Valuation Analysis of Semiconductor Industry of US Based on Portfolio Principle

Abstract

Many of the world's semiconductor R&D, production and manufacturing technology companies are going public in the US, hoping to leverage the power of US stock market capitalization to promote their own companies and industries. Valuation of the semiconductor industry is therefore essential. This study evaluates US-listed semiconductor companies based on portfolio principles with an enterprise value greater than $50billion. In the benchmark portfolio, individual stocks weights are assigned in accordance with the enterprise value weighting and a number of indicators are calculated based on fundamental data for comparison with the forecast portfolio. The paper uses absolute and relative valuation methods to value the forecast portfolio, and compares with benchmark portfolio on the derived results. Finally, conclusions and future investment outlook are drawn from the results of the comparative analysis. According to the analysis, investing in the semiconductor industry is a good choice. In fact, not only can investors share in the huge profits from the rapid development of the industry, the semiconductor industry itself can also benefit from the strong capital market, which is something that complements each other. These results shed light on guiding further exploration of valuation analysis of semiconductor industry.