Why Semiconductor ETFs Are Soaring
Semiconductor stocks and ETFs have been soaring lately thanks to surging demand for chips from manufacturers of everything from smartphones to cars, laptops, PCs, video games and data centers. The stay-at-home trend amid the coronavirus outbreak, which has bolstered the demand for gaming, cloud computing and data center businesses, has proven to be a boon for the semiconductor space.
Plus, robust M&A activities have aided the sector in recent times. Five big acquisition announcements and more than a dozen smaller deals in 2020 took the total value of deals to an all-time high of $118.0 billion, topping the previous record of $107.7 billion reached in 2015. A rally in cryptocurrencies like bitcoin prices and the 5G rollout are the winning points. Global semiconductor industry sales jumped 14.7% year over year to $39.6 billion in February 2021.
The accelerating speed of digitization in various corners like healthcare, transport, financial systems, defense, agriculture and retail has been making the future bright for semiconductors. The automotive sector has specifically advanced to include more electronic components in vehicles that rely on chips.
Additionally, robust recovery in smartphone sales is spurring demand for semiconductors. According to the forecast by Gartner, global sales of smartphones will likely increase 11.4% year on year to 1.5 billion units in 2021.
All these positive updates boosted the semiconductor ETFs like iShares PHLX Semiconductor ETF SOXX, VanEck Vectors Semiconductor ETF SMH and Invesco Dynamic Semiconductors ETF PSI in recent weeks. The funds have gained in the range of 9.6% to 11% past month. These funds have gained in the range of 100% in the past one year.
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iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
Invesco Dynamic Semiconductors ETF (PSI): ETF Research Reports
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
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