XLK - 5G deployments economic recovery and record foundry sales will drive semis higher in 2021
The COVID-19 outbreak made 2020 an unusual year for the typically cyclical semiconductor industry. The normally healthy Q2 growth was sidelined by the pandemic uncertainties, which tightened spending and slowed production. Q3 bounced back as semi companies responded to the demand surge tied to the work and learn from home shifts, but those trends could lose steam in 2021 as the vaccines roll out.Chart: Price return of the iShares PHLX SOX Semiconductor Sector Index ETF (NASDAQ:SOXX) vs. the tech sector (XLK) and S&P 500 in 2020.2021 forecast: The semiconductor industry forecast remains largely positive based on multiple growth drivers, including the improving global GDP growth, strong 5G base station deployments, increased 5G smartphone penetration, and the continued automotive market recovery.In a recent note, J.P. Morgan forecast 8-10% overall industry growth and 15-18% earnings growth. Semi stocks are expected to have a 15-20% upside in the next 18-20 months.The firm named Broadcom (AVGO) as
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5G deployments, economic recovery, and record foundry sales will drive semis higher in 2021