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Semiconductor equipment inventories jumped Thursday after the world’s first chip smelter, Taiwan Semiconductor Manufacturing Co. (TSM), has announced plans to increase investment in factories. Several chip gear actions have surfaced, including the ENTG action, the KLAC action, and the LRCX action.
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Taiwan Semiconductor, also known as TSMC, said it plans to spend $ 100 billion over the next three years to increase the capacity of its factories, Reuters reported. The news comes a few days later Intel (INTC) has revealed a $ 20 billion plan to expand its advanced chip manufacturing capability.
TSMC previously announced plans to spend $ 25-28 billion this year on advanced semiconductor manufacturing equipment. The company is currently facing a large backlog of chip orders from factory-less semiconductor companies. Its clients include Apple (AAPL), Advanced micro-systems (AMD), Nvidia (NVDA) and more.
Three stocks of semiconductor equipment came off the bases Thursday, according to IBD MarketSmith charts. They are Integris (ENTG), TO COMPLAIN (KLAC) and Lam Research (LRCX).
ENTG action, KLAC action, Out of stock LRCX
ENTG stock exited a 10 week consolidation period at a buy point of 114.10. KLAC’s stock jumped from a cup base to a buy point of 342.31. LRCX stock hit a buy point of 603.70 on a 31-day consolidation.
As of noon on the stock market today, ENTG stock was up 5.5%, nearly 118. KLAC stock was up 3.2%, nearly 340.80. LRCX stock rose 5.2% to nearly 625.85.
IBD’s electronic and semiconductor equipment industry group rose 4.4% on Thursday. The chip gear stock group ranks 28th out of 197 industry groups followed by IBD.
Growth equity investors should generally focus on the core stocks of the top 40 industry groups. Choosing highly rated stocks of large industrial groups in a confirmed uptrend in the stock market generally increases your chances of making profits on growth stocks.
CJ Muse, analyst at Evercore ISI, said stocks of semiconductor equipment still have room to function. In a note to customers on Thursday, he cited plans for increased capital spending by chipmakers and rising profit estimates. Muse also predicted a “decades-long investment cycle to come as semiconductor manufacturing becomes a strategic national priority in the United States and Europe.”
Named muse ASML (ASML), Materials applied (AMAT) and LRCX among the first choices of the group. It raised its price targets for LRCX and KLAC shares as well as for ASML and Applied Materials.
IBD Watchlists include Lam Research, ENTG Stock
IBD’s exclusive stock lists include several stocks of semiconductor equipment.
ASML and ENTG stocks are on IBD’s flagship growth stock list, IBD 50. Meanwhile, LRCX stocks are on IBD’s prestigious ranking list.
IBD’s Big Cap 20 list includes applied materials, ENTG stock, KLAC stock, and LRCX stock.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software, and semiconductor inventory.
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