While exacerbated logistical disruptions caused by the Russia-Ukraine war have worsened the ongoing semiconductor shortage, the overwhelming demand for semiconductors for consumer electronics, electric vehicles, and other industries should hold investors’ interest in the industry. Furthermore, rising government and private investments worldwide to ramp up semiconductor production should help the industry achieve growth in the coming months. Also, the possible easing of logistical disruptions with negotiations between Russia and Ukraine to end the war should help the semiconductor industry. Investors’ interest in the semiconductor industry is evident in the VanEck Vectors Semiconductor ETF’s (SMH) 2.2% returns over the past month.
The passage of the $52 billion CHIPS Act by the U.S. Senate is also expected to strengthen domestic semiconductor manufacturing and research. (The bill now awaits passage by the House.) According to BlueWeave consulting, the global semiconductor market is estimated to grow at a 5.2% CAGR between 2022 and 2028.
