The demand for semiconductors has increased amid the COVID-19 pandemic because of the lifestyle and business changes it has fostered. The world is now witnessing a semiconductor shortage, however, which is driving up chip prices. Against this backdrop, we think it is wise to bet on lesser-known semiconductor companies Vishay (VSH) and ChipMOS (IMOS) to reap maximum benefits from the industry tailwinds. Read on form details.The last year has been one of the best for semiconductor stocks because demand for them increased exponentially. Semiconductor chips play a vital role in the construction and use of advanced technologies that are helping several businesses navigate the healthcare crisis. Among other uses, chips are essential for running PCs, gaming consoles, mobile phones, electric vehicles (EVs), industrial machines and data centers.
Investors’ increased interest in the semiconductor industry amid the pandemic is evidenced by the SPDR S&P Semiconductor ETF’s (XSD) 92.7% returns over the past year versus the SPDR S&P 500 ETF’s (SPY) 46.4% gains over this period.
While demand is rising, a shortage of semiconductors fueled by pandemic interruptions is pushing prices up. With governments worldwide taking measures to increase the use of EVs, and with the increasing use of cloud computing, 5G, and AI, the demand for semiconductors should keep growing. According to WBOC, the worldwide market for semiconductor equipment is expected to grow at a CAGR of 6.9% over the next five years.