The VanEck Semiconductor ETF (SMH) closed 2021 with a 45% gain, and Nomura’s David Wong says the global chip shortage will continue to improve this year.
Wong’s remarks on CNBC’s ‘Squawk Box Asia’
Wong agrees that an end to the ongoing supply constraints in semiconductors was unlikely in 2022, but said signs of improvement will continue this year. On CNBC’s “Squawk Box Asia”, he noted:
Our view is that the supply issues, at least in electronics, will continue through 2022 in many places but steadily get better. We’ve seen this in 2021, we see it continuing into 2022. These shortages get cleared up as 2022 progresses and into 2023.
Wong expects growth in the semi space to moderate this year but reiterated that the sector at large continues to be a story of growth and opportunities. In December, consultancy firm Roland Berger said automakers were likely to battle the chip crisis for years.
Prices to remain steady in 2022
On the price front, Wong is convinced that levels will hold steady in 2022 because they’re based on strong demand. During the same interview with CNBC, he added:
We expect prices to remain firm. These shortages are due to the strength in demand. We don’t necessarily expect a huge spiral up in pricing, but we do see pricing to remain firm at least into the first half of 2022.
According to Wong, chip shortages are more pronounced in a few subsectors, but generally, inventories are at a reasonable level. Last month, Goldman Sachs’ Katie Koch said we could be at the precipice of a super cycle in semiconductor demand.
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