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April 3, 2021, 9:18 a.m. EDT

These semiconductor stocks might benefit the most from Biden’s spending plan

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By Philip van Doorn

The news about President Biden’s massive spending plans highlights infrastructure. But U.S. semiconductor companies may see a big benefit, and stocks in the sector are already starting to perk up.

The iShares PHLX Semiconductor ETF /zigman2/quotes/209255350/composite SOXX +1.02% was up 2.4% on March 31, with all 30 its components showing gains for the session. SOXX tracks the PHLX Semiconductor Index /zigman2/quotes/210598361/realtime SOX +1.05% . Among the 30 stocks, 15 are down at least 10% from Feb. 16, when SOXX hit its all-time high.

Biden’s spending plan

In February, the Semiconductor Industry Association’s (SIA) board of directors, which includes CEOs or senior executives of Advanced Micro Devices Inc. /zigman2/quotes/208144392/composite AMD +1.26% , Nvidia Corp. /zigman2/quotes/200467500/composite NVDA +1.66% , Qualcomm Inc. /zigman2/quotes/206679220/composite QCOM +0.96% , Intel Corp. /zigman2/quotes/203649727/composite INTC +0.43% , Texas Instruments Inc. /zigman2/quotes/202237907/composite TXN +1.34% and others, sent a letter to Biden.

They wrote that the U.S. market share of global computer chip manufacturing had “steadily declined” to 12% from 37% in 1990. The SIA board said the loss of market share was largely the result of significant government investment in the semiconductor industry in other countries, while there was none in the U.S. (You can read the entire letter here .)

And now the president is trying to give the U.S. semiconductor industry what it wants. SIA CEO John Neuffer said in a statement on March 31 that Biden’s spending program “would invest ambitiously in U.S. semiconductor workers, manufacturing and innovation — three cornerstones of America’s strength and its future.”

Investment strategists at Bank of America included chip makers in their list of companies that could benefit from the Biden plan.

The spending package would include $50 billion for the American semiconductor industry amid a worldwide shortage of chips. In addition, $174 billion would be set aside to help the U.S. “ win ” the worldwide competition for dominance in the electric-car industry. This would obviously help Tesla Inc. /zigman2/quotes/203558040/composite TSLA +0.76% , but it would also support manufacturers of the myriad computer chips used in the vehicles.

Chip stocks pare gains

This table shows the 15 semiconductor-industry stocks among the SOX 30 that have declined the most since the close on Feb. 16, the day SOXX hit its all-time high:

Wall Street’s favorite semiconductor stocks

Here are the 15 SOXX stocks with the most 12-month upside potential implied by consensus price targets among analysts polled by FactSet:

The table includes forward price-to-earnings ratios. In comparison, the forward P/E ratio for SOXX is 22.7 and the forward P/E for the SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/composite SPY +0.65% is 21.8.

Don’t miss: These infrastructure stocks could rise up to 41% in a year on Biden’s massive spending plan, analysts say

/zigman2/quotes/209255350/composite
US : U.S.: Nasdaq
$ 420.82
+4.26 +1.02%
Volume: 645,406
May 7, 2021 1:33p
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/zigman2/quotes/210598361/realtime
US : Nasdaq
3,098.45
+32.23 +1.05%
Volume: 83,517
May 7, 2021 1:33p
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/zigman2/quotes/208144392/composite
US : U.S.: Nasdaq
$ 78.87
+0.98 +1.26%
Volume: 25.50M
May 7, 2021 1:33p
P/E Ratio
33.54
Dividend Yield
N/A
Market Cap
$94.64 billion
Rev. per Employee
$774,841
loading...
/zigman2/quotes/200467500/composite
US : U.S.: Nasdaq
$ 590.57
+9.65 +1.66%
Volume: 3.52M
May 7, 2021 1:33p
P/E Ratio
85.71
Dividend Yield
0.11%
Market Cap
$361.56 billion
Rev. per Employee
$878,788
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/zigman2/quotes/206679220/composite
US : U.S.: Nasdaq
$ 137.31
+1.31 +0.96%
Volume: 4.13M
May 7, 2021 1:33p
P/E Ratio
19.69
Dividend Yield
1.98%
Market Cap
$153.41 billion
Rev. per Employee
$573,927
loading...
/zigman2/quotes/203649727/composite
US : U.S.: Nasdaq
$ 57.44
+0.24 +0.43%
Volume: 10.53M
May 7, 2021 1:33p
P/E Ratio
12.91
Dividend Yield
2.42%
Market Cap
$230.93 billion
Rev. per Employee
$704,042
loading...
/zigman2/quotes/202237907/composite
US : U.S.: Nasdaq
$ 186.73
+2.46 +1.34%
Volume: 2.28M
May 7, 2021 1:33p
P/E Ratio
28.31
Dividend Yield
2.18%
Market Cap
$170.18 billion
Rev. per Employee
$482,033
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 668.56
+5.02 +0.76%
Volume: 15.09M
May 7, 2021 1:33p
P/E Ratio
670.24
Dividend Yield
N/A
Market Cap
$639.21 billion
Rev. per Employee
$445,694
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/zigman2/quotes/209901640/composite
US : U.S.: NYSE Arca
$ 421.79
+2.72 +0.65%
Volume: 37.16M
May 7, 2021 1:33p
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