Despite global shortages caused by an array of supply chain issues, it’s been a banner year for semiconductor stocks and exchange traded funds.

Just look at the Invesco PHLX Semiconductor ETF (SOXQ). SOXQ follows the PHLX SOX Semiconductor Sector Index and is the newest addition to the dedicated semiconductor ETF fray, having debuted on June 11. Since then, SOXQ is higher by nearly 19%.

No one has a crystal ball, and it’s possible that supply issues could ebb next year, but investors should remember that an improvement on the supply front will take a while to permeate the entire industry.

“Not surprisingly, semiconductor fabs—like Taiwan Semiconductor Manufacturing Company (TSMC), Samsung, and GlobalFoundries—have prioritized their biggest and most profitable customers, like Apple, Qualcomm, Nvidia, and Advanced Micro Devices, ‘fabless’ companies that create chip designs to be built by the fabs,” writes Charles Schwab’s David Kastner.

Nvidia (NASDAQ:NVDA), Qualcomm (NASDAQ:QCOM), and AMD (NASDAQ:AMD) combine for about 22.5% of SOXQ’s roster. Taiwan Semiconductor (NYSE:TSM), operator of the world’s largest chip foundry, accounts for 3.65% of the fund’s roster.

SOXQ’s exposure to Taiwan Semiconductor is highly relevant not only because it’s a quality name with a strong balance sheet and a growing dividend, but also because that company is a major player in driving global chip supply. To that end, supply shortages could last into the second quarter.

“The fabs are trying to catch up with demand, increasing production of the commodity semiconductors by 60%, in part by recommissioning retired equipment. But this will take time. Completing a chip requires nearly 700 steps, which can take as long as three months. At the end of October, wait times for chips and related components were between 22 and 38 weeks,” adds Kastner.

Something else for investors to consider is that while SOXQ and its components are performing well this year, chip stocks are heavily cyclical, and the industry has a history of over-investment during supply shortages, When supply issues are rectified, all that investment often creates too much supply. Although these are ominous words in investing, it’s possible that this time will be different due to disruptive concepts such as clean energy technologies, artificial intelligence, cybersecurity hardware, and wearable technologies.

“The rapid expansion of the ‘internet of things’ (in which physical objects are increasingly embedded with sensors, processing ability, software, etc. to connect and exchange data with other devices over the internet) is necessitating faster and higher-capacity data transfer channels via broadband and 5G cellular,” concludes Kastner.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.