When looking at returns the past week using ETF Database’s ETF Screener tool, it’s apparent that semiconductors continue to roll with leveraged funds like the Direxion Daily Semiconductor Bull 3X ETF (SOXL).
High demand from automakers and low supply have provided the perfect catalysts for chip prices. As the world continues to lean heavily on technology, semiconductors will need to continue feed the need for computing power.
“Billings among North American manufacturers of semiconductor production equipment topped US$3 billion for the fourth consecutive month in April 2021, which also marked the fifth consecutive month of sequential increases, according to SEMI,” a DigiTimes Asia article noted. SEMI is a trade organization for the semiconductor industry.
Enter SOXL, which seeks daily investment results equal to 300% of the daily performance of the PHLX Semiconductor Sector Index. The fund, under normal circumstances, invests at least 80% of its net assets in financial instruments, such as swap agreements, and securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
The index measures the performance of domestic companies engaged in the design, distribution, manufacture, and sale of semiconductors.
Steady Growth for Semiconductors
U.S. president Joe Biden’s $2 trillion infrastructure plan includes initiatives to bolster the semiconductor industry. In the meantime, billings continue to rise, which should only push revenue higher for chip companies.
“North America-based manufacturers of semiconductor equipment posted US$3.41 billion in billings worldwide in April 2021 (three-month average basis), SEMI disclosed,” the DigiTimes Asia article said further. “The billings figure is 4.1% higher than the revised billings level of US$3.27 billion in March, and is 49.5% above the April 2020 billings level of US$2.28 billion.”
At the height of the pandemic, many manufacturing plants were shuttered, but as the economy starts to come back to life, resuming operations means a need for chips.
“Equipment manufacturers continue to log steady growth as the industry works to meet accelerating demand for semiconductors across a wide range of end-market segments,” said Ajit Manocha, SEMI president and CEO.
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