Wednesday, June 01, 2022
Or, as investment powerhouse BlackRock wrote at the time — tech, and more specifically, semiconductors, are “the fabric upon which today’s economy is built.”
And now global consulting juggernaut McKinsey is jumping on the bandwagon with us, quantifying the importance of semiconductors…
It is (conservatively) projecting that semiconductors will be “a $1 trillion-dollar industry by the end of the decade, assuming average price increases of about 2 percent a year.”
For perspective, there are only four or five trillion-dollar industries in existence. So it goes without saying, investing in the next one is a mega-trend you don’t want to overlook.
With that in mind, I’m making good on my promise from last week to share the fastest growing — and therefore, the most potentially profitable — segments of the chip industry to focus on.
So let’s get to it…
To be clear, we can’t go wrong investing broadly in the chip sector, as it's expected to expand from a $590 billion market last year to a nearly $1.1 trillion market in 2030.
I challenge you to find a bigger growth opportunity in existence.
As you can see in the chart below, though, drilling down into individual segments reveals that a staggering 70% of growth will come from just three areas: automotive, wireless communications, and computation & data storage.
The strongest-growing segment promises to be automotive, with an anticipated tripling of demand, fueled by, as McKinsey notes, “... applications such as autonomous driving and e-mobility.”
In more specific terms, we’re talking about:
So how do we play this undeniable growth trend? Here are three compelling opportunities, including my favorite one:
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Ahead of the tape,