How are these five chipmakers faring in recent days?

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Highlights:

  • Texas Instruments' revenue rose one per cent sequentially in Q3 FY22.
  • Warren Buffett has taken over a US$ 4 billion stake in Taiwan Semiconductor Manufacturing Company.
  • Analog Devices will report its final quarter and annual financial results on November 22.

The semiconductor industry is comprised of firms that manufacture chips or electronic devices used in various sectors, ranging from computers, cell phones to electric vehicles.

The semiconductor industry is one of the crucial segments of the technology segment, as it powers almost everything in the sector. The demand for semiconductors increased significantly last year, with the trend of stay and work-at-home.

This has also caused global supply disruptions for semiconductor chips in 2021. However, 2022 was not so inspiring for the semiconductor industry, with sales receding significantly for electronic devices like laptops, televisions, etc., compared to the prior year.

As the stay-at-home trend started to diminish, consumers shifted their spending to other areas like travel, recreational services, etc. In addition, the soaring inflation has also weighed on the market sentiment while subsiding consumer spending in the sector.

On the other hand, the geopolitical tensions between two nations, the United States and China, have also weighed on the market sentiment in recent months. But having said that, the investors are hopeful that US President Joe Biden's first meeting with Chinese President Xi Jinping in person after Mr Biden's term would allay some tensions between the nations.

Some of the major names from the semiconductor industry include Nvidia Corporation (NASDAQ: NVDA), Texas Instruments Incorporated (NASDAQ: TXN), Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM), Intel Corporation (NASDAQ: INTC), Analog Devices, Inc. (NASDAQ: ADI).

So, let's take a closer look at the financial performance and other key recent highlights of these companies with Kalkine Media®.

Nvidia Corporation (NASDAQ: NVDA)

The leading technology and semiconductor manufacturing firm, Nvidia Corporation, holds a market cap of US$ 414.98 billion. The company's stock, which produces GPUs for gaming and other related sectors, fell 43 per cent YTD and 44 per cent YoY.

In the running quarter, it added over 37 per cent after closing at over two per cent higher on Tuesday, November 15. The GPU maker's P/E ratio is 54.64.

On November 14, Nuance Communications and NVIDIA Corporation announced a partnership to direct artificial intelligence or AI-based diagnostic tools directly to radiologists and other clinical professionals, which would help them in delivering better patient care at lower costs.

The leading technology firm will report its Q3 FY23 financial results on Wednesday, November 16, after the session ends. Meanwhile, in Q2 FY23, NVIDIA Corporation's revenue rose three per cent YoY to US$ 6.70 billion, and its diluted EPS was down 72 per cent YoY and 59 per cent QoQ to US$ 0.26 apiece.

Texas Instruments Incorporated (NASDAQ: TXN)

Another major American technology and semiconductor firm, Texas Instruments Incorporated, holds a dividend yield of 2.76 per cent. The company, which designs and manufactures semiconductors and integrated circuits, lost over five per cent YTD and six per cent YoY from its stock price.

In the running quarter, it soared about 14 per cent through Tuesday, November 15.

Texas Instruments' revenue rose one per cent sequentially, and 13 per cent year-over-year to US$ 5.24 billion in Q3 FY22, and its net income rose 18 per cent YoY to US$ 2.29 billion. The company's revenue guidance range for the final quarter is US$ 4.4 billion to US$ 4.8 billion.

Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM)

The semiconductor contract manufacturing and design company Taiwan Semiconductor's dividend yield was 1.86 per cent. The Taiwanese semiconductor firm's market cap was US$ 421.67 billion.

Meanwhile, the chipmaker was in the news after Warren Buffett's Berkshire Hathaway disclosed a stake holding over US$ 4 billion in the company. Berkshire Hathaway disclosed the holding details in a securities filing on Monday, November 14.

Warren Buffett's conglomerate firm had purchased around 60 million ADRs in the chipmaker in the three months that ended September.

In Q3 FY22, Taiwan Semiconductor Manufacturing Company's revenue was US$ 20.22 billion or NTD 613.14 billion, up 47.9 per cent YoY, and its comprehensive income rose 101 per cent YoY to US$ 10.32 billion or NTD 313.09 billion.

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Intel Corporation (NASDAQ: INTC)

Intel Corporation is another major global technology company. The company's stock closed at US$ 30.71 on Tuesday, November 15, up 1.19 per cent from its previous close.

It is one of the leading semiconductor manufacturing firms that develops the x86 series of instruction sets found in personal computers.

Intel Corporation's Q3 FY22 GAAP revenue declined 20 per cent YoY to US$ 15.3 billion, and its non-GAAP revenue fell 15 per cent YoY. The Santa Clara-based semiconductor firm's net income tumbled 85 per cent YoY to US$ 1 billion, or US$ 0.25 apiece in the quarter.

Analog Devices, Inc. (NASDAQ: ADI)

Analog Devices is a semiconductor manufacturing firm with a market cap of US$ 84.95 billion. The company, with a dividend yield of 1.85 per cent, specializes in data conversion, signal process, and other related services.

The company on November 16, it announced some new technology solutions to aid its clients in driving improved intelligence into smart buildings, factory automation, and other related services.

The chipmaker will report its final quarter and annual financial results on November 22 at 7 am ET. In Q3 FY22, Analog Devices' revenue rose 77 per cent YoY to US$ 3.11 billion, and its diluted EPS surged seven per cent YoY to US$ 1.44 apiece.

Bottom line:

Investment in the semiconductor sector carries risks, as the industry tends to be volatile depending on the demand swings. Although some investors are still hopeful that the sector may regain its momentum, with global digitalization on focus, the sector's performance in recent months suggested otherwise.

However, as said earlier, semiconductor chips are crucial in recent days, as they power almost everything that helps consumers shift to digital online platforms and stay connected.

In addition, global climate concerns, which bumped up the demand for solar energy, electric vehicles, etc., are also powered by the semiconductor industry.

The chips are used in solar power infrastructure, EV production, etc. But, given the recent turmoil in the market, investors should carefully evaluate the assets before putting their bets into the assets.

The Dow Jones US Semiconductor index fell more than 30 per cent in 2022 while adding about 22 per cent in the running quarter.



 


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