Have you ever heard anybody saying “My internet is too fast”? We haven’t either. For some reason, people always want to speed up their connection as opposed to slowing it down. And this reason has a name – 5G. Nowadays, this technology is in the shade of other news (not very surprisingly) but 5G continues to evolve.
It’s the future transforming into the present – right before our very eyes. Obvious beneficiaries of 5G development – besides mobile operators – might be semiconductor manufacturing companies that could have fared better throughout 2023.
Despite potential challenges to come in 2023, the overall mood is positive. 65 % of executives surveyed said that they think the semiconductor shortage will ease in 2023. 2023 was a tumultuous year for all industries.
The global semiconductor industry has been all over the headlines since 2020 when the Covid-19 pandemic took the real world away from us and made us plunge into virtual reality. At the same time, the impact of digital technology on life and business was accelerating like never before, and, in turn, the semiconductor markets boomed.
The modern economy runs on semiconductors. They are the heart of millions of devices, including space vehicles, computers, smartphones, medical equipment, appliances, and more. Multiple devices breed like rabbits, yielding a profit for semiconductor manufacturers.
These companies never stop competing in producing smaller, cheaper, and faster chips. Among the manufacturers, there are huge corporations with global names and reach, as well as lesser-known firms that do not go beyond local markets.
The global semiconductor industry is dominated by companies from the United States, Taiwan, South Korea, Japan, and the Netherlands.
Many investors view the sector as important given its continuous growth and major role in the development of new technology. Let’s see what performance they are showing in the 5G race and whether it’s a good time to invest in them.
In 2023, stock markets were all in the red. Therefore, it doesn’t come as a surprise that the share prices of semiconductor manufacturers went south along with the others. But semiconductors stand out from the crowd. Just take a look at the chart with Marvell Technology, AMD, Qualcomm, and Skyworks Solutions – this is their performance in the last 12 months.
Looks like a ski slope created by the crisis, a general decline in purchasing power, and sagging demand for chips. In addition, the Covid-19 pandemic managed to set an uptrend for the above-mentioned brands, that’s why such a dramatic drop seems even more dramatic.
What a scenic landscape! Don’t you just feel like you’re on a trip to the mountains? You might be more inclined to enjoy this view if your portfolio doesn’t contain any of these stocks. In any case, all the companies on this chart are 5G stocks and this technology may become one of the growth drivers for them in the future.
Marvell Technology is engaged in the development of data infrastructure for carrier networks and is using its expertise in the construction of infrastructures at the intersection of 5G and cloud technology. 5G development could use some help, this is why Marvell is also teaming up with Nokia and Samsung. Analysts believe that 2023 will be a great year for the company’s stock. The average forecast is up to 70% in the next 12 months.
AMD also belongs to semiconductor companies – we’re all familiar with its CPUs. But you might not be aware of the fact that the CPUs the company produces is the converging point between AMD and 5G technology. The company develops EPYC processors powering the most energy-efficient x86 servers.
The idea behind this is to deliver exceptional performance while reducing energy costs. Such development may be of interest to mobile operators seeking to speed up 5G connections without going over budget. It remains to be seen whether EPYC processors can be that epic.
In any case, let’s check back in with them later this year – as experts predict that AMD will have a great 2023. The average forecast for its stock is an increase of 37% in the next 12 months.
Qualcomm is a legendary chipmaker. This semiconductor company designs and manufactures chips for Apple and other globally recognized brands. Qualcomm helped Apple to kickstart the line of iPhones supporting 5G. It’s an open secret that iPhones are sold like hotcakes, so it allows Qualcomm to succeed alongside it. According to analysts, 2023 should be prosperous for the company and may bring the company’s stock a 26% hike.
One more semiconductor company we mentioned above is Skyworks Solutions, which mostly produces chips used in cellular networks. The consensus forecast is more than 14% growth in the next 12 months.
The global semiconductor market is expected to shrink in 2023. The year ahead is shaping up to be a hard one for this business. These concerns are mostly connected with geopolitics.
In recent months, the U.S. has imposed restrictions on what chips can be sold to China and who can work for Chinese companies. At the same time, it has targeted the supply side of the industry by introducing generous federal subsidies to bring manufacturing back to the U.S.
Other governments in Europe and Asia, where major chip companies are located, have instituted similar policies to maintain their position in the industry. So far, the Chinese government has had little to no response to the new US export controls, aside from some involvement in a legal dispute filed with the World Trade Organization, which is unlikely to have many results.
Will there be a more tough response in the future? Most experts believe it won’t.
As these changes will remain in force in 2023, they will bring a new element of uncertainty to an industry that has long relied on globally distributed supply chains and a fair amount of freedom in choosing who to do business with.
Of course, average forecasts aren’t a guarantee that all of the abovementioned stocks will show good results in reality or that the global semiconductor market will face catastrophic damage. That’s why you should do your analysis before you make any deal.