London, England, 2 June 2021, ZEXPRWIRE, The past year has been extremely tough on many industries with so many regions undergoing strict lockdowns. Countless industries have lost billions in lost revenue that they could have generated in the course of the lockdown period but due to harsh penalties for breaking the law, many companies opted into following the rules to ensure the safety of their customers. Very few industries were even able to keep their doors open since a majority of companies relied on a human workforce to manufacture their products. Even assembly lines that had been automated to some extent required raw human labour to be operated.
It does look like almost every industry suffered through the lockdown except for pharmaceutical companies that had to remain open due to their special status as essential industries. They were, after all, developing the vaccine during the lockdown period. For the most part, a significant portion of the world’s manufacturing plants was either shut down or operated at minimum capacity.
However, there was one industry that against all odds was able to remain open and active throughout the pandemic. It wasn’t categorized as an essential industry at the beginning of the pandemic but it soon became clear that companies that had been tasked to design the vaccines needed all the help they could get. The industry that managed to grow in the past year is the electronics industry.
Green Tower Investments analysts look into the factors that led to the growth in the electronics industry and how their services were key to developing the vaccine. The electronics industry was at the centre of the economic world during the pandemic and investors have been curious about what its future holds.
A few weeks after the implementation of lockdown procedures the price for basic electronic systems went up by nearly 20 %. This was indeed a strange event but not unexpected. Analysts had already predicted that most working-class citizens of nations had access to only basic electronic systems and ever since the closing of offices many of these people had to go out and get their systems to work from home. This increased demand resulted in prices skyrocketing which in turn increased the demand of the stocks of electronics design companies such as Nvidia and AMD.
Essentially, people needed equipment to conduct their businesses from home and that required a computer. Some even went to the trouble of getting entertainment systems such as gaming PCs for themselves as well which resulted in the shortage of Graphics cards since they were essential in this setup and practically everyone was trying to get one.
While the increase in demand was more than enough to favour electronic companies, it had a relatively small effect as compared to the two other factors. They were primarily Crypto mining and vaccine development. Crypto mining was more of a hobby rather than an essential requirement whereas vaccine development was an all hands on deck situation.
Vaccines require an intense amount of computing power that only graphics cards can provide so naturally investors viewed this as an essential component in the fight against COVID-19 and went all-in on nVidia. The company’s stock price rose to astronomical levels. Its stock valuation went from around $240 to a whopping $619 today. This just shows how much contribution the electronics industry had in vaccine development and how pharma companies relied on raw computing power to develop the one thing that could give the world a sense of normality.
The Chip Shortage
One might be right to assume that since the demand for electronics is high, it is only logical that production is up also. Well, this is where COVID-19’s consequences came into effect. When global manufacturing plants had shut down or reduced their production capacity to stay within the lockdown procedural requirements many production lines had to be shut down. This resulted in low efficiency in manufacturing and a shortage in chips required for developing essential computer components. Many industries had taken a hit from this shortage with chip manufacturers having to delay orders up to 2022.
However, the chip shortage did not ignore the fact that confidence in electronics was growing and even though manufacturing companies have stated that getting more production lines up and running will take a while, analysts believe that this will not stop investors from buying stock.
Nvidia and many other companies have seen a relative rise in their stock valuations but at the end of the day, they too suffered a bit from the pandemic and the only reason for their success has been consumer demand and investor confidence.
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