Increasing government and corporate investments to address the global semiconductor chip shortage, and rising demand from several industries, should continue driving the semiconductor industry’s growth. Therefore, we think lesser-known players in this space, Axcelis (ACLS) and AXT (NASDAQ:AXTI), should benefit. But which of these stocks is a better buy now? Let’s find out.Axcelis Technologies, Inc. (NASDAQ:ACLS) in Beverly, Mass., and Fremont, Calif.-based AXT, Inc. (AXTI) are two lesser-known players in the semiconductor industry. With a market capitalization of $1.67 billion, ACLS designs, manufactures, and services ion implantation and other processing equipment used to fabricate semiconductor chips globally. In comparison, AXTI manufactures and distributes compound and single-element semiconductor substrates using its proprietary vertical gradient freeze technology. It has a market capitalization of $416.57 million. Both companies sell their products through direct sales channels internationally.
Amid a global semiconductor chip shortage, rising demand from several industries, including automotive and consumer electronics, has increased chip prices. Furthermore, in the second quarter of 2021, worldwide semiconductor sales increased 29.2% year-over-year. To address the problems caused by the shortage, governments and corporates worldwide are investing to boost semiconductor production. And the U.S. Senate has passed a landmark bill that includes $52 billion in planned spending to increase domestic production of semiconductors.
The global semiconductor market is expected to grow 25.1% to $551 billion in 2021. Given the favorable industry backdrop and the prevailing low-interest-rate environment, small-cap stocks ACLS and AXTI should benefit.