Because huge investments are being made to ramp up semiconductor production, the industry should increasingly meet the growing demand for chips from several sectors. And since semiconductor sales are expected to continue climbing, we think it could be wise to bet on fundamentally sound companies Broadcom (NASDAQ:AVGO) and United Microelectronics (UMC). The stocks of these companies have an overall ‘Strong Buy’ rating in our proprietary rating system. So, let’s discuss.The current semiconductor shortage has been impacting several industries, primarily automotive and consumer electronics. However, huge investments by governments and enterprises to ramp up production should help the semiconductor industry increasingly meet skyrocketing demand.
According to Statista, global semiconductor sales are expected to reach $550.90 billion in 2021, representing a 25.1% year-over-year rise. Investors’ interest in the semiconductor industry is evident in the iShares Semiconductor ETF’s (SOXX) 17.7% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 6.7% gains.
So, given the industry’s solid growth prospects, we think fundamentally sound semiconductor stocks Broadcom Inc. (AVGO) and United Microelectronics Corporation (UMC) could be solid picks now. These stocks have an overall A (Strong Buy) rating in our proprietary POWR Ratings system.