The Top Semiconductor Stock Today

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There are many fine semiconductor companies on the market, but one stands above the rest as an investment opportunity. If you were to check with our 110,000-member Motley Fool CAPS community today, you'd see that the highest-rated semiconductor stock is analog circuit designer Intersil (Nasdaq: ISIL).

The lowdown
Intersil is a smaller competitor in the same analog chip space where the likes of Texas Instruments (NYSE: TXN), Analog Devices (NYSE: ADI), and National Semiconductor (NYSE: NSM) make their bread. More specifically, Intersil is focused on high-performance parts rather than the higher-volume, lower-margin workaday product spaces. The company is particularly strong in driver chips for LCD panels, specialty industrial chips, broadband communications solutions, and power management devices for computer systems.

In a remarkable show of balance, each of Intersil's four operating segments represented between 21% and 29% of total sales in 2007. It is an American company, headquartered in Milpitas, Calif., at the heart of Silicon Valley. But 41% of its revenue comes from customers in China, 13% from South Korea, nearly 10% from Taiwan, and 19% from other foreign countries -- leaving just 17% of the pie for the troubled domestic market.

Intersil's three-year revenue growth rate is faster than the immediate peer group, which includes companies like National Semiconductor and Linear Technology (Nasdaq: LLTC).

The buzz
"There's not hardly an electronic device that doesn't require a component manufactured by Intersil," says CAPS player Budsworth, who has an "outperform" rating on the stock. Indeed, the customer list includes most of the world's premier electronics shops, including Valley neighbor Apple (Nasdaq: AAPL), Korean powerhouse Samsung, and fast-growing display specialist LG Display (NYSE: LPL).

Our players have issued 94 bullish ratings on Intersil and only five negative ones. You'd have to look back to last July to find the most recent negative comment on this stock, and all the All-Star players who cast a vote, as well as the entire Wall Street analyst crowd, have a positive view.

Start digging, Fool
If this combination of global reach, Zen-like balance, market opportunities and leadership, and investor approval sounds enticing, you should take a closer look and perhaps buy into this exciting yet relatively unknown all-star stock. Get in before Intersil becomes a household name, and hold it for decades. That's how great fortunes are made.

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Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. It's also free to join the CAPS community and take advantage of the knowledge that Foolish investors have accumulated on 5,500 stocks.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is all that and a bag of microchips.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 04, 2008, at 10:32 AM, capitalgorilla wrote:

    "But 41% of its revenue comes from customers in China, 13% from South Korea, nearly 10% from Taiwan, and 19% from other foreign countries -- leaving just 17% of the pie for the troubled domestic market."

    Hi,

    I agree with the article in general being inside the high end analog industry and ISIL is cheap selling at low PE.

    However the above statement is not accurate: The selling of the semiconductor is mostly to the contract manufacturers. e.g. to the biggest, Hon-Hai China for Apple. The "buying decision for ISIL and other semis is in the US, ASIA or Europe, where Apple etc design the next thing upon which the ISIL IC is locked in for purchase for years maybe. The end market use is elusively different...Asia's, Europe's and our teen. Taiwan is another example: home of most computer motherboards ISIL's ICs are part of due to being favored by Intel to power their processors.

    So the end market driving the chip demand is truly global and intertwined, possibly balanced between all continents/economies by GDP.

    Rgds, Caps player capitalgorilla

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