Semiconductors are everywhere. As electronic devices proliferate, the companies that make semiconductors continue to prosper. In fact, they are among the most successful companies in the world.
Because semiconductors are hidden away in phones, tablets and computers, many semiconductor companies are relatively unknown. They quietly do business with companies that manufacture devices. The names on our top 10 list may not be known to everybody, but they are giants in the industry.
1) Intel
Sales: $56.31 billion
Intel Corp. (NASDAQ: INTC) is an integrated device manufacturer that designs and manufactures motherboard chipsets, network interface controllers and integrated circuits. The company is headquartered in Santa Clara, Calif., and was founded in 1968 with $2.5 million in funding arranged by American venture capitalist Arthur Rock.
Intel's initial products were memory chips, including the world's first metal oxide semiconductor. Intel's introduction of the Pentium microprocessor in 1993 helped spur significant expansion of the PC market. Intel supports processors for computer companies such as HP and Dell.
Revenues have risen from $13,702,000,000 to $16,374,000,000 over the past four quarters. During that same period, operating income rose to approximately $4.5 billion from $2.6 billion. This indicates that Intel is keeping expenses in line. If increased revenues were not producing more income, that would indicate the cost of sales is rising too fast.
Wells Fargo rates the stock as an “outperform,” and the consensus it that the stock has room to rise. In addition to the potential for capital appreciation, the stock pays a 3.09% dividend.
2) Samsung
Sales: $43.54 billion
Samsung is actually made up of about 70 companies. Samsung Electronics makes mobile devices such as smartphones, and it manufactures television sets and appliances. The company also creates semiconductors.
Revenues continue to rise for this stock, and a glance at the past four quarters shows that the rise is steady.
3) Taiwan Semiconductor
Sales: $29.32 billion
Taiwan Semiconductor Manufacturing Company (NYSE: TSM) claims to be the world's largest dedicated independent pure-play semiconductor foundry. Pure-play foundries only fabricate integrated circuits and do not have any in-house design capabilities. Many leading semiconductor companies outsource the manufacturing of their components to Taiwan Semiconductor to cut labor costs while investing capital in research and development.
This company has reported higher revenues in each of the last four years and operating income has been up for each of those years.
The stock pays a 2.95% dividend. Note that the stock price is currently at the consensus target price, so this may be a dividend play rather than a capital appreciation play.
4) Qualcomm
Sales: $15.44 billion
Qualcomm, Inc. (NASDAQ: QCOM) designs and markets wireless telecommunications products and services. Telecommunications companies worldwide use Qualcomm's patented code division multiple access (CDMA) technology, which has played an integral role in the development of a single international standard for wireless communications.
This stock has a hefty 4.32% dividend. Revenues have been flat over the past four years, and operating income has dropped. However, the dividend appears to be safe, so this is a stock for income-driven investors.
5) Broadcom
Sales: $15.33 billion
Broadcom (NASDAQ: AVGO) was the source of major news when it was purchased by its rival Avago for $37 billion in 2015. Their products serve four primary markets: wireless communications, enterprise storage, wired infrastructure and industrial. It manufactures semiconductor devices and analog devices and provides interfaces for computers' Bluetooth connectivity, routers, switches, processors and fiber optics.
Revenues are fairly flat for the past three years, but operating income has almost doubled. Its management is clearly doing something right. With a 1.93% dividend, this stock is a steady investment for the foreseeable future.
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