How Tower Semiconductor Ltd. (NASDAQ:TSEM) is gaining market share- SIMO, PSEM

Northern, WI 03/12/2013 (usmarketsdaily) - Tower Semiconductor Ltd. (NASDAQ:TSEM) is managing to gain market share, despite financial statements that seem to suggest the contrary. Closing at around $7 per share in trading, this company has gained nearly 7% over its previous level, a rate that is nearly 2,000% higher than the small gains posted by all stocks in the technology sector and by the market overall.

It is an Israeli based semiconductor developer with a market capitalization around $155 million. The stock is trading around $7 per share, which is a little less than half of its 52 week high of around $14 per share. Recent trends in the upward movement of the company’s stock appear to be fueled by its acquisition of additional manufacturing capacity, in line with the company’s plan to reach around $1 billion in annual revenue in the year 2014. Its high debt to equity and debt ratios of 270% and 73% respectively are in line with the acquisition and should be of little consequence when the company meets its goal.

Prospects for Pericom Semiconductor (NASDAQ:PSEM) however appear to be much better on paper than that those for Tower Semiconductor Ltd. Pericom Semiconductor is a San Jose, California based semiconductor maker with a market capitalization around $170 million, which is slightly more than Tower Semiconductor Ltd.

The company is liquid, with a quick ratio of around 6. Its debt to equity ratio is around 17% and has a debt ratio of around 14%. It should be noted however that the company is not paying down a $140 million acquisition, as in the case of Tower Semiconductor Ltd. So its future revenue growth will need to come from its current production capability, barring any proposed or planned acquisition that may arise in the future.

Another emerging company, Silicon Motion Technology Corp. ADR (NASDAQ:SIMO) is the holding company for the Taiwan based semiconductor developer. This company has a market capitalization around $442 million and its financial statements shows positive income trends over the past 4 quarters of 2012.

The debt to equity ratio for Silicon Motion Technology Corp. is around 22%; its debt ratio is around 18%. It has a quick ratio measure of around 3.5. The company’s income is growing at a quarterly rate of around 7% to 8%, which will not keep it in pace with the aggressive growth strategy of Tower Semiconductor.

The market share gains by Tower Semiconductor will be realized in 12 months, if the company exceeds its 2012 amount of around $638 million. The additional manufacturing capacity gained in 2011 will add tremendous value to this stock and is a story worth watching.

Shares of Tower Semiconductor Ltd. (NASDAQ:TSEM) were up by 6.65% to close at $6.90
Shares of Pericom Semiconductor (NASDAQ:PSEM) were down by 1.24% to close at $7.19
Shares of Silicon Motion Technology Corp. ADR (NASDAQ:SIMO) were up by 2.38% to close at $13.79

About the Author

Richard Cooper is a graduated from Buffalo State College in New York with a bachelor's degree in Broadcast Journalism. Richard Cooper has covered an enormous variety of stories that have taken him across the country and around the world. Some of those stories include the presidential election deadlock in Florida, the Elian Gonzalez saga, the crash of JFK Jr., the Columbine tragedy. Richard Cooper is expanding the newsroom's sources, getting everyday people to talk about issues that matter to them and there world.

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