How to Invest in Semiconductor Stock (Chip-tech)

Whether you are reading this article on your smartphone, tablet, or laptop, there is an essential ingredient that is allowing you to do so.

Right now, at this very moment, you are using a semiconductor, also known as a computer chip. Semiconductors are tiny processing units, and they are not just used for your communication devices.

These little chips form an integral part of our daily lives. They can be found powering your FitBit, your smart sprinklers, and even the space stations orbiting Earth.

With their seemingly ubiquitous presence, semiconductors have become an indispensable product for human society- and that makes them a potentially lucrative investment.

The semiconductor industry is booming and investors are clamoring to hop onboard.

So in this article, we will explore why the industry is thriving, how to invest in semiconductor stock, and what risks and benefits it may present.

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The Semiconductor Industry Is Booming

The semiconductor industry is indeed booming. At this point, it is nearly impossible to imagine what life would look like without these tiny chips.

We use them to store information and to enact digital tasks.

In 2020, global semiconductor sales surpassed $440 billion and experts predict that the market will grow 8.6% each year.

That means that by 2028 the global chip industry is expected to reach $800 billion worth of sales.

So in just 6 more years, the revenue produced by the semiconductor industry is expected to double, making this an enticing growth industry for investors. 

So what actually is a semiconductor?

The chips themselves are made of conductive silicon, a material that can be found in abundance.

Unlike copper, which can conduct electricity in a speedy and efficient manner, silicon is used instead to carry more specific electrical signals.

These precise signals are vital for computer processes. Because the chips only conduct certain signals, they are called “semiconductors”. 

Global Chip Shortage

The global coronavirus pandemic has caused massive global disruptions to international shipping industries, as well as supply chain shortages.

The semiconductor industry was certainly affected, as the doors of many chip manufacturing facilities were shuttered due to lockdowns and quarantines.

This led to a shortage in the global supply of chip-tech.

At the same time, however, the huge increase in remote businesses and work-from-home employees has meant that the demand for semiconductors has skyrocketed.

All of the Zoom calls, remote file storage on the Cloud, and digital conference rooms and workspaces require chips.

So with supplies down and demands high, there was space for new manufacturers to step in once the peak of the coronavirus subsided. 

Factors Driving the Industry’s Growth

With so many of the products and services we use every day becoming increasingly reliant on digital technologies, semiconductors will become increasingly integrated into every aspect of our lives. And that means they will become an increasingly necessary commodity.

Our coffee makers, vacuum cleaners, security systems, and cars will soon all depend upon a computer chip to run.

Plus, there are broader trends that will help drive the growth of the chip-tech industry.

Let’s take a look at a few growth factors below. 

-Smart Cities

It isn’t only our homes that are becoming smarter these days.

Cities too are utilizing new smart technology to improve urban infrastructures, help with traffic flows, monitor crimes, and become more environmentally friendly.

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Through a combination of AI, image detection, machine learning, automation, 5G, and other new technologies, smart cities tap into a dynamic infrastructure that relies on a mixture of different tech gadgets, hardware, and software.

That means a lot of digital processes and a huge amount of data to store, both of which will require even more semiconductors, thus driving up the demand and value of chips. 

-5G Tech

The 5G network has been released recently all over the world.

This latest generation cellular data network offers faster transfer speeds and broader coverage to cell phone users globally.

Plus it syncs with and encompasses smart systems, powering the Internet of Things technology (IoT) that permeates our smart homes and smart cities.

All of this data and digital processing means that 5G relies heavily on semiconductors.

In fact, the network functions through an interconnected web consisting of thousands of small antennas and computer chips.

As more devices sync to the 5G network, the demand for semiconductors will only rise. 

-New Developments in the Automotive Industry

The automotive industry offers some of the most exciting new developments that merge previous technology with new digital, computerized tech. Take the electric car.

More and more companies, including those that have dominated in the traditional car industry like Ford, are shifting their manufacturing facilities so that they can produce electric vehicles.

While Tesla currently reigns supreme in the electric vehicle field, the swap from traditional cars to electric is taking place en masse.

All of those production capacity reconfigurations rely on a lot of techs, which means a lot of digital processors (ie: semiconductors). 

In addition to this, engineers are working hard to make autonomous vehicles a reality. Driverless cars will no longer be a thing of science fiction.

The cars themselves will operate digitally, which means computer chips will be needed in order to produce them. And once the technology is ready for the public, it may mean the end of private cars. Which would mean that every car on the road requires semiconductors to function. 

Investing in Chip-Tech

With so much growth on the horizon, now is the perfect time to invest in chip-tech.

Chip-tech stocks are one of the hottest commodities available on the stock market, and they are a great option for first-time investors.

Interested investors can easily add chip-tech stocks to their portfolio straight from their smartphones with the Wealthface app.

The chip-tech industry is comprised of many parts.

Using the virtual analyst available on Wealthface, investors can easily determine how best to invest in this thriving growth industry.

From fabless manufacturers to foundries, IDMs, transporters, silicon wafer producers, and more, there are countless opportunities to invest.

In fact, developing an entire portfolio dedicated to the semiconductor industry can provide investors with a geographically diversified portfolio that is also spread among a variety of industries, from design to production to transportation.

A Smart Investment

As increasingly sophisticated technology continues to evolve, becoming all-pervasive in our domestic, work, and city lives, we will rely even more heavily on semiconductors.

For those looking to make a wise investment with ease and wants to invest in semiconductor Stock, Wealthface offers a comprehensive portfolio of chip-tech stocks. So don't hesitate and let us help you build a low risk and high return stock portfolio.