Despite the buzz around artificial intelligence and machine learning, the semiconductor industry is facing turbulent times, with sales dropping 8.2% to $526.8 billion in 2023. This decline can be attributed to a slowdown in the personal computer industry and weakening consumer electronics and server sales. As a result, many semiconductor stocks are struggling to regain their footing, and investors are advised to tread cautiously.
Wolfspeed’s Diminished Howl
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Wolfspeed (NASDAQ:WOLF), a pioneer in next-generation semiconductors, has been howling with losses. Despite slight revenue improvements, the company recorded a net loss of $144.7 million in the second quarter of fiscal 2024, a significant increase from the previous year. With projections showing no immediate turnaround, Wolfspeed’s stock has plummeted by 56% in the last year, drawing an “F” rating in the Portfolio Grader.
MaxLinear: A Tale of Loss and Legal Battles
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MaxLinear (NASDAQ:MXL) has been unable to reverse its downward trajectory, with revenue plummeting and losses piling up. Posting a loss of $38.5 million in the fourth quarter of 2023, the company faces further challenges due to an arbitration claim from Silicon Motion (NASDAQ:SIMO). The arbitration demands $160 million in damages, adding to MaxLinear’s woes. With a 45% drop in the stock price over the last year and a “D” rating in the Portfolio Grader, MaxLinear is a company to steer clear of.
Amkor Technology: Packaging Pains
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Amkor Technology (NASDAQ:AMKR), though not a semiconductor manufacturer, relies heavily on semiconductor production, making it susceptible to market fluctuations. With dwindling demand for semiconductors, Amkor’s revenues have taken a hit. Specializing in packaging and testing integrated circuits for various electronic devices, the company’s fortunes are intertwined with the semiconductor market’s volatility.
Struggles in the Semiconductor Industry: A Deep Dive into Three Companies Facing Challenges
Alpha and Omega Semiconductor (AOSL)
Alpha and Omega Semiconductor (NASDAQ:AOSL) operates amid a turbulent sea of challenges in the semiconductor market. This California-based company manufactures semiconductors for a variety of products, from flat-panel televisions to smartphones. Recently, it faced the tumultuous waves of a Department of Justice investigation into its business dealings with Chinese tech giant Huawei Technologies.
Back in 2019, the Department of Commerce imposed a shipment suspension order on Alpha and Omega in connection with transactions involving Huawei. While the recent closure of the criminal investigation by the Department of Justice brought some relief, the ongoing civil inquiry by the Commerce Department continues to loom over the company.
Despite the industry headwinds, Alpha and Omega posted revenue of $165.3 million in the second quarter of fiscal 2024, down from the previous year. Notably, the company swung from a profit to a loss, signaling stormy seas ahead. With AOSL stock down 12% over the past year and a lackluster rating from the Portfolio Grader, the company’s journey remains fraught with uncertainty.
SkyWater Technology (SKYT)
SkyWater Technology (NASDAQ:SKYT), based in Minnesota, stands as a unique player in the semiconductor arena as the sole U.S.-owned pure-play silicon foundry. However, even this distinctiveness offers little shelter from the overall industry slowdown affecting semiconductor companies worldwide.
Despite its specialized position, SkyWater faced a 19% decline in revenue during the fourth quarter, accompanied by a net loss. The company’s struggles are reflected in SKYT stock’s 8% dip over the last year and a lackluster rating from the Portfolio Grader.
Shoals Technology (SHLS)
Shoals Technology (NASDAQ:SHLS) ventured into the solar energy realm, providing electrical balance of systems (EBOS) solutions for solar infrastructure. Like many others in the solar industry, Shoals confronted a challenging landscape marked by labor costs, regulatory shifts, and rising interest rates – elements that cast shadows over its performance.
While the fourth quarter showed a revenue uptick for Shoals, with $130.4 million compared to the previous year, the company’s net income and earnings per share fell short of illuminating success. With SHLS stock plummeting by 41% in the past year, the road to recovery seems long and uncertain for Shoals as solar energy loses its luster in the investment spotlight.
Skyworks Solutions’ Resilience Amidst Apple Woes
Skyworks Solutions: A Glimpse
Skyworks Solutions (NASDAQ: SWKS), the California-based semiconductor manufacturer, is the epitome of versatility. Specializing in amplifiers, audio devices, clocks, modems, switches, and televisions, the company’s products find utility in smartphones, data centers, automobiles, and various healthcare devices.
Dependence Dilemma with Apple
Notably, Skyworks Solutions relies heavily on tech giant Apple (NASDAQ: AAPL) as a key customer. Apple’s provision of components for desktop computers, notebooks, smartphones, watches, and tablets has been a significant revenue stream for Skyworks. However, this close tie also exposes Skyworks to vulnerability – a potential pivot by Apple to another supplier or in-house manufacturing of parts could shake Skyworks’ stability.
The Apple Factor in Earnings
With Apple grappling with dwindling iPhone sales, especially in markets like China, Skyworks Solutions stands at the receiving end of the fallout. Reduced demand for Apple’s products directly impacts Skyworks’ financial performance. In the first quarter of fiscal 2024, the company witnessed a decrease in revenue from $1.32 billion to $1.2 billion compared to the previous year. Similarly, income dropped from $309.4 million to $231.3 million in the same period.
Stock Performance and Portfolio Position
Despite its mettle, SWKS stock has weathered an 8% decline over the past year, mirroring the testing times faced by the broader semiconductor industry. Reflecting these challenges, Skyworks Solutions has landed an undesirable “D” rating in the Portfolio Grader, an indication of the road ahead.
On the date of publication, Louis Navellier had a long position in AMKR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in AAPL. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
