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Governments worldwide and industry titans have been taking steps to accelerate the supply. President Biden’s $50 billion investment plan to boost the U.S semiconductor industry, along with the initiatives by other leading semiconductor producing countries, should be able to ramp up the supply to meet the increasing demand. Also, South Korea recently announced its plan to invest $452 billion in the industry over the next nine years. And Taiwan Semiconductor Manufacturing Company (TSM), the world’s largest semiconductor manufacturer, has responded to the shortage by increasing its capital spending budget to $28 billion in 2021. These investments and robust market demand should drive the semiconductor industry’s growth. The industry is expected to grow at a 6% CAGR over the next five years.
We think this sector’s growth potential should allow stocks Broadcom Inc. (AVGO), United Microelectronics Corporation (UMC), Semtech Corporation (SMTC), and ChipMOS TECHNOLOGIES INC. (IMOS) to rebound in the near term and continue rallying thereafter.
