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The Semiconductor Surge in Canada: 5N Plus and POET Technologies Lead the Way

ByJorge Diaz

 SEPTEMBER 12, 2023

JP Morgan analysts predicted earlier this year that semiconductors would make a strong comeback in 2023, and it seems their prediction has come true. After experiencing a significant decline in 2022 due to geopolitical tensions and excess inventories, the semiconductor sector is now on the path to recovery. This is no surprise, considering that semiconductors power everything from consumer durable goods to electric vehicles and smartphones. Government policymakers are also recognizing the importance of developing resilient and secure semiconductor supply chains.

One company that has seen remarkable success is NVIDIA, which is currently the hottest stock in the U.S. with a year-to-date gain of 209.25%. In the second quarter of fiscal 2024, NVIDIA reported a record revenue of US$13.51 billion, representing a 101% increase from the previous year. Jensen Huang, the founder and CEO of NVIDIA, believes that a new computing era has begun, with companies transitioning from general-purpose to accelerated computing and generative AI.

In Canada, two domestic semiconductor stocks, 5N Plus and POET Technologies, are gaining momentum. 5N Plus, a Montreal-based company, produces specialty semiconductors and performance materials. Although it is much smaller compared to NVIDIA, its earnings potential is equally enormous. In the second quarter of fiscal 2023, 5N Plus experienced a decline in revenue but saw a significant increase in earnings year over year.

According to Gervais Jacques, the president and CEO of 5N Plus, the strong financial results are a testament to the company’s strategy and market leadership. The company will continue to invest in building capacity to meet growing customer demand. The Specialty Semiconductors segment of 5N Plus expects strong demand in the space solar power and terrestrial renewable energy sectors, while the Performance Materials segment will cater to the health and pharmaceutical sectors.

POET Technologies, a Toronto-based company, designs and develops various semiconductor products for use in data centers, telecommunication, and artificial intelligence markets. Although it is currently not profitable, investors see a substantial upside in POET Technologies. The company is focused on increasing customer engagements to accelerate aspects of its business and achieve profitability.

Overall, the semiconductor surge in Canada is undeniable, and 5N Plus and POET Technologies are at the forefront of this growth. Investors looking for exponential growth in the space should consider these two companies as top choices.

Definitions:
– Semiconductors: These are materials that have properties of both conductors and insulators. They are a critical component in electronic devices and are responsible for powering various technologies.
– Specialty semiconductors: These are semiconductors that are designed for specific applications or industries.
– Performance materials: These are materials that are used to enhance the performance of a product or system.
– Year-to-date gain: The percentage increase in a stock’s price since the beginning of the year.
– Revenue: The total income generated by a company’s operations.

Sources:
– JP Morgan analysts
– NVIDIA
– 5N Plus (TSX:VNP)
– POET Technologies (TSXV:PTK)