By Gustav Andersson
This article delves deeper into a long-term investment strategy we’ve been discussing in the “Investing for the Win” series.
which you can find here: https://bullishbeat.com/investing-for-the-win-a-beginners-guide-to-avoiding-fomo-and-making-smart-choices/
Here’s my favorite section: TL;DR. For the uninitiated TL;DR stands for Too long, Didn’t read. its a section where you give away your focal points:
TL;DR
- The semiconductor industry is booming, driven by soaring demand for advanced chips for AI and telecom/5G applications.
- Cutting-edge technologies like generative AI, 5G networks, edge computing and IoT require incredibly powerful, specialized processors.
- The market for just AI chips alone is projected to top $50 billion in 2024, illustrating immense opportunity.
- Semiconductor giants like NVIDIA, AMD and Intel are leading the charge in AI chips, but opportunities exist across large, mid and small-cap players.
- The global semiconductor market could reach a staggering $1.2 trillion by 2030, growing at 8.2% CAGR from 2021-2030.
- However, headwinds like sustainability concerns, supply chain risks and geopolitical tensions could impact growth.
- This booming industry presents an attractive investment landscape to capitalize on the digital future through strategic semiconductor portfolios.
The Booming Semiconductor Industry Driven by AI and Telecom Tech.
Introduction: The semiconductor industry is growing rapidly, fueled by the rising demand for special chips needed for artificial intelligence (AI) and telecommunications/technology breakthroughs. This is according to the 2024 Technology Industry Outlook report by Deloitte. The report highlights how these cutting-edge technologies are increasing the need for advanced chips, creating exciting opportunities for the semiconductor industry.
The 2024 Technology Industry Outlook report by Deloitte explains that the semiconductor industry’s growth is being driven by the quick developments in generative AI and the changes happening in telecommunications and technology sectors like 5G networks, edge computing, and the Internet of Things (IoT). All these new technologies require powerful specialized chips to work properly.
The report also mentions that the COVID-19 pandemic made businesses and people rely more on digital solutions like cloud computing and online services. This further increased the demand for advanced semiconductors to handle all the extra data processing and storage needs.
The market for just the specialized AI chips is expected to be over $50 billion in 2024. This huge number shows the massive potential for semiconductor companies in the AI space.
comment:
So we are looking for opportunities within this report. If you have been sleeping the last two years, a fast recap – AI is about to take over, government bodies are trying to limit their potential. However, the market is booming. in short…First, let’s go over what makes the semiconductor industry so strong and why it represents a potential goldmine, then we’ll conclude with some of the key challenges. This analysis will set the stage for exploring investment strategies in this lucrative space.
Who is leading the semiconductors industry?
Generative AI can understand human language, create images and videos, and even make decisions on its own. This cutting-edge AI needs extremely powerful chips to work properly. This is where the semiconductor companies play a crucial role: the prominent companies that are well established as Top Chip Makers Ready for AI are NVIDIA, AMD, and Intel.
With their expertise in designing high-performance chips, NVIDIA, AMD, Intel and other top semiconductor companies are in a great position to meet the growing demand for AI.As businesses across many industries adopt generative AI over the next few years, the market for these specialized AI chips is expected to explode. The companies already developing AI chip technology will be the biggest winners in capturing this lucrative opportunity. By focusing on AI chips optimized for the unique needs of generative AI workloads, the semiconductor industry is setting themselves up for tremendous growth in what seems to be an ever expanding market where use cases are rapidly increasing.
Analysis:
However we mention NVIDIA, Intel and AMD that are leading the industry, we will later focus on different profiles, small cap, mid cap and large-cap , with different risk profiles and strategies.
Telecom industry Fuels Demand for Advanced Chips and is increasing its demand on advanced semiconductors. According to the report, it’s estimated that around $2 billion worth of specialized chips will be used in smartphones with satellite connectivity capabilities in 2024 alone.
New telecom technologies like 5G networks, edge computing, and satellite communications require extremely powerful processors that can handle massive amounts of data with ultra-low latency. This is creating significant demand for cutting-edge chips designed specifically for these telecom/tech applications.
As we can see, there are two huge industries – AI and telecommunications/technology – that desperately need powerful new semiconductor chips. The demand for advanced processors from these sectors is extremely high.
In the AI field, the rise of generative AI systems that can understand human language, create content, and make decisions on their own is causing an explosion in demand for specialized AI chips. These AI applications require an immense amount of computing power packed into processors designed specifically for AI workloads.
At the same time, the buildout of superfast 5G wireless networks, edge computing setups that process data closer to devices, and satellite communication systems is creating an equally ravenous need for high-performance, low-latency chips in the telecom world.
Whether it’s training large AI language models, processing real-time video data, or encoding/decoding massive data streams, both generative AI and next-gen telecom technologies are pushing chips to their limits. This has kicked off a race for semiconductor companies to develop customized chips perfectly suited for these complex, data-intensive uses.
Semiconductor companies that can provide the best of both AI and telecom/tech innovation have a major opportunity. Those that make advanced chips checking all the boxes – blazing performance, ultra-low latency, high energy efficiency, and scalability – stand to make huge profits from the screaming demand.
I’m not a pessimist but..
according to the 2024 Technology Industry Outlook report by Deloitte
The semiconductor industry’s growth faces headwinds from several areas: sustainability, supply chain disruptions, and geopolitical tensions. Chip manufacturing’s reliance on energy and natural resources necessitates more sustainable practices. Additionally, the industry is vulnerable to shortages and delays caused by supply chain disruptions. Finally, geopolitical conflicts between countries can create trade barriers and other disruptions that can impact the chip industry. To continue growing and meeting the demand for their products, chip companies will need to address these challenges.
another comment:
Let’s take a stand and call out what Deloitte seems hesitant to address directly. Their 2024 report paints a rosy picture of the chip industry’s geopolitical landscape, seemingly overlooking the elephant in the room: the escalating tensions between Taiwan and China. This situation has the potential to cause major disruptions throughout the entire chip supply chain. In 2022, Taiwan manufactured 63.8% of the world’s semiconductors, sementing its position as the world leader in the semiconductor industry.
However despite this looming threat..
Investing Opportunity Analysis: The insights from Deloitte’s report illuminate a semiconductor industry positively booming, propelled by multiple transformative technology currents. Analysts predict the global semiconductor market could reach $1.2 trillion by 2030, growing at a compound annual rate of 8.2% from 2021 to 2030 according to the report. This staggering growth trajectory presents an enticing investment landscape ripe for exploration.
In the upcoming analysis, we will dive deeper into developing targeted investment strategies to potentially capitalize on this semiconductor industry..
Reference: This article’s insights are derived from the 2024 Technology Industry Outlook report by Deloitte.
https://roc-taiwan.org/uploads/sites/86/2024/02/February-2024-Issue.pdf