The smartphone market has matured and isn’t as much of a high-growth industry anymore. Qualcomm was a darling of the chip industry during the 2000s and 2010s, riding the wave of mobility as smartphones went from a novel idea to an inseparable part of everyday life. If you’re looking for investment income from a microchip stock, Broadcom might be your ticket.
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The company generated a whopping free cash flow profit margin of almost 49% in 2021.īroadcom has a policy of returning about half of the free cash flow it generated the previous year to shareholders via dividends, and it supplements that with share repurchases as well. What it lacks in high-octane growth it more than makes up for in profitability. As its name suggests, it supplies a broad range of electrical parts and components that companies across many sectors of the economy need.Īlthough Broadcom is not the highest-growth chip business on this list, it has expanded slowly and steadily for years. However, the chip giant is quietly helping power everything from 5G mobile network development to data centers and industrial equipment. It is one of the most promising names in the AI computing movement.īroadcom is not a household name. Nvidia is a premium-priced stock among its chip peers and for good reason.
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More than just a microchip company, Nvidia recently made a foray into software with subscription services that enable AI-fueled applications built atop its leading GPU business. The company has extended its tech even further and is also powering devices with computing intelligence, including robotics in factories and warehouses, self-driving car features for automakers, and medical devices and research. Nvidia hardware now powers artificial intelligence (AI) for businesses via its data center chip designs, now its second-largest segment by revenue. However, Nvidia has spurred a revolution in computing by extending the usefulness of GPUs beyond games. The company has remained true to its roots, and almost half its revenue still comes from its video game segment, a ubiquitous form of entertainment around the world.
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The company got its start as a developer of specialized chips called GPUs (graphics processing units) used for high-end PC video games. Nvidia has quickly become one of the most recognizable names in the semiconductor business. If you’re looking for a long-term play on microchip expansion, Taiwan Semiconductor is a good place to start. The company is still reinvesting to maintain its production prowess and pays a modest dividend to shareholders, too.
Taiwan Semiconductor has managed to maintain an operating profit margin of no less than 30% over the past 10-year stretch as well. Over the past decade, this chipmaking giant has gone from just $17 billion in annual sales to almost $57 billion in 2021. Although many manufacturers, including fellow chip fabs, are prone to ebbs and flows in sales from year to year, this company’s constant investment in new and advanced production has kept demand steadily rising for years. Taiwan Semiconductor boasts more than half of the total market share of chip fabrication.Īs a manufacturing giant, Taiwan Semiconductor would normally be considered a highly cyclical stock. Its fabs (most of which are in Taiwan, but it has a number elsewhere, including the U.S.) can handle the most complex chip designs around. It took the crown from Intel ( NASDAQ:INTC) a number of years back, and steady investment into increasingly advanced chip fab capabilities has paid off. Slowly but surely, Taiwan Semiconductor has built itself into the world’s largest manufacturer of microchips.
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