Microchips: The New Gold of the 21st Century

Microchips are at the heart of many of the devices we use on a daily basis, from our computers and smartphones to our cars and appliances. As the world progresses, an explosion of technological advances are about to present themselves to the masses of people around the globe. This will increases the demand for microchips. The problem is that there is currently a shortage of microchips. This has led to a decrease in production from industries that rely on integrated circuitry for their goods or services. I can’t think of anything better for any manufacturer than to have a never-ending backlog of orders for the next 10 years. And that’s exactly what chip makers of integrated circuitry have. Companies that have aligned themselves to make graphic cards, CPUs, circuit boards, and the like have struck the new gold of the 21st century.

This presents an opportunity for investors. As the demand for microchips increases, so too will the price of microchips. As the world becomes increasingly more reliant on new technology, the demand for microchips is only likely to increase, making this a potentially sound long-term investment.

Many around the world have money to buy new cars, but new cars aren’t available because of the current shortage of chips from silicon valley and other producers around the world.

There are 5 companies that dominate the semiconductor (microchip) industry.

Let’s see who they are and how they have been progressing as we weigh the opportunity to invest in this strategy.

Advanced Micro Devices, Inc. (AMD)

Advanced Micro Devices, Inc. (AMD) is an American multinational semiconductor company based in Santa Clara, California that develops computer processors and related technologies for business and consumer markets. Its main products include microprocessors, motherboard chipsets, embedded processors and graphics processors for servers, workstations and personal computers, and embedded systems applications.

AMD

Chart courtesy of Yahoo

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Intel Corporation (INTC)

Intel Corporation (INTC) is an American multinational corporation and technology company headquartered in Santa Clara, California, in the Silicon Valley. It is the world’s second largest and second highest valued semiconductor chip maker based on revenue after being overtaken by Samsung. They are the inventors of the x86 series of microprocessors, the processors found in most personal computers. Intel supplies processors for computer system manufacturers such as Apple, Lenovo, HP, and Dell. Intel also manufactures motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphics chips, embedded processors and other devices related to communications and computing.

INTC

Chart courtesy of yahoo

Broadcom Inc. (AVGO)

Broadcom Inc. is an American multinational semiconductor company based in San Jose, California. The company designs and sells a variety of semiconductor and infrastructure software products. Its product portfolio includes system-on-a-chip and firmware solutions for wireless connectivity, enterprise storage, data center networking, broadband access, industrial networking, smartphones, and base stations. The company was founded in 1961 as a division of HP. In 2016, Avago Technologies Ltd. acquired Broadcom Corporation and changed its name to Broadcom Limited.

AVGO

Chart courtesy of Yahoo

Qualcomm Incorporated (QCOM)

Qualcomm Incorporated is an American multinational semiconductor and telecommunications equipment company that designs and markets wireless telecommunications products and services. The company was founded in 1985 and is headquartered in San Diego, California. It has over 30,000 employees worldwide.

The company’s product portfolio includes chipsets, system-on-chips (SoCs), software, and services for mobile devices, wireless infrastructure, and the Internet of Things (IoT). The company’s products are used in a variety of devices including smartphones, tablets, laptops, and modems.

QCOM

Chart courtesy of Yahoo

Nvidia Corporation (NVDA) is an American multinational technology company headquartered in Santa Clara, California. They are one of the world’s leading designers of graphics processing units (GPUs) for the gaming and professional markets. The company also designs system on a chip units (SOCs) for the mobile computing and automotive markets. Nvidia’s main product line, GeForce, is the most recognized brand in the video card market. (NVDA split 4 for 1 earlier this year)

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NVDA

Chart courtesy of Yahoo

There are some basic theories that are taught in economics that must be understood, in order to be successful as an investor in the 21st century.

1. Supply and demand
2. Follow the Money

When it comes to microchips just follow the yellow brick road. The microchip road has golden bricks. As we said earlier these companies have a backlog of orders for the present technology available. In essence that’s money that just needs to be collected and accounted for. As we can see from the basic charts above, all of these companies have done extremely well over the past 5 years.

Several more companies produce integrated circuitry. These companies might not be in the top 5 but their growth has also been outstanding. We’ll be bringing these firms and their investment potential to your attention in future discussions. The current market conditions may have presented a most excellent buy-in opportunity. We will continue to monitor these markets.

The increasing demand for microchips presents a great opportunity for investors. As the world becomes increasingly reliant on new technology, the price of microchips is sure to rise. Therefore, investing in microchip companies could be a wise decision for those looking to pursue a potentially lucrative opportunity from the 21st century’s most important commodity, the microchip.

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