With the global semiconductor shortage showing little sign of improvement, shares of the companies that produce them are still soaring fast.
Last summer we reported how companies like Nvidia ( (NVDA) - Get NVIDIA Corporation Report) and Qualcomm ( (QCOM) - Get QUALCOMM Incorporated Report) were on every investor's radar as they were producing the chip that makes everything from one's car to one's phone work.
Advanced Micro Devices ( (AMD) - Get Advanced Micro Devices, Inc. Report), which creates the processors that go into many popular laptop computers, saw its shares rise by 33% to $156 in the same time period.
The situation is a simple matter of supply and demand, Raymond James analyst Chris Caso told the Wall Street Journal.
The rise of 5G and worsening American relations with China, which is the largest producer of semiconductors in the world, had already contributed to a shortage before the pandemic exacerbated it with supply chain disruption.
"When we talk about the supply and demand balance, which is where we kind of get back to normal, we probably are not going to see normal for most of 2022," Caso said.
Any effort to ramp up production can take years due to the highly specialized nature of the necessary infrastructure and equipment.
Construction will start in 2022 and is not expected to finish until 2024.
In the meantime, only a select number of companies can produce the necessary semiconductors. That means analysts like Caso expect their stock to keep surging higher and higher, until a regular supply is re-established.