Everyone’s favorite trade in the stock market, technology, has gone the way of the dodo. Oil and value stocks are all the rage. But one part of technology — semiconductors — is vital not only to the technology sector in the stock market but to the global economy and industries from cars to computers. The growing, shifting and manufacturing of chips and chipmakers will remain crucial.
I recently sat down for the Six Five Summit with Arvind Krishna, CEO of IBM
IBM,
-0.50%.
In the conversation, he shared an observation about how tightly correlated the semiconductor industry is to GDP growth. When tech, and more specifically semiconductor companies, grow, GDP grows. And tech growth is nearly 100% dependent on the growth of semiconductors. So, as we enter what looks like a prolonged winter for tech and growth stocks, it seems that keeping a watchful eye on semiconductor growth would be prudent. While forecasts vary, McKinsey places the semiconductor industry’s growth to become a trillion-dollar industry by 2030 based on what the consulting firm estimated to be 6% to 8% annual growth and around 2% annual price growth — all depending on the return of balance in supply and demand. Several trends in semiconductors warrant investors’ attention, from the sustained supply chain woes that have played a significant role in today’s unprecedented inflation to the earnings and growth of key semiconductor companies like Intel
INTC,
-2.94%,
AMD
AMD,
-7.09%,
Nvidia
NVDA,
-6.79%,
Qualcomm
QCOM,
-2.70%,
Marvell
MRVL,
-6.76%
and Taiwan Semiconductor
TSM,
-3.28%.
Perhaps one of the most important trends to pay attention to is the semiconductor ecosystem at large and what is driving a wave of new entrants into chip manufacturing, from PCs to servers. In particular, …