Microchip Technology Inc. (MCHP), Texas Instruments Incorporated (TXN): This Semiconductor Manufacturer Looks Good

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Looking around

Microchip competes with Texas Instruments Incorporated (NASDAQ:TXN) and Analog Devices, Inc. (NASDAQ:ADI).

Texas Instruments has been investing in R&D in order to focus on high margin analog and embedded markets in order to become a pure analog and embedded processing company. This shift came about after it announced its exit from the wireless market in September 2012 and is in line with the objective to be exposed to less volatile markets like mobile computing.

It accounts for about 15% of the analog market, where it is a leader in voltage regulators. Having acquired National Semiconductors, equipped with a stronger product portfolio than before, growth in high volume analog and logic markets and a strong sales force, Texas Instruments Incorporated (NASDAQ:TXN) is well positioned to reap the benefits of an upswing in demand in the analog segment.

The company has also been focusing on Open Multimedia Applications Platform (OMAP) embedded applications for industry, automotive and enterprise. The embedded market, currently valued at $19 billion, offers sustainable growth as compared to the mobile computing space. Texas Instruments Incorporated (NASDAQ:TXN) expects third quarter revenue in the range of $3.05 billion to $3.09 billion and Earnings Per Share for the quarter is estimated to be in range of $0.49 to $0.57.

Analog Devices, Inc. (NASDAQ:ADI)’ 2Q2013 earnings missed consensus estimates where it reported earnings of $0.50 per share, and revenue was down Y-o-Y by 2.3% to $659.3 million. Analog Devices, Inc. (NASDAQ:ADI), like Texas Instruments Incorporated (NASDAQ:TXN), is a global player in the analog markets. Management is expecting third quarter revenue to be in the range of $655 million to $685 million and still be lower than analysts’ expectations of $688 million.

The risk for this semiconductor manufacturer is lower as it has a beta of 1.22 as compared to 1.35 of Texas Instruments Incorporated (NASDAQ:TXN). Its dividend yield of 2.75% offers another reason to buy.


Microchip Technology Inc. (NASDAQ:MCHP) has been growing at a terrific pace and the growth is expected to continue as the company focuses on research and development and is present in growing markets. As a result, investors should consider adding this stock to their portfolios.

The article This Semiconductor Manufacturer Looks Good originally appeared on Fool.com and is written by ANUP SINGH.

ANUP SINGH has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. ANUP is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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