In the short-term, shortages are still acute due to Chinese lockdowns. Leading tech companies CEO comments and data during earning calls are painting a very bullish case. The only problem is not demand but supply. In a catch-22 situation, some equipment manufacturers are themselves suffering from chip shortages.

Pat Gelsinger, Intel new CEO who  has engaged the company into a major repositioning in manufacturing and execution revised Q2 guidance slightly due to soft demand in low-end PCs but maintains the bullish FY guidance and continues to think that “we are just at the beginning of a long-term growth cycle across semiconductors”.

Peter Wennink, the CEO of ASML, the world largest semiconductor equipment maker, says that he continues to see “unprecedent customer demand across all market segments”. ASML is running at full capacity and expects demand to exceed supply well into next year.

TSMC is the largest semiconductor manufacturing company in the world. Its CEO CC Wei indicated that 2022 will be another strong growth year for TSMC and expects full year growth to likely be at or exceed the high end of their guidance range of mid- to high 20s percent in U.S. dollar terms. Softness in cell phones and PCs is largely offset by the “multi-year megatrend” in High Performance Computing and 5G. He sees tight capacity throughout 2022 as a very good leading indicator for TSMC pricing power and margins that mostly relies on capacity utilization rate.

Even though technology stocks have gone through a severe correction in 2022, the strong fundamental story has not changed. Unlike other segments of technology, chip stocks and SPEs (Semiconductor Production Equipements) were not overpriced in January. Many blue chip stocks now trade on PE well below 20x, which sounds attractive related to a 20-30% growth potential in 2022 and 2023, strong demand and tightness in inventory and capacity.