2 Semiconductor Stocks Driving The Electric Vehicle Industry Forward

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Because semiconductors are a key component in electrical vehicles (EVs), the ongoing global chip shortage poses a major challenge for the EV industry. However, the relatively better capacity of STMicroelectronics (STM) and Renesas (RNECF) to supply semiconductors to EV manufacturers we think position them for enviable gains in the near term. 

The manufacturing of electrical vehicles (EVs) has slowed significantly due to a global shortage of semiconductor chips. However, many semiconductor companies are now ramping up their production to meet the rising demand. So, the supply challenge may not exist for the EV industry for much longer. According to Meticulous Analysis, the electric vehicle market is expected to grow at a 33.6% CAGR of between 2020 – 2027, to hit  $2.5billion by 2027.

Given the growing demand and supply shortage, the prices of semiconductors are rising, benefiting the semiconductor industry significantly. And strong investor attention to the semiconductor space is evidenced by the SPDR S&P Semiconductor ETF’s (XSD) 59.1% returns over the past year versus the SPDR S&P 500 ETF’s (SPY) 41.4% returns

While the timing of the recovery of the EV industry depends in-part on how quickly semiconductor companies are able to meet the industry’s demand for chips, two prominent players in this space, STMicroelectronics N.V.  and Renesas Electronics Corporation, are  exhibiting their strength in support of the EV industry through their relatively better supply now. So, we think these two stocks are well positioned for handsome  gains soon.

STMicroelectronics N.V. 

Headquartered in Geneva, Switzerland, STM designs, develops, manufactures and markets semiconductor products across Europe, the Middle East, Africa, America, and Asia Pacific. It operates through three segments: Automotive and Discrete; Analog, MEMS and Sensors; and Microcontrollers and Digital ICs. Its offerings include automotive integrated circuits (ICs), application-specific integrated circuits (ASICs), and radio frequency (RF).

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