Rising demand for semiconductors from several industries, including electric vehicles (EVs) and consumer electronics, coupled with a global chip shortage, is helping the semiconductor industry thrive. So, we think it could be wise to invest in EMCORE (EMKR) and inTEST (INTT). These companies are not making headlines but have solid upside potential. Read on.The rising demand for semiconductor chips from several industries, such as electric vehicles (EVs) and consumer electronics, has since last year created a huge imbalance between supply and demand. The resulting increase in prices has been beneficial to the semiconductor industry. Consequently, semiconductor stocks are attracting investors’ attention. This is evident in the SPDR S&P Semiconductor ETF’s (XSD) 70.8% gains over the past year versus the SPDR S&P 500 Trust ETF’s (SPY) 38.6% returns.
Even though semiconductor manufacturers are increasing production to meet the high demand, with support from governments, the supply shortage may not end anytime soon. An increasing demand for advanced devices that feature a wide range of innovative technologies, such as artificial intelligence (AI), machine learning (ML), and internet of things (IoT), should keep the demand for semiconductors at higher levels than the supply for the foreseeable future. According to a Fortune Business Insights report, the global semiconductor market is projected to grow at a 8.6% CAGR between 2021 - 2028.
Given this backdrop, we think it could be wise to bet on EMCORE Corporation (EMKR) and inTEST Corporation (INTT). These two companies are not making daily headlines, but could nonetheless capitalize on the industry tailwinds.