Here's Why Semiconductor ETFs Are Looking Attractive For Q2

macro photography of black circuit board

The semiconductor market is experiencing expanding demand with increasing digitization and growing dependency on the Internet owing to some new normal trends like online shopping, work from home, digital payments, digitization of healthcare, growing favor for video gaming and many more.

Growing automotive sales are also driving semiconductor demand due to the increasing utilization of chips in electronic components of vehicles. Robust demand for electric vehicles (EVs) and plug-in hybrids also deserve a mention here. Markedly, EVs require complex electronic systems composed of advanced semiconductors. Furthermore, the increased deployment of 5G technology — the next-generation wireless revolution — is likely to support growth.

According to the latest data from the Semiconductor Industry Association (or SIA), global semiconductor sales rose to $39.6 billion in February, jumping 14.7% on a year-over-year basis, per a Design And Reuse article. However, it declined a nominal 1% from January’s total of $40 billion. Regionally, year-over-year sales rose across all major markets. Sales in Asia Pacific/All Other grew 18.2%, while in China it jumped 18.9%, followed by 9.7% in Americas, 7.6% in Japan and 6.8% in Europe. On a month-over-month basis, sales increased 0.8% in Europe and 1.5% in Asia Pacific/All Other.

In this regard, John Neuffer, SIA president and CEO, said that “global semiconductor sales during the first two months of the year have outpaced sales from early in 2020, when the pandemic began to spread in parts of the world. Sales into the China market saw the largest year-to-year growth, largely because sales there were down substantially early last year,” as stated in a Design And Reuse article.

Factors Driving Demand

It is worth noting here that strong adoption of gaming, wearables, drones and VR/AR devices is fuelling significant growth in the semiconductor arena. Moreover, growing adoption of cloud computing and the ongoing infusion of AI, machine learning and IoT are expected to keep the sector brewing with opportunities in 2021.

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