Semiconductor-producing companies are vital to the global economy because most electronic equipment, such as smartphones, vehicles, televisions, refrigerators and medical care devices require the technology. The VanEck Semiconductor ETF (NASDAQ:SMH) is a popular metric for tracking the industry as a whole. Over the past year, it has returned 43%, and over the past five years, it returned 180%, far outpacing the returns for the S&P 500.
The industry is only expected to continue to grow due to the increased need for chips in our economy. Still, I have listed multiple semiconductor-producing companies that investors should try to avoid at the moment. These semiconductor stocks to sell have an uncertain future outlook and financial struggles.
MaxLinear (NASDAQ:MXL), based in Carlsbad, California, produces integrated circuits for wired and wireless infrastructure for commercial and industrial applications. Their products include gateway processors for high-speed internet access, radio frequency transceivers to utilize wireless 5G and data center infrastructure.
MaxLinear’s share price dropped 39% over the last year. That was triggered by a drop in overall sales this year compared to last and the cancellation of the company’s previously planned acquisition of Silicon Motion Technology (NASDAQ:SIMO).
On July 26, MaxLinear reported second-quarter earnings for 2023, showing a net loss of $4.4 million compared to Q2 2022’s net income of $32 million. The company’s total revenue also dropped by 34% within the same time period. And for the third quarter of 2023, MaxLinear predicted that revenue will continue to fall within the $125 to $155 million range. Its stock price plummeted by 34% directly following this earnings release.
In the spring of 2022, MaxLinear announced the proposed acquisition of Hong Kong-based chip manufacturer Silicon Motion, but the company subsequently terminated the deal a month after it was supposed to close due to a multitude of reasons, including claims of a breach of contractual obligations by Silicon Motion.
Indie Semiconductor (INDI)
Indie Semiconductor (NASDAQ:INDI), located in Aliso Viejo, California, provides chips for use in the automotive industry, including driving assistance, in-car experience and vehicle electrification.
Over the past year, the company’s stock dropped approximately 28% due to continued profitably concerns. In August, it released second-quarter earnings for 2023, showing that revenue doubled and a net loss nearly tripled compared to the year before.
Indie Semiconductor has seen a lot of trading volatility since it started trading on the Nasdaq through a particular purpose acquisition company (SPAC) merger in June of 2021 with Thunder Bridge Acquisition II. In late 2021, indie’s stock price exceeded $15 per share partly due to investor interest in the auto tech space, and it has been consistently dropping ever since.
Impinj (NASDAQ:PI) is a chip-producing company that focuses on its innovative radio frequency identification (RFID) chip solutions. It aims to help businesses and consumers alike by wireless connecting products such as shipments, vehicles and luggage to the internet using RFID chips.
Over the past year, Impinj has had a 45% reduction in its overall share price, primarily due to Impinj reporting a disappointing future outlook for the company in Q1 2023. The reporting prompted investors to sell off shares, and the company’s stock price plummeted by 39% directly following the news.
Its most recent earnings report from July 26 stated a 44% increase in revenue and a reduction in net loss of approximately 40% compared to the year before. This recent improvement in overall earnings still needs to outweigh the poor future outlook Impinj is experiencing. Impinj could experience difficulty due to reduced demand for its RFID technology and a growing investor selloff.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.