Semiconductor companies are known to be early cyclical businesses, and since there's no chip company bigger than third-party foundry Taiwan Semiconductor Manufacturing (NYSE: TSM), it makes sense to follow its financials and end-market commentary closely. That's why the $586 billion market cap company's latest earning report meant so much to the market.

Moreover, I think that report spells great news for two companies that might not be immediately apparent to investors -- machine vision company Cognex (NASDAQ: CGNX) and automation company Emerson Electric (NYSE: EMR).

When manufacturers and technology companies anticipate improving sales, the first thing they do is start to prepare to ramp up their production by ordering chips. That's why semiconductor companies are such good early indicators of the turning of the economic cycle.

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Source Fool.com