What are the best semiconductor stocks for the chip shortage affecting the world right now?
A massive global shortage of the semiconductor chips that go in everything from automobiles and industrial equipment to smartphones, computers and household appliances is showing no sign of letting up. As more devices come online, the best semiconductor stocks should benefit, since demand is high and will only continue to grow.
This is creating a great opportunity for investors. Continue reading to discover the best semiconductor stocks to profit from in the current chip shortage.
What are the Best Semiconductor Stocks? Status Report
Currently, the semiconductor market is potentially in its most defining period. Several key trends are set to shape the industry for better or worse, including the ongoing chip shortage, the changing competitive landscape and a continued push for sustainability.
The global semiconductor market was valued at $429.5 billion in 2021. It is predicted to climb at a compounded annual rate (CAGR) of 8.8% from 2022 to 2028 to reach a valuation of $712.4 billion by the end of the forecast period.
Asia Pacific leads the global semiconductor market, holding the greatest market share in 2022. Prominent market leaders include Intel Corporation (NASDAQ: INTC), Samsung Electronics (SSNLF), Texas Instruments (NASDAQ: TXN), and NVIDIA Corporation (NASDAQ: NVDA). In the next decade, we will likely see some of the world’s tech giants added to this list, as companies such as Apple (NASDAQ: AAPL), Google (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN) enter the market.
While the United States continues to play an important role in the semiconductor market, its share of semiconductor manufacturing capacity has fallen in the last two decades from 37% to around 12%. To combat this, President Biden and Intel CEO Pat Gelsinger announced that $20 billion would be invested into a silicon manufacturing mega-site in Ohio. The site would house two plants for research, development and manufacture of state-of-the-art chips.
Overall, the future of the semiconductor market is promising. Increasing demand and innovation in related technologies will encourage growth in the global sector. While the challenge of chip shortages may linger in the short term, the long-term outlook for growth is promising. Currently, Asia Pacific is the most important region for the semiconductor market, however, the United States may challenge this in the next decade.
What are the Best Semiconductor Stocks: Intel Corporation (NASDAQ: INTC)
Intel is still a leading semiconductor stock. It has lost some ground and some big partners, like Apple (NASDAQ: AAPL). Apple has been working on its own chips for a while and started phasing out Intel. That was a big partnership, but Intel still has a huge customer base. In recent years, Dell has been one of its largest customers.
In addition, Intel is expanding its manufacturing in the United States with the announcement of a $20 billion investment into a silicon manufacturing site. Intel has also jumped into autonomous driving with its Mobileye acquisition. On top of that, Intel is solving challenges across the cloud, the Internet-of-Things, artificial intelligence (AI) and 5G.
What are the Best Semiconductor Stocks: TSM (NYSE: TSM)
Investing in this company gives you ownership in the world’s largest semiconductor foundry. Last year, it produced more than 10,000 different products to service hundreds of customers.
TSM has more than 50% of the total foundry market share. It also has pushed forward with 7- and 5-nanometer foundry technologies. It is the first foundry to provide these capabilities. Some of TSM’s top customers include other semiconductor giants like Apple, Nvidia and Qualcomm.
What are the Best Semiconductor Stocks: Texas Instruments Inc. (NASDAQ: TXN)
One of the largest chip makers in the world, Texas Instruments, is valued at $140 billion and is among the most entrenched semiconductor stocks out there. In this age of supply chain disruptions and talk of “strategic autonomy,” where the United States looks to avoid reliance on Chinese-made chips, the fact that this firm is based in America could provide fuel for growth from its entrepreneurial homeland’s goal to become more competitive in the semiconductor manufacturing sector.
Texas Instruments is not the most dynamic semiconductor stock, the long-term potential looks promising, thanks to its scale and its domestic roots alone. In addition, the stock has a healthy dividend of 3.2% which adds to the reason to give this semiconductor stock a chance.
What are the Best Semiconductor Stocks: Nvidia (NASDAQ: NVDA)
Nvidia has become one of Intel’s fiercest competitors. It is now the leader in discrete graphics processing units (GPUs). The company has also surpassed Intel’s market cap. Investors have bid up the company’s value as it has advanced some of its technologies.
One area with a lot of potential for Nvidia is AI. Nvidia GPUs are 20 to 25 times more efficient than CPU servers for AI workloads. AI is starting to impact every industry and the growth potential is extraordinary. This will make Nvidia one of the top semiconductor stocks going forward.
What are the Best Semiconductor Stocks: Qualcomm (NASDAQ: QCOM)
Qualcomm is a leading wireless semiconductor company. It owns vital patents for 5G, 4G and many other communications standards. One of Qualcomm’s largest customers is Apple. But there have been some legal concerns between the two companies. They have ceased litigation and signed a six-year licensing agreement.
To expand Qualcomm’s business, it also acquired NXP Semiconductors for $47 billion in 2016. The next year, it received antitrust regulatory approval. And this chipmaker stock continues to grow through acquisitions and organic efforts.
The Best Semiconductor Stocks for the Chip Shortage: The Bottom Line
Due to the complexity of the semiconductor supply chain, there is a persistent global shortage of semiconductors. The situation has prompted governments and chip manufacturers around the world to take actions to expand production and prevent such shortages from occurring again.
In order to meet the continuously growing demand, large players in the semiconductor manufacturing space have the opportunity to achieve sustainable growth for years to come if the proper operations are instilled. All of the stocks listed above have a high chance to benefit from the current semiconductor shortage. In turn, this will produce a healthy profit for investors.