Semiconductor ETFs Shining Bright Amid Coronavirus Crisis

The semiconductor industry has been strong amid the coronavirus outbreak, and this is largely due to the expanding digitization and growing dependency on the internet. In fact, the S&P Semiconductor Select Industry Index has returned around 15.5% so far this year compared with the S&P 500’s nearly 5% gain during the same period.

Overall, the industry has also impressed with solid earnings from second-quarter results, with better-than-expected reports from well-known players like Texas Instruments (TXN), Lam Research Corporation (LRCX), Intel (INTC), Qualcomm (QCOM), and Advanced Micro Devices, Inc. (AMD) infusing optimism in the sector.

Factors Driving Demand

The coronavirus pandemic continues to wreak havoc across the globe. The outbreak has compelled people to stay indoors and work remotely. Also, the pandemic has resulted in some changes in lifestyle preferences. Even as the global economy starts to reopen in phases and social-distancing restrictions are being eased, people will try to minimize the human-to-human contact.

Twitter (TWTR) has said that its employees can keep working from home permanently if they wanted to, whereas several companies like Microsoft Corporation (MSFT), Chevron Corporation (CVX), Facebook, Inc. (FB), and Uber Technologies, Inc. (UBER) have extended their work-from-home facilities until mid-2021.

In such a scenario, cloud computing’s popularity is growing and altering the way people are managing data, communication, and business. Cloud computing is seeing increasing usage globally as it allows data interoperability in a scalable, cost-efficient way through data collection, processing, analyzing, and sharing across platforms.

Before the lockdown, companies were already discarding their own data centers to rent computing from Amazon (AMZN), Microsoft, and Google (GOOGL). In order to keep up with the increasing demand for cloud storage, semiconductor chips are also seeing an uptick in requirements from data-center operators.

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