3 Semiconductor Stocks To Buy During The Chip Shortage

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The semiconductor industry has weathered the COVID-19 pandemic better than many other industries. It concluded 2020 with 6.5% revenue growth. The global semiconductor market is projected to hit  $726.73 billion by 2027, growing at a CAGR of 4.7%. This growth can be attributed primarily to rising demand for consumer electronics devices and increasing use of integrated circuits in developing economies. In addition, the mainstream adoption of IoT, 5G, AI, and the increasing semiconductor needs of the automotive sector are providing new growth opportunities.

The industry is currently seeing a demand explosion, which is causing a near-term supply shortage. Pandemic-driven remote living trends are the primary drivers of the demand surge. However, given the limited supply because of a bottleneck among outsourced chip factories and a weak trade relationship with China, the semiconductor market has now reached a near-crisis point regarding supply. Consumers are facing price rises and product shortages, while many automakers have halted their production. Experts are of the opinion that this chip shortage is likely to persist for some time.

Given this backdrop, many chipmakers are thriving. The prevailing capacity utilization tightness, rising prices, and strong demand bodes well for them. Broadcom Inc. (AVGO - Get Rating), United Microelectronics Corporation (UMC - Get Rating), and Cirrus Logic, Inc. (CRUS - Get Rating) are three companies that we expect to benefit from the supply-demand imbalance.

Broadcom Inc. (AVGO - Get Rating)

AVGO is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. The company’s product portfolio serves critical markets, including data center, networking, enterprise software, broadband, wireless, storage, and industrial. A few of its solutions include data center networking and storage, mainframe and cybersecurity software focused on automation, and factory automation, among others.

In  January, AVGO announced that its BCM4389 chip would power the world’s first Wi-Fi 6E phone, the Samsung Galaxy S21 Ultra. Its partnership with Samsung is expected to provide to consumers worldwide a seamless and secure connected experience, including better Wi-Fi QoS, more precise indoor location accuracy, and five times better battery utilization.

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Anne Barry 2 months ago Member's comment

Only $CRUS is worth investing at this price.