A Look at the Current Semiconductor Industry and the Wealth-Generating Opportunities That Are Present Across the Value Chain

Thesemiconductorindustryhasundergoneremarkablegrowthandtransformationsinceitsinception,playingapivotalroleinshapingthemoderntechnologicallandscape.

Thesemiconductorindustryhasexperiencedphenomenalgrowthandtransformationsinceitsinception,playingapivotalroleinshapingthemoderntechnologicallandscape.WhileNvidiahasbecomeahouseholdnameformanyfamiliarizingthemselveswiththesemiconductorindustry,otherstakeholdersareofcrucialimportance.Thesemiconductorvaluechainisacomplexnetworkofcompaniesandprocessesinvolvedindesigning,manufacturing,testing,packaging,anddistributingsemiconductorcomponents.Itencompassesaseriesofstagesandstakeholders,eachplayingacrucialroleinbringingsemiconductorproductsfromconcepttoend-users.Thevaluechaininvolvescollaborationbetweensemiconductormanufacturers,foundries,equipmentsuppliers,designhouses,andotherentities.Thisarticlewillprovidealookatthecurrentsemiconductorindustryandthewealth-generatingopportunitiesthatarepresentacrossthevaluechain.Asummarizedlookatthevariousparticipantswithinthesemiconductorsupplychainisdetailedbelow:ChipDesignersSemiconductorchipdesignsarecreatedforeitherspecificorgeneralproductusage.IntegratedDeviceManufacturers(IDMs),suchasIntel,AMD,andSamsung,takechargeofallprocessesinproducingsemiconductorsfromplanningtoproducingthefinalproducts.Conversely,fablesdesigncompanies,likeQualcommandNvidia,focusondesigningsemiconductorcomponentsbutoutsourcethemanufacturingprocesstothird-partyfoundries.EquipmentandMaterialprovidersWithinthesemiconductorindustry,afewkeyequipmentmakershavebecomecruciallyimportant,enablingthecreationofever-smaller,moreefficientchips.CompanieslikeASML,AppliedMaterials,andLamResearchprovidethetoolsandmachineryrequiredforsemiconductormanufacturingprocesses.Variouscompaniessupplymaterialssuchassiliconwafers,chemicals,andgasesessentialforsemiconductorproduction.Fabrication/WaferManufacturingSiliconwafersareprocessedthroughacomplexandextensiveseriesofmanufacturingsteps.CompaniessuchasTaiwanSemiconductorManufacturingCompany(TSMC),GlobalFoundries,andSamsungFoundryspecializeinmanufacturingsemiconductorwafersbasedondesignsprovidedbyfablessdesigncompaniesorIDMs.TestingandPackagingSemiconductorchipsareassembledintopackagestoformelectroniccomponentsthatcanbemountedontocircuitboards.OutsourcedSemiconductorAssemblyandTesting(OSAT)Companies,suchasAmkorTechnologyandASEGroup,specializeinpackagingandtestingsemiconductordevices,ensuringchipscanperformunderdifferentelectricalandtemperatureconditions.Investinginthewhole,notthepartsSemiconductorshavebecomeanessentialcomponentoftheglobaleconomy,asevidencedbytheirintegrationintovehicles,smartphonesanddevices,andthetechnologicalinfrastructureofourmodernsociety.Giventheirintegralnature,investorswouldbenefitfromhavingexposuretotheindustrywithintheirportfolio.InlookingattheannualreturnsoftheU.S.iSharesSemiconductorETF(Ticker:SOXX)forthepastdecade,investorshavebenefittedimmenselyfromcomprehensivesemiconductorindustryexposure.ForCanadianinvestors,theCanadianiSharesSemiconductorIndexETF(Ticker:XCHP)providesexposuretoU.S.-listedequitysecuritiesthatareinthesemiconductorsindustry.ItshouldbenotedthatXCHPwasrecentlylisted,havinganinceptiondateofSeptember6th,2023,thushavinglessthanoneyearofperformance.Alternatively,theGlobalXSemiconductorIndexETF(Ticker:CHPS/CHPS.U)seekstoprovideexposuretotheperformanceofglobal,publiclylistedcompaniesengagedinproducinganddevelopingsemiconductorsandsemiconductorequipment.LaunchedonJune21,2021,thisfundhasanestablishedtrackrecordandprovidescomprehensiveexposuretotheglobalsemiconductorindustry.Recently,againstthebackdropofsemiconductorfervor,moreAI-focusedETFsolutionshavecometomarket,providingexposuretocompaniesthatwillbenefitfromthefurtherdevelopmentandutilizationofartificialintelligence(AI)technologyintheirproductsandservices.GlobalXCanadalaunchedtheGlobalXArtificialIntelligence&TechnologyIndexETF(Ticker:AIGO),whichseekstoreplicatetheIndxxArtificialIntelligence&BigDataIndex,whichreflectscompaniesthatbenefitfromthedevelopmentandutilizationofArtificialIntelligence(“AI”)technologyintheirproductsandservices,aswellascompaniesthatproducehardwareusedinArtificialIntelligenceappliedfortheanalysisofBigData.InvescoCanadaalsolaunchedanAI-focusedsolution,theInvescoMorningstarGlobalNextGenAIIndexETF(Ticker:INAI/INAI.F),whichreplicatesMorningstar®GlobalNextGenerationArtificialIntelligenceIndex™;whichisdesignedtodeliverunparalleled,thematicallypureexposuretoleading-edgeartificialintelligencetechnologies,includinggenerativeartificialintelligenceandadjacentproductsandservices.Withdemandforsemiconductorsgrowingglobally,investorswhomaintainsomeexposuretothisindustryarepoisedtobenefitmateriallyinthepresentandyearstocome.Pleasenotethisarticleisforinformationpurposesonlyanddoesnotinanywayconstituteinvestmentadvice.Itisessentialthatyouseekadvicefromaregisteredfinancialprofessionalpriortomakinganyinvestmentdecision.

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