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Nvidia, Semiconductor Stocks Climb on Dialog Deal, Chip Shortage

Nvidia and other semiconductor companies rise on a chip shortage and a major acquisition.

Nvidia  (NVDA) - Get NVIDIA Corporation Report and other semiconductor companies were rising Monday, following news of Dialog Semiconductor's DLGNF acquisition by Renesas Electronics RNECY and an ongoing chip shortage. 

Nvidia was up 6% to $576.35 at last check, while Advanced Micro Devices  (AMD) - Get Advanced Micro Devices, Inc. Report was up 4%, and Intel  (INTC) - Get Intel Corporation Report rose 1.42%.

The increase was driven in part by the announcement that Renesas had agreed to buy Dialog Semiconductor for $6 billion cash.

Shares of U.K.-based Dialog, whose clients include Apple  (AAPL) - Get Apple Inc. Report, were up 16% to $78.99.

"Power management is the DNA of Dialog’s intellectual property," Mirabaud Securities analyst Neil Campling said after the deal was announced, Reuters reported

"As we move forward in a world increasingly focused on battery technology, EV vehicles and leveraging the ‘power sucking’ capabilities of 5G in the smart industrial future - power, power efficiency and power management - are crucial," the analyst said.

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The semiconductor sector has also felt the impact of the coronavirus pandemic shutdown, as auto production slowed down and car sales dropped. 

As auto factories reopened, customer demand for cars accelerated.

In addition, demand for chips increased as consumers, who were homebound due to the outbreak, bought laptops, TVs, and other devices.

Last week, Ford F said it would cut production of its extremely popular F-15 pick-up truck at two plants due to a worldwide shortage of computer chips. 

Other auto makers, including General Motors  (GM) - Get General Motors Company Report, Mazda  (MZDAY)  and Stellantis all said they would have to reduce production due to the chip shortage. Founder Jim Cramer said Friday that the chip shortage "is very real."

"The Chinese are hoarding chips dramatically," he said. "We screwed up the supply chain amazingly. We let Taiwan dominate, we don't make factories here -- thank you, Intel. We definitely need a whole new set of foundries."