Which Chip Stock is a Better Investment? By StockNews
There was a spike in demand for semiconductors due to the pandemic. A shortage in semiconductors has been caused by supply disruptions due to the coronavirus, stressed supply chains and other factors. This is leading to increased pricing power and well-known players in this space, Taiwan Semiconductor Manufacturing (TSM) and NXP Semiconductors (NASDAQ:) are benefitting. Which stock is the best buy right now? Let’s discuss.Taiwan Semiconductor Manufacturing Company Limited (TSM) and NXP Semiconductors N.V. (NXPI) are two well-known companies in the global semiconductor industry. TSM is a Taiwan-based company which manufactures and sells semiconductor products and integrated circuits. They offer wafer production, wafer probing services, testing, manufacturing and mask production as well design and engineering services. NXPI develops semiconductors and software to support mobile communication, network, security, entertainment and consumer electronics.
In spite of the chip shortage worldwide, July 2021 saw a 29% annual sales increase. Moreover, the industry’s production is expected to increase, with governments across the globe investing heavily in the industry to eliminate the supply bottlenecks faced by several industries due to the chip shortage. Investor interest in the industry is evident from the SPDR S&P Semiconductor ETF’s (XSD) 2.6% gains over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) negative returns. Global semiconductor markets are expected to expand at 7.7% CAGR, reaching $778 billion in 2026. TSM as well as NXPI will both benefit.
TSM suffered a slight decline over the last three months. However, NXPI grew 6.1%. In terms of the year-to-date price performance, NXPI is a clear winner with 36.3% gains versus TSM’s 6.5% returns. What stock do you think is the best? Let’s find out.
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