Because government and private initiatives are expected to help many semiconductor companies ramp up production to meet surging demand, it could be wise to scoop up the shares of quality semiconductor stocks STMicroelectronics (STM), Renesas Electronics (RNECF), Silicon Motion (NASDAQ:SIMO), and in TEST (INTT). We think these companies are well-positioned to capitalize on the increasing demand for chips. So, let’s examine these names.The current semiconductor shortage has forced many automakers and consumer electronics manufacturers to cut back production over the past few months. Limited supply and increasing demand for semiconductor chips are driving chip prices higher.
According to the Semiconductor Industry Association, chip sales came in at $133.6 billion in the second quarter, representing a 29.2% year-over-year rise. Furthermore, semiconductor companies worldwide have been increasing production to meet the soaring demand. Government initiatives in several countries to address the semiconductor chip shortage should also boost the industry’s growth. According to an Electronics Sourcing report, the worldwide semiconductor market is expected to grow 19.7% to $527 billion this year.
Hence, we think it could be wise to bet on fundamentally sound semiconductor stocks STMicroelectronics N.V. (STM), Renesas Electronics Corporation (RNECF), Silicon Motion Technology Corporation (SIMO), and inTEST Corporation (INTT). These stocks reported impressive second-quarter results and are rated A (Strong Buy) in our proprietary POWR Ratings system.