Increasing government support to ramp up semiconductor production to meet surging demand from various industries should drive the semiconductor industry’s growth. This, combined with impressive chip-making technological breakthroughs, should benefit popular chipmakers Taiwan Semiconductor Manufacturing (TSM) and ASML Holding (NASDAQ:ASML). But which of these stocks is a better buy now? Read more to find out.Taiwan Semiconductor Manufacturing Company Limited (TSM), in Hsinchu, Taiwan, and ASML Holding N.V. (ASML), in Veldhoven, the Netherlands, are two well-known companies in the global semiconductor industry. TSM manufactures and markets integrated circuits and semiconductor products. It provides wafer manufacturing, wafer probing, assembly, and testing, mask production, and design services. In comparison, ASML develops, sells, and services advanced semiconductor equipment systems, focusing on lithography-related systems worldwide. It caters mainly to the makers of memory chips and logic chips.
Amid a global chip shortage, the semiconductor industry witnessed 27.6% year-over-year sales growth in the third quarter. Governments and enterprises are working together to address the chip shortage and are making considerable investments in the industry to meet the rising demand from various sectors worldwide. Chipmakers’ ongoing efforts to manufacture advanced chips and major technological breakthroughs position the industry well for growth.
Investor optimism in this space is evident in the SPDR S&P Semiconductor ETF’s (XSD) 15.4% gains over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) 6.4% returns. The global semiconductor market is expected to grow at a 7.7% CAGR to $778 billion by 2026. So, both TSM and ASML should benefit.