Amid the ongoing semiconductor shortages that have plagued the global automotive, smartphone and appliance chip supplies since last year, shares of the companies making those chips have done well in the first half of 2021.
Year-To-Date Returns: Shares of U.S.-listed chipmakers have fetched double digit gains in the first six months this year, withNvidia Corp(NASDAQ:NVDA) leading the pack at 53.2% gains.
Shares of Intel Corp(NASDAQ:INTC), overtaken by Nvidia as the most valuable chipmaker last year, returned 12.7% gains during the same period.
Shares of Taiwan Semiconductor Manufacturing Co(NYSE:TSM), world's largest pure-play semiconductor foundry, returned 10.2% gains andMicron Technology Inc(NASDAQ:MU) rose 13% in the same period.
And it’s not just the chipmakers, the shortage is also boosting business opportunities for semiconductor industry intermediaries, or authorized distributors, as they are able to source parts faster.
Advanced Micro Devices Inc.(NASDAQ:AMD) returned 2.4% in the same time period.
Services of Avnet Inc(NASDAQ:AVT) and Arrow Electronics Inc(NYSE:ARW) areincreasingly sought afterby bigger companies such as Intel, Samsung Electronics and others, who generally rely on direct purchases and are able to secure supplies on their own, as per a WSJ report.
Avnet shares have risen 14% in the first six months of the year, while those of Arrow Electronics have risen 17%.
Why It Matters: Shortages of semiconductor chips used in auto components, smartphones, and appliances, have increased their pricing power and many large clients such as Tesla Inc(NASDAQ:TSLA) are even willing to pay an advance.
In some cases, as reported by WSJ, brokers are quoting five times higher prices than before the pandemic for auto chips; in some extreme cases, it's reportedly 20 times more.
Price Action: Shares Nvidia closed 1.05% higher at $808.48 on Thursday while those of Intel closed 0.23% lower at $56.01, TSM closed 1.45% lower at 118.42, and Micron shares closed 5.73% lower at $80.11.
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