Everyone is familiar with the giants in the semiconductor industry like Nvidia, Advanced Micro Devices, and Taiwan Semiconductor, waving their banners and attracting the gaze of eager investors.
Yet, beneath the shadow of these magnates, lie hidden gems among semiconductor stocks, quietly positioning themselves for a leap as technologies like artificial intelligence and machine learning gallop towards the horizon. To unearth these overlooked jewels, discerning eyes should focus on two key criteria. Firstly, identify semiconductor companies specializing in niche components crucial for specific applications, such as parts for cutting-edge electric vehicle assemblies. These are the players dominating market niches and holding firm ground.
On the other hand, seek semiconductor stocks that play a supportive role to the industry at large, not directly locking horns with the likes of Nvidia or AMD. Discover semiconductor stocks that offer vital peripheral services to these tech giants and behold a mine of potential waiting to explode, irrespective of which company takes the crown in the industry.
Infineon: Driving the Automotive Revolution
Infineon, standing tall as a top semiconductor stock, lies at the crossroads of multiple emerging automotive trends – the rise of electric vehicles and the advent of sophisticated “dashboard tech” pervading vehicles of all classes. The European semiconductor powerhouse embeds its components in various vehicle systems, from infotainment platforms to Bluetooth interfaces.
But the real magic lies in Infineon’s chips driving less conspicuous but vital functions in EVs like anti-lock braking systems, airbag deployment mechanisms, and air conditioning. As electric vehicles democratize, marching into lower market segments due to diminishing R&D costs, the hunger for these semiconductors is set to surge. Infineon, with its strategic foothold in this specific realm of the EV value chain, emerges as a key player poised to ride this swelling wave of demand.
The future shines even brighter for EV infotainment systems, with research forecasts painting a rosy picture of a 38% annual growth in the demand for these systems until 2030. As vehicle interiors shape-shift into technological marvels, the thirst for semiconductors intensifies. Infineon, with its specialized presence in this sphere, distinguishes itself from mundane semiconductor manufacturers offering generic solutions.
Skyworks Solutions: Scaling the 5G Summit
Skyworks Solutions, a niche semiconductor star, reigns supreme in the realm of 5G and wireless data, weaving the essential fabric of semiconductors for the wireless landscape, from towering cell structures to handheld user devices. Skyworks’ ace lies in the global expansion of 5G network connectivity, with its components playing a pivotal role in band switching and other quintessential 5G functionalities.
The company’s market canvas may be broad, but its reliance on Apple, accounting for nearly 60% of its 2022 revenue, casts a shadow of risk. Nevertheless, the burgeoning 5G market, projected to burgeon at a rate of 32% annually until 2030, provides Skyworks with a robust safety net. The vote of confidence from institutional investors, who hold a whopping 84% of Skyworks shares, cements the stock’s fortitude. Following the money-savvy bigwigs – these institutional players – is often sage advice in the domain of niche tech, including semiconductor stocks. With 19 institutions clutching over half of the company’s shares, their substantial bet signals a profound belief in Skyworks’ promise, hinting at a tale uniquely compelling about this semiconductor dynamo.
Onto Innovation: Refining the Semiconductor Melting Pot
Onto Innovation, not just a chipmaker but a formidable semiconductor support wizard, basking in the glow of wider sector trends, marks an impressive 26% climb year-to-date, signaling strong momentum inexorably propelling it forward.
Last August, Onto made waves with a significant $100 million deal for its Dragonfly inspection system, a critical tool for spotting flaws in semiconductors birthed by third parties, meeting the pressing needs of major players like Nvidia. Onto’s robust stance in the semiconductor ecosystem emanates from the pivotal nature of its inspection services, positioning it as a pivotal service provider to a vast spectrum of semiconductor clientele. As semiconductors morph into the lifeblood of all electronic systems, Onto finds its customer base swelling.
With the AI beacon shining gloriously overhead, the GPUs and related technology sector is forecasted to balloon to a whopping $25.5 billion by 2030. Onto occupies a prime spot to reap the harvest of this growth as the semiconductor realm hurtles forward, irrespective of which entities seize the champion’s laurels in this cutthroat arena.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Jeremy Flint, a finance-savvy MBA graduate and adept writer, excels in sculpting content strategy for wealth managers and investment funds. With a passion for unraveling complex market concepts and a sharp focus on fixed-income investing, alternative investments, economic analysis, as well as the oil, gas, and utilities sectors, Jeremy’s work stands tall at various platforms like www.jeremyflint.work.
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