The fact that semiconductors are crucial to global manufacturing has gotten a lot more attention this year. Side effects from the U.S.-China trade war and the coronavirus pandemic contributed to a global shortage of chips, which has chipmakers and their customers scrambling lately to meet demand. It's a good time to be a semiconductor investor.

The growing need for chips in progressive vehicle safety and autonomy, 5G mobile networks, data centers, and cloud computing services is on everyone's mind and it's showing no signs of slowing anytime soon. It's also showing up in discussions about recent earnings reports.

To that end, NXP Semiconductors (NASDAQ:NXPI), Skyworks Solutions (NASDAQ:SWKS), and Advanced Micro Devices (NASDAQ:AMD) look even more like solid long-term buys after recently releasing their first quarter 2021 earnings. Here's why these three semiconductor stocks are a buy.

Someone in a suit holding a tablet. A brain illustrated with electrical connections hovers above the screen.

Image source: Getty Images.

1. NXP Semiconductors: A rare play on chip design and fabrication

Most chip companies these days concern themselves with chip design (including Skyworks and AMD, which we'll discuss below). These "fabless" firms offload the actual manufacturing to outfits like Taiwan Semiconductor Manufacturing. But NXP Semiconductors is a rarity, handling both design and fabrication in-house. It also derived 44% of its sales from the auto industry last year and another 21% from industrial "Internet of Things" equipment -- making this a solid bet on the rebounding auto and industrial manufacturing industries.

But this is no old and stuffy industrial firm. NXP's chip portfolio focuses on high-end computing trends like autonomous vehicles and advanced driver assistance systems, vehicle electrification, factory automation, and digital payments solutions in the smartphone sector. It's been a tough couple of years for NXP, but trends are pointing to a run higher as new demand for its wares ramps up and effects from the pandemic ease. 

Specifically, revenue increased 27% year over year in Q1, and adjusted operating profit margin notched a big rally too at 30.9% of sales (compared to only 24.8% the year prior). Management is anticipating an acceleration in results in the second quarter, with sales expected to be at least 38% higher year over year and adjusted operating margin coming in at least at 30.7%.

Given the trend toward higher revenue and better profit margins after a rough 2020, NXP looks like a value. Shares trade for 25 times trailing 12-month free cash flow. If you're looking for a non-speculative bet on vehicle autonomy and batteries, NXP Semiconductor is a great place to start.  

2. Skyworks Solutions: Connectivity without wires is the way of the future

If you believe mobile connectivity will continue to rise in the next decade, Skyworks Solutions is the stock for you. The company made a name for itself in the 2010s riding the coattails of Apple as smartphones went mainstream. But 5G networks are now here and have set off an upgrade cycle as consumers around the globe update their devices to connect to next-gen mobility services.

Skyworks still makes most of its money designing chips that help smartphones connect to mobile networks, and 5G has been a boon for the company so far. Revenue surged 53% higher year over year in the last quarter, and management said sales will increase about 49% from a year ago in the next three-month period. Adjusted operating margin was 37.6% compared to 32.5% last year, helping Skyworks deliver a 77% boom in adjusted earnings per share during the first three months of 2021.  

But smartphones aren't the only growth trend this fabless chip designer is riding. It also plays a hand in WiFi 6 routers and smart home connectivity hardware. It's boosting its exposure to the automotive industry as well. It recently announced it's acquiring the auto and industrial equipment division of Silicon Labs (NASDAQ:SLAB) for $2.75 billion in cash, granting it expanded access to the connected and electric vehicle movement.  

At 26 times trailing 12-month free cash flow, Skyworks looks like a long-term value. The 5G mania it's enjoying right now won't last forever, but the company has a new end-market to exploit in the equally exciting automotive tech movement. Now looks like a great time to make a purchase after the latest earnings update.  

3. AMD: A seriously disruptive force in PCs and data centers

AMD used to be a unified design and fab outfit, but it offloaded its manufacturing arm GlobalFoundries over a decade ago. Since then, this has been a scrappy upstart, offering a compelling alternative to Intel's (NASDAQ:INTC) leadership in the PC and data center industries. But as the page has turned and a new era of cloud computing has dawned, AMD is now a leading chip technologist rather than an underdog. 

AMD's Ryzen 5000 Series chip is shown sitting on a table.

Image source: AMD.

Case in point: While Intel is struggling with flagging sales even during a global chip shortage, AMD is booming. Revenue was an incredible 93% higher year over year in Q1, driven by growth across the company's portfolio of products. Adjusted net income was up 189%, driven by the surge in sales plus adjusted operating profit margin increasing to 22.1% versus 13.2% last year. Management sees continued strength in PCs, laptops, and data centers, and it forecast Q2 sales to be up another 86% and full-year 2021 sales to be up about 50% from 2020.  

AMD is about to get even more profitable too, once it finalizes its pending acquisition of field-programmable chip specialist Xilinx (NASDAQ:XLNX). Xilinx generates a higher free cash flow margin from its smaller operation, and the two companies will combine developmental forces to further AMD's battle for market share against Intel -- especially on the data center and networking front as organizations around the globe start to ramp up investment in new hardware in support of new cloud-based operations. Once complete, the new AMD with Xilinx's assets will be a formidable player in the semiconductor world

After the Q1 update, AMD stock trades for 56 times trailing 12-month free cash flow. It's a premium price tag, but a reasonable one given how fast the company is expanding and the looming Xilinx takeover that will meaningfully improve the company's profit profile. It's taken over a decade since offloading GlobalFoundries and refocusing its efforts, but it's safe to say AMD is now a top-notch name in the design of today's high-end computing components.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.