IQE, CML & Alphawave (AWE): Are these semiconductor stocks good to buy?

Highlights

  • IQE had recently announced the closure of its Singapore production facility by mid-2022, as a part of its global consolidation strategy.
  • CML Microsystems declared a final special dividend of 50p per ordinary 5p share
  • Alphawave IP Group announced the production availability of its new 5nm connectivity IP for the PCIe-CXL market.

The UK is home to several semiconductor manufacturing companies offering breakthrough technological products that are used in diverse applications. However, for the last some time, there has been a critical shortage in the supply of semiconductors used in the manufacturing of smartphones, computers, tablets, televisions, and cars. Companies are rethinking their strategies to solve the chip shortage.

Recently, Intel dropped the UK as a potential site for its planned chip manufacturing capacity expansion in Europe due to Brexit. The announcement may significantly impact the UK’s manufacturing capability, as the country intends to become a science and technology superpower in the near future.

Increasing investments in new capacity expansions across the semiconductor industry in the UK may play a key role in addressing current deficits arising as a result of supply chain and geopolitical issues. Below is a detailed review of the investment potential in three semiconductor stocks – IQE, CML Microsystems and Alphawave IP Group.

IQE, CML & Alphawave (AWE): Market capitalisation details

(Data source: Refinitiv)

IQE Plc (LON: IQE)

IQE is an AIM-listed company engaged in supplying advanced compound semiconductor wafer products and material solutions. Recently, the company announced the closure of its Singapore production facility by mid-2022, as a part of its global consolidation strategy.

The shares of the company are trading at GBX 44.35 at 8:09 AM BST on 14 October 2021. The company’s current market cap is £355.81 million.

IQE’s revenue for H1 2021 was s £79.5 million compared to £89.9 million in H1 2020, representing a decline of 11.5% year-on-year. It reported a loss after tax of £2.7 million in H1 2021 compared to a loss of £5.0 million in H1 2020.

CML Microsystems Plc (LON: CML)

CML Microsystems is engaged in designing, manufacturing and marketing semiconductor products for the communications sector. Its revenue stood at £12.5 million in 2021 compared to £15.0 million in 2020.

The shares of the company are trading at GBX 420.00 at 8:12 AM BST on 14 October 2021. The company’s current market cap is £69.71 million.

CML Microsystems recorded a profit before tax of £0.01 million in 2021 compared to £1.18 million in the previous year. The company’s board declared a final special dividend of 50p per ordinary 5p share.

Alphawave IP Group Plc (LON: AWE)

Alphawave IP Group is a provider of semiconductor solutions that enable high-speed connectivity. The company announced the production availability of its new 5nm connectivity IP for the PCIe-CXL market. It recorded US$196.1 million worth of bookings in H1 2021, representing a year-on-year increase of 490% compared to H1 2020.

The shares of the company are trading at GBX 269.80, up by 0.30% at 8:13 AM BST on 14 October 2021. The company’s current market cap is £1,788.76 million.

Alphawave IP Group’s revenues stood at US$27.6 million for H1 2021, up by 140% year-on-year compared to US$11.5 million in H1 2020.

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