Increasing demand for semiconductors amid rapid digitalization, and rising investments to address the global chip shortage, position the semiconductor industry for solid growth. We think ON Semiconductor (ON) and Xilinx (NASDAQ:XLNX) should benefit from this. But which of these two stocks is a better buy now? Read more to find out.ON Semiconductor Corporation (ON) in Phoenix, Ariz., manufactures and sells semiconductor components for various electronic devices worldwide. The company operates in three segments: Power Solutions Group; Advanced Solutions Group; and Intelligent Sensing Group. In comparison, San Jose, Calif.-based Xilinx, Inc. (XLNX) designs, develops, and markets programmable devices and associated technologies worldwide. The company offers integrated circuits in the form of programmable logic devices.
The global semiconductor shortage has impacted several industries worldwide. The chip shortage has also caused chip prices to soar, benefiting the semiconductor industry. While huge investments are helping semiconductor manufacturers increase production, the supply shortage may not end soon. Furthermore, with growing demand for electric vehicles (EVs), and rising demand for advanced technologies in the hybrid working environment, the industry is expected to see increasing demand. According to a Fortune Business Insights report, the global semiconductor market is projected to grow at an 8.6% CAGR between 2021 - 2028. As a result, both ON and XLNX should benefit.
ON has gained 65.6% in price over the past six months, while XLNX has returned 63.1%. Also, ON’s 91.2% gains year-to-date are significantly higher than XLNX’s 47.8% returns. Moreover, ON is the clear winner with 104.1% gains versus XLNX’s 45.7% returns in terms of the past year’s performance.