Since the stock market bottom in March 2020, one of the strongest industries within the tech sector has been semiconductors. Over this timeframe, the VanEck Vectors Semiconductor ETF (SMH) is up 147%, which is significantly better than the S&P 500’s 92% gain.
The major reason for this outperformance was increased spending on technology by businesses and consumers during the pandemic. Demand outstripped supply, leading to increased revenues and pricing power for companies and even shortages for certain chips. In recent months, the industry has experienced a correction, which is allowing investors to scoop up shares at more attractive entry points.
