Semiconductor Industry Is Hot, The Hottest It Has Ever Been

The top five international semiconductor stocks recorded an average return on investment (RoI) of 100.59 percent between 28th June 2020 and 28th June 2021. Experts are of the view that Covid-19 might have accentuated the peak of the semiconductor industry. But there seem to be many more factors.

Semiconductors are to electronics what oxygen is to living beings. While helping control the flow of electricity in a circuit, these are known as the brain behind modern electronics.

Their importance to the world today could be mined from the fact that several automakers, smartphone OEMs, consumer electronic OEMs, and many others into electronics manufacturing have had to halt operations for some part of 2020 and 2021 due to shortage of semiconductors.

Further, despite lockdowns announced by almost all the countries following the outbreak of coronavirus, many semiconductor fabrication units were allowed to operate. International Data Corporation (IDC) recently noted that the size of the global semiconductor market will reach $522 billion in 2021. This represents a growth of around 12.5 percent year-on-year.

The proof of the pudding can also be gauged from the fact that the top five semiconductor stocks have recorded an average RoI of 100.59 percent between 28th of June 2020 and 28th of June 2021. The data collected and analysed by Finbold also shows that the top ten selected semiconductor stocks recorded an average RoI of 78.79 percent during that period.

“There are two metrics that the investors or top management of a fab need to be worried about. One is what the load of the fab is and second is what is the yield on the fab. ‘Load’ is the function of demand or a company’s capability to sell the 30K to 40K wafer starts per month. ‘Yield’ is how good are the number of ‘usable’ chips from each 300mm wafer. The fabs which have made the chips of these high performing companies are very mature ones.

They have already solved the yield problem on the well established and mature nodes, which is where the extraordinary growth is coming from. These fabs have also made significant investment into tooling for the newer nodes, which is where future demand will come. Note that in a good year a fab is a money printing machine,” says PVG Menon, former President of the India Electronics & Semiconductor Association (IESA), and former CEO, Electronic Sector Skills Council of India (ESSCI).

He adds, “Fabs announcing 100s of billions of dollars in R&D is proof in itself that fabs are money generating machines. Someone like a TSMC will not commit big amounts to R&D and capacity expansion unless it has demand (‘Load’) commitment from the likes of large-volume customers like Apple. Investing in a new node means investing at least $4 billion per node.” Shortage and high demand

Starting 2020, semiconductors have been in high demand and, despite many fabs being allowed to function amidst coronavirus lockdowns, their supply in the market continues to be scarce. This is primarily due to the constraints the semiconductor supply chain went through, […]

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