Top 5 global chip manufacturers:
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1. Taiwan Semiconductor Manufacturing Company
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While it may not be a household name like Intel, TSMC is by far the world's largest semiconductor company by market capitalisation. In terms of revenue, the contract giant has taken the crown from Intel in chip manufacturing in recent years.
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At present, TSMC has a 57% market share among global chip manufacturers. Its advanced manufacturing techniques have been key to its success, with its 5-nanocrit production - the smallest, most power-efficient, and most powerful computer processor - leading the pack. As a result, almost every semiconductor company in the world that has no wafer plant looks to TSMC as a trusted production partner. Even Intel has had trouble rolling out new product lines. From chips that power 5G mobile networks to chips that support artificial intelligence systems, TSMC can meet different order needs.
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The company just announced plans to spend $100 billion over the next three years to increase production capacity. This is because although the plant's capacity utilization rate has exceeded 100%, it has not been able to meet demand over the past year.
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TSMC continues to pay a dividend, now yielding 1.5 per cent a year. In the foreseeable future, when the different chip manufacturers all turn the production of chips into corporate profits at maximum capacity, TSMC investors can be sure to profit from it.
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2. Texas Instruments
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Texas Instruments designs and manufactures chips for a wide variety of applications, from advanced driver assistance systems (ADAS) in the automotive industry to microcontrollers in the aerospace and defense industry. Texas Instruments is not the fastest growing company in the industry, but it is an important supplier to the global economy and has been growing steadily for decades as electronic components become more important in a variety of devices.
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The semiconductor industry is highly cyclical, and after a year of surging demand (such as 2021), global demand can be met and then exceeded as supply increases. But Texas Instruments has been a winner in this cycle by efficiently allocating resources to improve its manufacturing processes.
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From 2004 to 2020, the company's free cash flow has grown by an average of 12% per year, and it has increased its dividend payout ratio every year in the process. In fact, the current dividend yield is about 2.2%, making it one of the best blue-chip stocks for investors looking for steady growth and reliable income.
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3. Micron
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Unlike the previous two fabs mentioned earlier, which produce a variety of chip types, Micron Technology focuses on digital memory. Memory chips are a technological necessity that is ubiquitous in more complex semiconductor designs, in data centers and as standalone parts in consumer electronics.
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Historically, their prices have been prone to big swings due to fluctuations in supply and demand. But digital memory is more important than ever, and Micron Technology has weathered its most recent downturn (which peaked in 2020) stronger than ever and is now rapidly returning to profitable growth.
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This is because technologies such as artificial intelligence, data centers, cloud computing services, 5G mobility and smartphones, cars with ADAS and electric drivetrains, and robotic industrial equipment all require large amounts of data. That requires a place to store all that data, and Micron is constantly investing in technology to shrink the size of its memory chips while increasing their storage capacity. As a result, its margins are improving, and the company expects demand to remain high through 2021 and beyond as more applications require more memory components.
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4. 模拟设备
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Analog Devices (ADI) is another diversified chip designer and manufacturer, similar to Texas Instruments. The company's products range from processors to network connectivity chips to chips designed for more specific applications such as LiDAR or 5G mobility. Its high-end markets include the industrial, communications and automotive industries.
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ADI is also driving important technology trends, and its chips are reducing power consumption in industrial equipment and manufacturing, wireless connectivity, and battery-powered vehicles and energy storage, which are also very profitable. It has enough cash (its free cash flow margin in the first quarter was a stunning 33%) to invest in new designs and improve its fab processes. Currently, it has a dividend yield of 1.8% and the business is growing rapidly amid the current global chip shortage.
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5. NXP半导体
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The last of the five fabs to be featured is NXP Semiconductor, a leader in the design and manufacture of connected chips and processors for cars, smartphones and industrial devices. Last year was a bad one for automakers, but even in the early days of the pandemic, sales of cars and trucks, an industry that still accounts for 40 percent of NXP's revenue, fell sharply. In addition to connected chips, it also has the vehicle's ADAS hardware, infotainment system and electric drivetrain technology.
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That makes NXP a top buy for investors looking to bet on a rebound in the auto industry, not to mention demand from autonomous and electric vehicles. Bad weather caused NXP to temporarily close some of its Texas plants at the start of the year, but the company is recovering quickly from the impact of the outbreak and has ramped up production, so profitability is recovering. NXP was recently added to the S&P 500, cementing the company's growth prospects as a top electronic component factory.