The MSCI Semiconductor index, a benchmark for chip stocks, is down 43% this year, reflecting broader market sentiment towards the possibility of a slowdown in economic growth. In such an environment, some investors have begun to question whether it is prudent to sell chip stocks in favor of companies in other better-performing sectors. Speaking to CNBC “Pro Talks,” Brian Arcese of Foord Asset Management said that despite negative returns this year, it’s better to keep investing in select companies than to leave the industry. . “Where the valuations are, if it’s a modest part of a portfolio, then I would comfortably own them until they are,” said Arcese, who manages two funds that oversee $1.6 billion in assets. I have more information to make a more informed decision.” The portfolio manager revealed that he wants to keep Taiwan Semiconductor Manufacturing Company even though the company’s shares are down 35% this year. The chip industry used to operate in boom and bust cycles. During economic growth, consumer demand for computers, laptops and phones outstripped semiconductor manufacturing capacity, making the sector highly profitable. In contrast, chip prices fall during a recession, which reduces the company’s revenue. Cyclicity means that companies that allocate capital during a boom cycle to profitable sectors tend to perform better when the economy comes out of a recession. Arcese said this focuses on executive management while valuing chipmakers. “We typically invest in what we feel is the market leader that has generated the best returns over time and has the strongest management team and ability to continue to generate profits,” he said. good. TSMC, which makes higher-end chips for Apple and AMD, has a “buy” rating from 23 out of 26 analysts covering the stock with an average price target of new NT$600 ((18, $7) per share, showing a 50% gain According to this industry, companies that specialize in making chips known as RAM are likely to face greater challenges due to intense global competition. Analysts at Mizuho Securities were quick to downgrade Micron, while Bank of America analysts said South Korea’s SK Hynix would “underperform.” Both companies produce entry-level chips. lower rates for industry and autos Arcese also said the US decision to reduce reliance on foreign chip production by passing funding to help boost domestic manufacturing facilities would help benefits some chip stocks like Intel,” he said, referring to the $52 billion in aid through the Science and Chips Act. The program, designed to boost semiconductor manufacturing in the United States, is expected to benefit companies like Intel and Global Foundries.