“Semiconductors are the new oil.”
That’s a quote from Rory Green, economist at investment research firm TS Lombard.
It’s quite a bold statement, but Green backs it up. Just look at the chart he posted:
That is wild — we’re literally looking at larger exports of computer chips than of oil. The new lifeblood of commerce has been born. However, as we’ve seen with oil in the past, there is currently a shortage of these chips. A big one.
This is impacting companies from myriad industries: computers, cellphones, video games, and even automobiles.
Think about it — each time you start up your car, send a text message, or stream a movie or video game, you’re using semiconductors. Those little chips are completely essential for all of those things.
Which means the current massive shortage could cause disruption in all parts of the economy and, more importantly, an opportunity for big profits for investors…
The COVID lockdown has led to a surge in sales for computers, phones, and any other devices that people need to get through a pandemic at home. It seemed to have taken industries by surprise and now, like a drunk guy at last week’s Super Bowl party, they are scrambling to get their hands on some chips.
It’s already led to delays with laptops, cellphones, and — most importantly for nerds everywhere — the new Playstation 5.
But just because we’re talking computer chips doesn’t mean I’m referring only to tech companies…
The shortage has heavily impacted the automotive market as well. This week, GM announced that it would have production cuts in the U.S., Canada, and Mexico until at least March. Ford and Honda have also slowed production due to a shortage of chips.
That’s because these types of electronics make up around 40% of a vehicle’s value. We’ve come a long way since the basic internal combustion engine. Our cars are computers, and without semiconductors they simply can’t even be produced.
Not only will workers be furloughed, retailers damaged, and gamers starved of their livelihoods, but national security could even be at risk…
“Having cars not manufactured is a bit of an annoyance, but if we can’t get critical chips we need for fighter jets, military applications, and artificial intelligence applications that the economy is increasingly running on, it’s a big problem.”
That’s a quote from NZS Capital’s Brad Slingerlend.
This is about more than our personal electronics.
So by now, you probably know how important semiconductors are to every aspect of our lives and economy. One of the major issues that is being ignored in the chip shortage is that silicon used for these chips is on its last legs. If you’re familiar with Moore’s law — the idea that the number of transistors per silicon chip doubles every year — then you would assume that silicon chips are keeping up that pace.
The fact is they are not. So regardless of how fast companies can produce the current products, they simply aren’t able to keep up with the new paradigm of EV production, video streaming, 5G, and the internet-of-things world that we live in.
That’s why I’m personally investing in a company that has figured out how to revolutionize the silicon chip and has the opportunity to make the chips we’re discussing up to 10 times more powerful than current silicon.
If they’re successful, “Silicon Valley” will be a relic of the past.
None of the semiconductor companies based in Silicon Valley offer a way out of this dead end.
It’s not possible to cram more transistors onto silicon than we already have. Silicon isn’t a reliable conductor when transistors become smaller than 5 nanometers. The time has come to reinvent the chip.
The off-radar company I’m talking about found a way to manufacture microprocessors with one of the most interesting materials on earth: It’s just one atom thick and has a honeycomb structure that allows for maximum conductivity.
It’s the thinnest material ever found.
This company teamed up with MIT in order to create the perfect chip. They have the backing of the U.S. government. They are going to be the leaders in this revolution to totally upend the way we think about semiconductors.
And right now, they are in the perfect position to profit from the current scarcity.
