Surging demand for semiconductors from various industries, along with significant government and private investment to address a semiconductor chip shortage, should help the semiconductor industry achieve solid growth. Consequently, we think popular chip manufacturers Advanced Micro Devices (NASDAQ:AMD) and NXP Semiconductors (NASDAQ:NXPI) should benefit. But which of these stocks is a better buy now? Let’s find out.Advanced Micro Devices, Inc. (AMD) in Santa Clara, Calif., and NXP Semiconductors N.V. (NXPI) in Eindhoven, Netherlands, are two popular players in the semiconductor industry. AMD offers microprocessors, chipsets, GPUs, server and embedded processors, semi-custom System-on-Chip (SoC) products, and technology for game consoles, and provides assembling, testing, and packaging services worldwide. In comparison, NXPI designs semiconductors and software for mobile communications, consumer electronics, security applications, in-car entertainment, and networking.
The rising demand for semiconductor chips from various industries, primarily automotive and consumer electronics, amid a global supply crunch is pushing up chip prices. The global semiconductor industry has witnessed 29% year-over-year sales growth in July 2021.
Increasing government and corporate investments to address the chip shortage, and rising demand for chips due to the fast-paced digital transformation of industries, should keep driving the industry’s growth. The global semiconductor market is expected to grow 25.1% to $551 billion in 2021. So, both AMD and NXP should benefit.