After falling 8.3% in 2023, sales of global semiconductors rose 15.2% year-on-year during the first quarter of this year, fueled in large measure by demand for AI computing power. Due to the recovery in chip sales and ongoing enthusiasm for AI, the semiconductor stock index SOX has risen nearly 50% over the past year, compared to the S&P 500 index up 26%, and the MSCI All Country World Index up 20%. Optimism for the sector has also been aided by an influx of financial assistance from government programs aimed at increasing production capacity around the world. For instance, US President Biden’s 2022 Chips and Science Act planned USD 39 billion in grants and an additional USD 75 billion in tax incentives and subsidized loans. Including USD 142 billion in funding announced in China, planned and allocated government aid for chipmakers has surpassed USD 400 billion in the last two years, according to Bloomberg and the Semiconductor Industry Association.
Source: Bloomberg, June 2024.