Why Chip Companies Are Important to the Future of Tech

Over the past 12 months, the Philadelphia Semiconductor Index rallied about 90% as global demand for chips surged through the pandemic. Stay-at-home trends boosted sales of new PCs, data centers installed more chips to keep pace with the surging usage of cloud and AI services, and new technologies -- including driverless cars, automated factories, and 5G networks and devices -- gobbled up more chips. That demand propelled the price of many leading chip stocks, including Qualcomm, Advanced Micro Devices (NASDAQ:AMD), and NVIDIA (NASDAQ:NVDA), to historic highs. Taiwan's Taiwan Semiconductor Manufacturing (NYSE:TSM), the world's largest contract chipmaker, also benefited from those surging orders. The global semiconductor market could still expand at a compound annual growth rate of 10% from 2021 to 2026, according to research firm EMR, as companies across a wide range of industries purchase more chips.