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3 Top Stocks to Buy as the Semiconductor Shortage Continues

Stock Markets Aug 23, 2021 01:31PM ET
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© Reuters. 3 Top Stocks to Buy as the Semiconductor Shortage Continues

There's no question that the pandemic drove up the demand for electronic devices as more people stayed at home. But, what no one expected was that it would result in a worldwide semiconductor shortage. As we've recently learned, that shortage is expected to continue, which benefits the stock prices of chip stocks such as Intel Corporation (NASDAQ:INTC), Silicon Motion Technology Corp. (NASDAQ:SIMO), and Broadcom Inc. (NASDAQ:AVGO).A global shortage of semiconductors has turned the industry upside down. The demand for chips was high even before the pandemic started, due to the rollout of 5G. However, the coronavirus pandemic drove that demand much higher as millions bought laptops, cell phones, and gaming devices as they sheltered in their homes.

While many analysts thought the shortage would get better towards the end of the year as the vaccines rolled out, that may no longer be the case. Apple (NASDAQ:AAPL) CEO Tim Cook warned that silicon supply constraints would affect sales of the iPhone and iPad. This week Toyota Motor Corp (NYSE:TM) announced it would reduce global production for September by 40% from its previous plan due to critical shortages of semiconductors.

Since the shortage reflects a tight supply, this has been a boon to the semiconductor industry and many chip stocks. With the shortage expected to continue, many chip stocks are ripe for continued gains. That's why investors should consider chip stocks such as Intel Corporation (INTC), Silicon Motion Technology Corp. (SIMO), and Broadcom Inc. (AVGO), which are rated highly in our POWR Ratings system.

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3 Top Stocks to Buy as the Semiconductor Shortage Continues
 

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