeks for the coronavirus stock market, there is plenty of good news. Investors Business Daily reported, “strong chip demand amid the coronavirus crisis.”
“Intel CEO Bob Swan told Bloomberg Television late Thursday that demand for expensive server chips picked up in the first quarter. Corporations are rushing to build up infrastructure as coronavirus shutdowns spur working from home.”
“Intel stock rose 5.6% last week but closed near the low of its range. On Thursday, Intel stock fell back below its 50-day line. INTC stock could be starting to form a handle on its consolidation.”
Leading the ‘strong chip’ pack is Taiwan Semiconductor Manufacturing (TSM) who is the world’s largest devoted independent semiconductor foundry. They are also known as Taiwan Semiconductor or TSM. Their headquarters are in Hsinchu, Taiwan, but their customer outreach is enormous. They provided a broad range of technology and were the first foundry to mass commercialize Extreme Ultraviolet (EUV) lithography technology and provide 7-nanometer manufacturing capabilities. They are also moving toward 5-nanometre production later this year.
They make chips for big-techs like AMD (AMD), Apple (AAPL), and Qualcomm (QCOM).
High revenues have been reported for the last four years, with an increase year on year in operating income.
Q1 2020 saw revenue growth of 42% vs. the previous year. However, it is likely not to grow at such extreme rates for the remainder of the year as TSM anticipates a slow down because of the economic downturn from the coronavirus pandemic, not just for them but for the semiconductor manufacturing industry as a whole.
Last year’s figures were down due to the U.S.-China trade wars, so it wasn’t a good year for semiconductors.
As more powerful chips are required nowadays, and AI applications are a big trend, the companies that are manufacturing the most advanced chips will see great success. TSM gets a considerable percentage of its revenue from smartphone chips, and with 5G phones requiring these advanced chips, their content growth per smartphone looks to grow by 20% even as smartphone unit numbers decline.
TSM has also seen a surge in sales of high-performance computer chips due to the rise in cloud use from remote working. Stocks look solid as they operate in a sector that isn’t adversely affected by the pandemic, and they have a solid balance sheet.
They’re certainly a stock under close observation right now, “Analyst recommended consensus rating of 1.79 on this stock. Analysts also expected that stock to achieve share value at $2 – 96.57% in the coming one year period. EBITDA is NT$21.352B. EBITDA is a company’s earnings before interest, taxes, depreciation, and amortization and is an accounting measure calculated using a company’s net earnings before interest expenses, taxes, depreciation, and amortization are subtracted, as a proxy for a company’s current operating profitability.”
Semiconductor companies continue to succeed as electronic devices fill the market. Despite already being among the most profitable companies in the world, first-quarter earnings have leaped ahead. The COVID-19 outbreak isn’t causing any slowdown in demand for leading-edge chips. Anyone investing in these stocks for a retirement income should be rejoicing right now.
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