Due to their utility in a plethora of electronic appliances and gadgets, semiconductors are now practically indispensable in the electronics and other industries. To support this digital transformation, governments worldwide have been formulating policies to address a current chip shortage. Thus, we think fundamentally sound semiconductor stocks Texas Instruments (TXN), Micron Technology (NASDAQ:MU), and KLA Corporation (KLAC) could be solid bets now. Read on.Semiconductors have a wide range of applications, from vehicles to appliances to smartphones. With an increasing demand for tech-oriented products and the rising popularity of electric vehicles (EVs), semiconductors witnessed unprecedented demand over the past year, triggering a supply shortage as production facilities remained closed for a significant period during the initial months of the COVID-19 pandemic.
The U.S. Senate passed a bipartisan tech and manufacturing bill in June to address the production bottlenecks and boost domestic manufacturing capacity. The bill allocates $52 billion toward semiconductor production, helping the industry to strengthen its supply chain. In addition, governments of many other countries are similarly investing in the industry to address the shortage. Due to its wide-ranging applications and favorable government policies, global semiconductor sales are expected to increase 19.7% in 2021 and 8.8% in 2022.
Given this backdrop, we expect popular semiconductor companies Texas Instruments Incorporated (NASDAQ:TXN), Micron Technology, Inc. (MU), and KLA Corporation (KLAC) to rally in price substantially in the coming months.