The semiconductor industry is expected to grow significantly in the coming months, driven by higher global demand thanks to the continued advancement of technologies and rising government and private investments. The current, global semiconductor shortage has been driving prices up steeply, allowing companies such as KLA Corporation (KLAC) and ASML Holding (NASDAQ:ASML) to boost their profits. But which stock is a better investment now? Read more to find out.KLA Corporation (KLAC) is an international process control and yield management supplier for semiconductor and nanoelectronics companies. With a $45 billion-plus market capitalization, KLAC is a dominant player in the U.S. semiconductor industry. ASML Holding N.V (ASML) is a Netherlands-based semiconductor equipment manufacturer with sales concentrated in Europe, the United States and Asia.
The rising demand of semiconductors, given their applications in almost every technology-oriented industry, has grabbed investor attention in this space. Furthermore, with an adverse supply shock currently gripping global markets, semiconductor prices have been rising sharply, allowing manufacturing companies to generate hefty profits on roughly the same volume of sales. With budding industries, such as electric vehicles (EVs) and 5G magnifying the demand for semiconductors, most manufacturing companies are taking steps to boost their production capacity through multiple new “fab” manufacturing factories. The Chips Act, which is a part of President Biden’s proposed $2 trillion in infrastructure spending allocates approximately $50 billion to developing the domestic semiconductor infrastructure.
These factors should allow the semiconductor industry to grow rapidly over the next few years to meet the high demand. As a result, ASML and KLAC should see a significant rise in the demand for their products. has gained 117.2% over the past year, while KLAC returned 77.8% over this period. In terms of year-to-date performance, ASML is the clear winner, with 30.3% returns versus KLAC’s 15% gains. ASML has gained 8.1% over the past three months, while KLAC declined 9.9% over this period.