Can Semiconductor Giants like INTC and TXN Return to 2000-Levels?
The technology industry is one of the most dynamic industries, with trends evolving every five to ten years and a technology shift occurring every 15 years. Since the start of 2000, the tech industry has come a long way from traditional PCs (personal computers) and smartphones to AI (artificial intelligence) and IoT (Internet of Things).
Every technology shift has either created some very large companies or have made many companies disappear through acquisitions or bankruptcy. Generally, a technology shift begins with semiconductors, which are at the core of all technologies.
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Can semi giants’ reach another peak?
Semiconductor stocks reached a peak in 2000, with stocks like Intel (INTC), Applied Materials (AMAT), and Texas Instruments (TXN) reaching all-time highs. At that time, the industry witnessed a technology shift to mobile phones, and companies like Samsung (SSNLF), Apple (AAPL), and Nokia (NOK) flourished and became major customers of semiconductor firms.
But in the past 16 years, none of the above semiconductor stocks have been able to reach 2000 levels, even though they have grown their businesses organically as well as through mergers and acquisitions. They suffered the most during the 2008 financial crisis, when almost all major stock markets, including the S&P 500 Index (SPY), crashed.
At that time, nearly all semiconductor stocks underperformed the market, except those that had strong exposure in smartphones. For instance, Qualcomm (QCOM), Qorvo (QRVO), and Micron (MU) outperformed the S&P 500 Index in August 2008, when Apple launched its second iPhone.
Another big growth spurt came in 2014, when Chinese smartphones started to gain ground in domestic and international markets and DRAM (dynamic random access memory) prices increased. Since 2014, most semiconductors stocks started outperforming the S&P 500 Index (SPY), as we saw with the iShares PHLX Semiconductor ETF (SOXX), which also outperformed SPY.
In the next part, we’ll look at the semiconductor stock trend from 2015 and the factors that could drive semiconductor stocks in the near future.