The extended global supply chain disruptions due to the ongoing Russia-Ukraine conflict and COVID-19 lockdowns in China worsened the global chip supply shortage this year. However, with substantial government investments and increased production capacities worldwide, semiconductor sales increased 23% year-over-year in the fiscal first quarter ended March.
This growing demand and increasing government and corporate investments to enhance chip production and impressive breakthroughs in the chip manufacturing process should drive the industry’s growth over the long run. Investors’ interest in this space is evident from the SPDR S&P Semiconductor ETF’s (XSD) 8% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) marginal decline. The global semiconductor market is expected to grow at a 9.2% CAGR to $893.10 billion by 2029.
