(March 9): Veteran emerging-markets investor Mark Mobius said he is betting big on semiconductor shares as the US and China increase investments in the sector.
Chipmakers are “the number one category we have in our portfolio”, Mobius said in a Thursday interview on Bloomberg Television. The companies associated with the industry are going to do well as “both the US and China are putting enormous amounts of money in semiconductor research and production”, he added.
Chip stocks have had a great start to 2023 after rising interest rates led to a carnage in 2022. Investor focus has started shifting to the sector’s long-term growth prospects and cheaper valuations. The Philadelphia Semiconductor Index has risen 20% this year compared to a 4% gain in the S&P 500 Index, on course for its best quarterly outperformance versus the US gauge since September 2016.
Asia is in a prime position to benefit from the sector’s improving outlook as it houses global bellwethers such as Taiwan Semiconductor Manufacturing Co and South Korea’s Samsung Electronics Co, with Mobius adding the outlook remained “good” for China and Indonesia.
The technological conflict between the US and China is funneling billions of capital — some of it direct from government coffers — into the chip industry as nation states compete to build up domestic semiconductor production. More fundamentally, chips are growing more sophisticated and demand is expected to skyrocket with the mainstream adoption of future technologies from connected cars and devices to artificial intelligence that will require intense computing power.
Mobius, who co-founded Mobius Capital Partners after a multi-decade career at Franklin Templeton, added that he remains “very bullish” on India as it takes a larger share of manufacturing in Asia.