The Top 3 Ways to Trade the Semiconductor Shortages


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Investors may want to consider semiconductor stocks.

All because the worldwide shortage is now expected to last into 2022, reports MarketWatch.

Worse, says IHS Markit, as highlighted by Reuters, a shortage of auto chips could impact up to a million units of global light vehicle production this quarter. Technology is being hit hard, too with work and school from home trends increasing the demand for electronics.

Even 5G chip demand, the trade war, and warehouses full of computers mining for cryptocurrencies have also put a massive strain on supply.

“The chip shortage is expected to wipe out $61 billion of sales for automakers as production is stalled for want of the complex pieces of silicon. And the fallout now threatens to hit the much larger electronics industry,” added Livemint.


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Unfortunately, the shortage could last for quite some time. Not only will it take time to manufacture chips, but demand more than likely won’t slow down.

Plus, there’s just no easy fix. In fact, according to Harvard Business Review:

“Lead times for many semiconductors are one year out right now, and these devices are in just about everything we use. Business and financial media have detailed how the shortage of semiconductors has caused production cutbacks in the automotive industry: Ford, Toyota, Nissan, VW, and Fiat Chrysler Automobiles (now a part of Stellantis) are among global carmakers that have scaled back output. Other carmakers have announced they’ll likely miss their 2021 targets. And it’s not just carmakers that are in trouble. The chip shortages are expected to cause widespread shortages of everything, from electronics to medical devices to technology and networking equipment.”

Until the problem is resolved, investors may want to consider related stocks and ETFs. In fact, some of the top ETFs to consider include the ProShares Ultra Semiconductor (USD), iShares PHLX Semiconductor ETF (SOXX), and the First Trust NASDAQ Semiconductor ETF (FTXL).

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