Why invest in semiconductor chip stocks?
Semiconductors are part of the supply chain for almost all electronic devices, including bank machines, smartphones, cars, and computers. Here are some of the reasons long-term growth is still expected in semiconductor manufacturing:
Cars are increasingly becoming electronic, as are many other forms of transportation. Most new car models use a computer that requires microchips. Learn more about electric car stocks.
5G technology also requires sophisticated electronics to support it, which, in turn, requires more semiconductors.
Add in the increasing use of artificial intelligence (AI), drones, cloud computing, the internet of things (IoT), automation, digitalised weapons technology, and metaverse, and it seems like there is an endless need for semiconductors.
A chip shortage in 2020 and 2021, stemming from supply disruptions amid Covid-19, also means there could be pent-up demand for semiconductors for years to come.
10 semiconductor stocks to watch
{{{ BORDER }}} Nvidia [NVDA]
Known for its graphics processors, this California-based company was founded in 1993. The chips are used in gaming computers to enhance the overall experience. Nvidia is also broadening into technologies for data centres, autonomous driving cars, and AI for aeroplanes. These are early-stage fields with growth potential as autonomous driving and AI are just starting to emerge with the potential for widespread use.
{{{ BORDER }}} Advanced Micro Devices [AMD]
Advanced Micro Devices was founded in 1969 and is also based in California. The company’s GPUs (graphics processing units) are commonly used in personal computers (PCs) and gaming consoles such as Sony’s PlayStation and Microsoft’s Xbox. In 2020, Advanced Micro Devices agreed to merge with Xilinx to broaden its reach in data centres. Xilinx also focuses on logic devices and serves the aerospace, military, and commercial industries.
{{{ BORDER }}} Intel [INTC]
Intel is one of the most recognised brands in the space because its chips appear in a wide range of PCs. The company, founded in 1968, has branched into other areas, including server processors, which are used for cloud technology. It is also diversifying into the IoT, automotive chips and AI industries. This diversification was primarily a result of the stagnating PC industry, as most PC users don’t need the massive advances in technology that other areas require.
