The global semiconductor market is riding high on the widespread utilization of chips in diverse applications, spanning electronics, industrial equipment, automotive, networking, communications, and data processing. Propelled by continuous strides in miniaturization, energy efficiency, and high-performance computing, semiconductors have become the backbone of innovation.
So, I present robust chip stocks Trio-Tech International (TRT), United Microelectronics Corporation (UMC), and ChipMOS TECHNOLOGIES INC. (IMOS) that are well positioned to yield weekly tech profits.
The rapid adoption of emerging technologies like AI and IoT drives the demand for customized chips, driving the industry’s growth. In addition, the chips industry not just addresses the current needs for faster and more efficient devices but is also paves the way for the future through continuous advancements in miniaturization, energy efficiency, and high-performance computing.
According to a report by Mordor Intelligence, the semiconductor industry is projected to reach $1.09 trillion by 2028, growing at a CAGR of 10.9%.
Also, the rise in generative AI and the expanding use of AI applications necessitate high-performance GPUs and optimized semiconductor devices. Gartner predicts AI chip revenue in the semiconductor industry to reach $53.4 billion this year, growing 20.9% over the prior year. By 2027, AI chip revenue is expected to be more than double the size of this year’s market, reaching $119.40 billion.
Furthermore, from smart homes and wearable devices to high-performance computing gadgets, the demand for innovative electronic products is on an upward trajectory. According to Statista, revenue in the consumer electronics market will amount to $1.03 trillion in 2025 and is expected to grow at a CAGR of 2.3% in the period 2023-2028.
With relentless innovation and adaptability, semiconductors are at the forefront of the tech revolution, shaping the future of consumer electronics and paving the way for a more interconnected, intelligent, and efficient world.
Given the backdrop, let’s delve deeper into the fundamentals of these Semiconductor & Wireless Chip stocks, starting with the third stock.
Stock #3: Trio-Tech International (TRT)
TRT offers manufacturing, testing, and distribution services to the semiconductor industry. It operates through four segments: Manufacturing; Testing Services; Distribution; and Real Estate.
TRT’s trailing-12-month EBITDA margin of 16.62% is 83.3% higher than the industry average of 9.07%. Its trailing-12-month ROCE and ROTA of 3.13% and 2% are favorably higher than the 0.80% and 0.07% industry average.
TRT’s total revenues for the fiscal first quarter that ended September 30, 2023, amounted to $9.97 million. The company’s total operating expenses decreased 1.3% year-over-year to $2.52 million. Net income attributable to TRT’s common shareholders stood at $230 thousand and EPS amounted to $0.05.
Comprehensive income attributable to TRT common shareholders came in at $26 thousand, compared to a loss of $314 thousand in the prior-year quarter.
The stock has soared 11.3% year-to-date to close the last trading session at $5.01.
TRT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
It has an A grade for Momentum and Value and a B for Sentiment. It is ranked #14 out of 92 stocks in the Semiconductor & Wireless Chip industry.
Click here to see TRT’s Growth, Stability, and Quality ratings.
Stock #2: United Microelectronics Corporation (UMC)
Headquartered in Hsinchu City, Taiwan, UMC operates as a semiconductor wafer foundry in Taiwan, Singapore, China, Hong Kong, Japan, the United States, Europe, and internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It serves fabless design companies and integrated device manufacturers.
UMC’s trailing-12-month EBITDA and net income margins of 45.31% and 29.37% are notably higher than the 9.07% and 1.77% industry average.
On October 31, UMC launched the W2W (wafer-to-wafer) 3D IC project in collaboration with partners Winbond, Faraday, ASE, and Cadence. This project aims to expedite the production of 3D products by providing an end-to-end solution for integrating memory and processors using silicon stacking technology.
It caters to the increasing demand for efficient computing at the device level, particularly in edge AI applications such as home and industrial IoT, security, and smart infrastructure.
UMC pays an annual dividend of $0.58, which translates to a yield of 7.36% on the current market price. Its four-year average dividend yield is 4.41%. The company has raised its dividend payouts at a CAGR of 61.6% over the past three years.
UMC’s operating revenues for the third quarter ended September 30, 2023, came in at $1.77 billion. Its gross profit came in at $634 million. Net income to shareholders of parent and earnings per ADS stood at $495 million and $0.20, respectively.
Analysts expect UMC’s revenue to increase 5.6% year-over-year to $1.90 billion in the fiscal second quarter ending June 30, 2024. Its EPS in the same quarter is likely to be $0.18. It surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.
Shares of UMC have soared 19.8% year-to-date and 10.6% over the past month to close the last trading session at $7.82.
UMC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Momentum and a B for Value and Quality. It is ranked #8 in the same industry.
To access UMC’s Growth, Stability, and Sentiment ratings, click here.
Stock #1: ChipMOS TECHNOLOGIES INC. (IMOS)
Headquartered in Hsinchu, Taiwan, IMOS develops, manufactures, and sells high-integration and high-precision ICs and related assembly and testing services internationally. The company operates through Testing; Assembly, Testing and Assembly for LCD, OLED, and Other Display Panel Driver Semiconductors; Bumping; and Other segments.
IMOS’ trailing-12-month EBITDA and net income margins of 29.44% and 8.04% are 224.8% and 354.8% higher than the 9.07% and 1.77% industry average.
The company has a four-year average yield of 6.94%. It pays $1.50 annually, translating to a yield of 5.89% on the current market price.
IMOS’ revenue for the third quarter ended September 30, 2023, increased 6.2% year-over-year to NT$5.58 billion ($177.53 million). Its gross profit increased 9.5% year-over-year to NT$889.08 million ($28.29 million). Its operating profit came in at NT$487.15 million ($15.50 million), registering a 22.7% increment from the prior year quarter.
Its profit attributable to the company came in at NT$580.60 million ($18.47 million). Also, its EPS stood at NT$0.80.
IMOS’ revenue is expected to increase 11.6% year-over-year to $739.70 million in the fiscal year 2024.
Over the past year, the stock has gained 20.2% to close the last trading session at $25.46.
It’s no surprise that IMOS has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Momentum and a B for Growth, Value, Sentiment, and Stability. Within the same industry, it is ranked first.
Beyond what we stated above, we also have given IMOS grades for Quality. Get all the IMOS ratings here.
What To Do Next?
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UMC shares were trading at $7.95 per share on Wednesday morning, up $0.13 (+1.66%). Year-to-date, UMC has gained 28.51%, versus a 20.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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