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Will the Semiconductor Shortage Continue Into 2022?

By Jose Najarro – Sep 29, 2021 at 10:30AM

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CEOs within the industry say yes!

Advanced Micro Devices (AMD -1.81%) and Nvidia (NVDA -1.58%) are two giants in the semiconductor industry that cannot keep up with the demand for their products due to the chip shortage. Today's video focuses on recent news affecting Nvidia and AMD, current valuations for both companies, and an update on the current semiconductor shortage. Here are some highlights from the video:

  1. On Monday, Sept. 27, online reports appeared that Lisa Su, the CEO of AMD, believes the chip shortage will continue to be tight for the first half of 2022 but should ease up in the second half. The reasoning is that the time needed to build new manufacturing plants is roughly 18 to 24 months, and most of the investment into manufacturing plants started approximately a year ago. 
  2. In the past 12 months, AMD and Nvidia have provided excellent returns to investors, probably due to the overall excitement of the semiconductor industry. With the current stock price correction, investors who would like to enter should think about the dollar-cost averaging method. Volatility can continue to affect the semiconductor market as yield rates increase, supply and demand change, and a market rotation to value stocks potentially continues. 
  3. On Tuesday, Sept. 28, Micron Technologies (MU -1.17%) reported its fourth-quarter earnings. Even tech investors who don't own Micron should watch its presentation, which provides excellent insight into the upcoming quarter for the PC, data center, mobile, and automobile markets. These are markets that AMD and Nvidia provide products to.

Click the video below for my full thoughts and analysis. 

*Stock prices used were the closing prices of Sept. 28, 2021. The video was published on Sept. 28, 2021.
 

 
  

Jose Najarro owns shares of Advanced Micro Devices and Nvidia. The Motley Fool owns shares of and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Advanced Micro Devices Stock Quote
Advanced Micro Devices
AMD
$73.62 (-1.81%) $-1.36
Nvidia Stock Quote
Nvidia
NVDA
$166.10 (-1.58%) $-2.66
Micron Technology Stock Quote
Micron Technology
MU
$54.04 (-1.17%) $0.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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