The semiconductor chip shortage has hurt production across industries around the globe. However, the Biden Administration’s push to pass a spending bill to boost U.S. chip production should address the crisis to a great extent. And because the semiconductor industry is expected to continue thriving on rising demand, we think it could be wise to invest in fundamentally sound large-cap chip stocks Intel (INTC), Micron (MU), and United Microelectronics (UMC). These stocks are rated A (Strong Buy) in our proprietary rating system.The production of several industries has been hit hard by the global semiconductor chip shortage over the past 18 months. And although the global chip shortage is not expected to subside until the end of 2022, the situation could begin improving in the near term, thanks to the initiatives to ramp up production. The Biden administration has urged Congress to pass a $52 billion spending bill before Christmas to address the crisis.
Rising demand from several industries, such as consumer electronics and electric vehicles (EVs), is driving the industry’s growth. The global semiconductor chips market is expected to reach $553.6 billion by 2026, registering a 7.8% CAGR. And according to the U.S. Commerce chief, “As you know, we’ve been working on the semiconductor shortage since day one of the president’s administration, and it’s time to get more aggressive.” Furthermore, advancements in chip making processes should help the industry grow. Investor optimism in this space is evidenced by the SPDR S&P Semiconductor ETF (XSD) 23% returns over the past three months.
Given this backdrop, we think it could be wise to bet on quality large-cap chip stocks Intel Corporation (NASDAQ:INTC), Micron Technology, Inc. (NASDAQ:MU), and United Microelectronics Corporation (UMC). They are expected to deliver substantial returns in the long run based on their market dominance and diverse portfolios. Also, these stocks are rated A (Strong Buy) in our proprietary rating system.