The semiconductor industry is predicted to hit sales of around $1trn in 2030, up from $450bn in 2019. We speak to Capital Group about why the sector could power the next decade of global growth – just like the oil industries of the past.
Semiconductors have seen a surge in demand over the past year driven by changing consumer habits post-Covid-19. As a result, the world is currently experiencing a global semiconductor shortage. Ironically even Samsung, the world's second-largest producer of chips, was forced to postpone the launch of its high-end smartphone earlier this year due to the shortage.
This is yet more evidence of the robust demand for chips across industries, that is only set to grow. Indeed, according to Steve Watson, equity portfolio manager at Capital Group, semiconductors are set to power the next decade of global growth - as much as the oil fuelled industrial economies did in the last century.
"By essentially forcing great swathes of the planet's population into a virtual world, Covid-19 restrictions accelerated orders for semiconductors for smartphones, video game devices and home appliances," explains Watson. "Already essential to the manufacture of many possessions, by 2030 semiconductors could be ubiquitous across most consumer touchpoints, from belts to salt cellars."
But there are questions as to whether the shortage in semiconductors poses a challenge to investors in the short-to-medium term, and how this could impact investment opportunities and returns.
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