IQE, CML: 2 FTSE Semiconductor stocks to keep a close eye on

Highlights

• The UK government announced a £1 billion investment in the domestic semiconductor industry.
• Meanwhile, the US has already pledged the support of £42 billion in subsidies for semiconductor manufacturing, and the EU had promised a £37 billion investment plan.
• Despite the recent dip in demand, the semiconductor industry is expected to touch US$1 trillion by 2030.

When Rishi Sunak came to power as the Prime Minister of Britain, one of his visions was to make the country a technological super giant. For this, the UK government announced a £1 billion investment in the domestic semiconductor industry. However, naysayers believe that this £1 billion investment is not enough to revive the sector in the country.

This ambition of PM Sunak has been jolted following other markets opening, such as the US and European nations providing attractive support. In fact, the US has already pledged the support of £42 billion in subsidies for semiconductor manufacturing and research. Similarly, the EU had promised a £37 billion investment plan for the sector.

The semiconductor industry primarily comprises products ranging from cars to washing machines to mobile phones’ microchips. Many domestic firms claim that they haven’t enough support on home soil, so they must look at greener pastures.

Earlier, the Business, Energy and Industrial Strategy Committee (BEIS) voiced their concerns that the nation is particularly exposed to future disruption in global suppliers of semiconductors and is lagging compared to other countries. It further warned that if the government fails to take note of the industry, it may send significant economic shocks to the UK.

The global semiconductor industry currently stands at a little over US$500 billion and is expected to touch US$1 trillion by 2030 despite the dip in demand.

Amid the current economic headwinds, investors can explore the following semiconductor stocks.

IQE Plc (LON: IQE)

The FTSE AIM UK 50 Index constituent, IQE Plc, is a domestic semiconductor company which engages in the R&D, manufacture and sale of compound semiconductor materials. The firm offers services across consumer mobile, automobiles, aerospace & defence, IoT etc. As of 19 May, IQE Plc held a market cap of £167.15 million, giving its investors negative one-year and YTD returns of -21.44% and -53.14%, respectively.

IQE stock on Friday was witnessing an impressive spike of 13.25% and was trading at GBX 23.50 at the time of writing.

CML Microsystems PLC (LON: CML)

The FTSE AIM All-Share constituent CML Microsystems holds a market cap of £74.41 million. The developer of microwave semiconductors for global communications markets has trading operations in Britain, Asia and the USA. CML Microsystems Plc has given its investors a dividend yield of 2.11% and offers a P/E ratio of 33.49.

CML Microsystems had a positive one-year return of 24.47% and a negative YTD return of -3.65. When writing, the CML stock was trading at 472.25 and down by -1.61%.