The industry is feeling the effects of the problems in the global economy.
(Photo: AP)
It seems paradoxical: When the industry was producing at the limit and still could not meet the demand sufficiently, so that the prices and thus profits continued to rise, the prices of the chip shares collapsed. Globally, the sector has lost around 40 percent in value since the beginning of the year – almost twice as much as the overall stock market.
At first glance, this is remarkable given that the long-term prospects for the sector remain excellent. Whether automotive, retail or mechanical engineering: In view of the ever-increasing digitalization, there is hardly an industry that can do without semiconductors. The need increases and increases.
So if Nvidia, Intel, Samsung, Infineon & Co. don’t continue to lose value in the future, even though the downturn in the real economy is becoming more and more visible, nobody need be seriously surprised. Investors have been anticipating this scenario since the end of last year. Once again, the stock market lived up to its reputation as a leading indicator.
However, this also means that the stock markets as a whole have probably not yet reached the hoped-for bottom, despite recent promising price increases. Compared to the crashed semiconductor sector, many other industries are still doing relatively well in the stock market.
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But if the feared recession comes in Europe and large parts of the industrialized world, which almost all economists are expecting, then stocks in sectors such as aviation, luxury and retail still have plenty of potential for a downturn. Especially since the conditions and, above all, future prospects here are by no means better than in the semiconductor industry.
This is likely to be the first to emerge from the trough of the bear market and ultimately live up to its reputation as the industry leading indicator.
More: US stocks are more expensive than European stocks – but also more promising.