The semiconductor industry has been aggressively expanding its manufacturing capabilities amid the global chip shortage. And because the demand for semiconductors is expected to rise over time, the industry is well-positioned to witness double-digit growth over the next five years. Thus, we think fundamentally sound chip stocks Analog Devices (NASDAQ:ADI), Lam Research Corporation (NASDAQ:LRCX), and KLA Corporation (KLAC) could be ideal bets now. Let’s discuss these names.Analysts expect the ongoing global semiconductor shortage to continue in 2022 due to strong demand for electronics, electric vehicles (EVs), and other products. However, the semiconductor supply is expected to improve beginning in mid-2022 as industry leaders expand their production capacities as new factories, which are currently under construction, become operational. Experts predict the industry to grow in the range of 15%-20% over the next three to five years.
The U.S. government has been taking steps to boost domestic semiconductor production capacity to make the U.S. globally competitive. Though the U.S. Innovation and Competition Act, which contains the CHIPS Act, is currently stalled in the House of Representatives, U.S. Commerce Secretary Gina Raimondo has urged the House to pass the legislation immediately.
Demand for semiconductors is expected to rise over time given the rapid digitization of virtually all industries. Thus, we think renowned semiconductor stocks Analog Devices, Inc. (ADI), Lam Research Corporation (LRCX), and KLA Corporation (KLAC) could be solid bets now.