Semiconductor Industry: Strong Growth Prospects Justify Premium Valuation

Published on 01 Dec, 2021

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Semiconductor, a critical component in electronic devices and an essential part of the value chain for many industries, has been in short supply over the last few years. Amid higher demand from end-user industries and tight supply conditions, industry players fared well despite the sharp economic decline caused by the COVID-19 pandemic. Although the current valuation of the sector commands a premium over its past performance, strong growth prospects amid geopolitical tensions and slow capacity expansion justify the lofty valuation. In the industry, fabless ICs continue to dominate the chips segment and fabless IC manufacturers command higher valuation than other players in the sector.