- Commission-free stock trades
- Receive dividend payments
- Invest in fractional shares
With over $600 billion (around £475 billion) in yearly revenue, the semiconductor industry is a cornerstone of our technology-driven world, with its components essential in everything from smartphones to electric vehicles (EVs) and artificial intelligence (AI).
While Nvidia has become a household name, it’s not the only game in town. There are other major players and lesser-known stocks in the semiconductor sector that could seriously energise your investment portfolio.
What are the best semiconductor stocks?
Finding the best semiconductor stocks is a challenge because it’s a quickly evolving space, with companies all jostling for position. To give you some starting inspiration, these are the top semiconductor stocks in the S&P Global Semiconductor Index.
- Taiwan Semiconductor Manufacturing (2330)
- Broadcom (AVGO)
- ASML Holding (ASML)
- Advanced Micro Devices (AMD)
- Intel Corporation (INTC)
- Texas Instrument (TXN)
- Samsung Electronics (005930)
- Qualcomm (QCOM)
- Applied Materials (AMAT)
How to invest in semiconductor stocks
- Open a share dealing account. Whether you want to invest directly in semiconductor stocks or use an investment fund, you’ll need to open a share trading account.
- Fund your account. The next step is to deposit money into your account to buy shares or invest in a fund, either by bank transfer or using a debit card.
- Choose your semiconductor stocks. Either select a direct or indirect semiconductor investment and research the stock you’re considering. Once you know what you want, find the semiconductor stocks on your platform.
- Review and hit buy. It’s as simple as that.
- 0% commission on trades
- Choose from 3000+ stocks
- Real-time live pricing
- Commission-free trading
- Invest in fractional shares
- Over 5,400 stocks & ETFs
Compare share dealing accounts to find the right platform for you. Make sure to use a platform with access to international markets or a large exchange-traded fund (ETF) selection if you want to invest in top semiconductor stocks from around the world.
What are semiconductor stocks?
Semiconductor stocks represent companies involved in the production and innovation of the nifty materials that make our gadgets tick. Semiconductors are made out of materials that both conduct electricity and block it, depending on the need.
These components are the unsung heroes in everything electronic, from your smartphone to your car. Investing in semiconductor stocks means you’re backing the brains behind our tech-savvy world.
Recently, there’s been a buzz in the industry with government investments like the US’s “CHIPS Act” injecting billions of dollars into semiconductor research, manufacturing and workforce development. This move is a game-changer, making semiconductor stocks not just a part of the tech conversation, but a crucial piece of geopolitical strategy.
Why do people want to invest in semiconductor stocks?
Here are some of the benefits and reasons why people are interested in finding the best semiconductor stocks for their portfolios:
- Connecting the world. The expanding digital landscape in developed and emerging markets means more demand for semiconductors – used in everything from smartphones to data centres.
- Green revolution. The world is shifting gears towards green energy, and semiconductors are at the heart of this transformation.
- Electric vehicles (EVs). The EV market is poised for astronomical growth, driving the need for more semiconductors, which are integral for everything from power management to advanced infotainment systems.
- Renewable energy. Wind turbines and solar panels also need semiconductors for efficient energy conversion and storage. So, renewable energy companies and semiconductor stocks are closely linked.
- Chip wars. Governments, notably the UK and the US, are investing heavily in their semiconductor industries to reduce reliance on China-dominated supply chains.
You could say semiconductor stocks are an investment in a digitalised, greener, and geopolitically secure future. But hang on, it’s not all rainbows and sunshine. Keep reading to learn about the risks.
The risks of investing in semiconductor stocks
If you’re thinking about investing in the best semiconductor stocks you can find, keep in mind the potential risks:
- High price tags. Nvidia and other US semiconductor stocks experienced a dazzling rally in 2023, but investors are getting jittery about steep valuations, especially after Nvidia’s shares rose over 200% and its market value topped $1.2 trillion. Some analysts are questioning if these stocks, boosted by the AI hype, might be overvalued.
- Stomach-churning volatility. The semiconductor industry has historically been a rollercoaster ride for investors. For example, the iShares Semiconductor ETF climbed by 45% in 2021, before plummeting by 58% in 2022 and shooting up again by 48% in 2023.
- Geopolitical risks. Growing tensions between the US and China are affecting how semiconductors are made and sold. For example, the US has created rules limiting what kind of semiconductor tech can be sold to Chinese companies. This situation is tricky because a lot of semiconductor businesses rely on both American technology and Chinese markets. And then there’s Taiwan, a major player in making these chips, caught in the middle.
Alternative ways to invest in semiconductor stocks
With hundreds of billions of dollars swishing around, the semiconductor industry is an ocean that sustains more than just the sharks like Nvidia, Intel, and AMD.
Take Huntsman Corporation, for instance, a chemicals firm which has expanded its offerings in Texas to include specialty amines used to make semiconductors.
Then there’s Merk, best known as a pharma company, pouring about $1 billion into research and development for electronic materials used in semiconductor manufacturing.
And let’s not forget Entegris, which made waves by acquiring CMC Materials for $6.5 billion, a firm which specialises in polishing slurries critical for semiconductor production.
If all this semiconductor stock picking sounds like a high-tech headache, it’s well worth exploring the possibility of investing in ETFs that cover the global semiconductor industry or a region-specific ETF that concentrates on somewhere like the US, for example.
Pros and cons
- Growing digital connectivity worldwide means more demand
- Essential in the expanding EV and renewable energy markets
- Heavy investments by the US and UK highlight strategic importance
- Concerns about inflated stock valuations
- The sector is prone to significant volatility and price swings
- Tensions between the US and China pose supply chain risks
Semiconductor stocks are a way to invest in the building blocks of all things futuristic like AI, cryptocurrency, and EVs. You have big names like Nvidia, a host of other major players and hidden gems – all contributing to a sector that’s being buoyed by billions of dollars’ worth of government subsidies.
But, just like a delicate electronic circuit, these investments require careful handling. Historically, the prices of semiconductor shares have seen explosive jumps followed by catastrophic collapses. Investors who buy shares in a well-diversified semiconductor ETF, as opposed to picking individual companies, are likely to enjoy a smoother ride.
Frequently asked questions
More guides on Finder
Jeeves review: prepaid business cards
Find out whether Jeeves could help you better manage your business finances.
Less than 50% of kids learn the skills to manage their money
New research from the Money and Pensions Service reveals that most kids are leaving school without the money skills they need.
Women in business statistics: 2024
Explore the latest statistics on women in business, including the number of businesses owned by women and access to funding and loans.
Get £100 off London Blockchain Conference 2024 passes with Finder
London Blockchain Conference 2024 returns at ExCeL London this May for a 3-day event. Get £100 off passes with Finder.
Half of UK adults have now used BNPL as the government delays plans to regulate the sector
Half of UK adults, around 26.4 million, have now used BNPL while the government delays plans to regulate the sector.
Londoners need to earn at least £37,000 to be financially stable in the capital
Find out the minimum salary you need to earn in London to be considered financially stable as a single person living in London.
NatWest bank switch deal: Get £200 (2024)
How to get £200 from switching to NatWest. Plus, how to get an extra £36 in rewards and nearly £60 extra in interest.
Half of adults in the UK have now used buy now, pay later
Half of adults in the UK – around 26.4 million Brits – have now used buy now, pay later (BNPL), according to new research.
£200 switch deal from NatWest and RBS launches
Bag £200 by switching to NatWest or RBS if you meet the criteria. And access a regular saver account offering 6.17% interest. Here’s how.
Register now to attend PAY360
The UK’s largest payments event is being held on 19 and 20 March at ExCeL London. Find out how to book your place here.