Technology

Taiwan Semiconductor's $25 Billion+ 2021 Capex a Boon for These 5 Suppliers

Lam Research makes products used in thin film deposition, plasma etch, photoresist strip and wafer cleaning for the semiconductor manufacturing process.

Since December 29, Lam Research shares have added more than 11%, and in 2020 the stock gained 64%. Thursday morning, the stock has added around 5% and posted a new 52-week high of nearly $554, against a consensus price target of $484.17. Shares trade at around 25 times expected 2021 earnings. Lam Research pays a dividend yield of about 1% ($5.20 annually).

KLA manufactures and services process control systems. More than half the company’s revenue is derived from sales to chip fabs like TSMC.

In the two weeks since our last report on these stocks, KLA shares have added just over 14% to close 2020 with a full-year share price increase of around 48%. The stock traded up more than 7% early Thursday, after posting a new 52-week high of $313.98, compared to a price target of $265.47. The stock trades at around 25 times expected 2021 earnings, and KLA pays an annual dividend of $3.60 (yield of 1.24%).

Teradyne Inc. (NASDAQ: TER) develops and sells automatic semiconductor test equipment around the world. Sales totaled $2.3 billion in the 2019 fiscal year, and the company’s market cap is just north of $23 billion.

Since our review in late December, Teradyne stock has added just over 16% to its price, and it posted a full-year jump of nearly 77% to its share price. Early Thursday, the shares traded at a high of $139.18, just 35 cents from the 52-week high posted on Tuesday. The stock trades at around 29 times expected 2021 earnings and pays an annual dividend of $0.40 (yield of 0.29%).

ASE Technology Holding Co. Ltd. (NYSE: ASX) is a Taiwan-based provider of semiconductor manufacturing services, including packaging and testing. ASE is well-positioned to take advantage of a total spend of around $3.4 billion this year on assembly and packaging equipment and estimated spending of $5.7 billion on testing next year.

Since late December, shares have added more than 24%, which boosted the company’s full-year appreciation to just 7%. The stock has posted a new 52-week high of $7.34 early Thursday, a gain of about 3% over Wednesday’s closing price. The consensus price target on the shares is $6.43, and the stock trades at about 17 times expected 2021 earnings. ASE pays a dividend yield of 1.91% (payment of $0.14 annually).


Finally, let’s not forget TSMC. The stock has posted a new 52-week high of $132.25, well above the consensus price target of $112.85. The company pays an annual dividend of $1.74 (yield of 1.46%). At the current share price, TSMC trades at a multiple of 33 to expected 2021 earnings.