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While some folks are worried that the big drop in PC sales would send the semiconductor business into a nosedive, it's actually one of the hottest markets around the world today.
Sales of microchips are at multi-year highs, driven by major new trends that are reshaping the global tech landscape – including Big Data, The Mobile Wave, Cloud Computing, and Sensors – all of the things I've been telling you about here at Strategic Tech Investor each week.
Semiconductors are also essential to the operation of smartphones, tablets, satellites, TVs, even wearable technology – one of the industry's biggest new breakthroughs.
All of which make semiconductors one of the best places to invest your money.
And today I'm going to show you a unique way to play the industry's surge for big gains – even while armoring yourself against the sector's notorious volatility.
A Microchip Boom Is Underway
Semiconductors are a foundational element of the global high-tech economy.
They're the "brains" of your PC, smartphone, and iPad. And they've become increasingly integral to everything electronic.
In fact, according to the Semiconductor Industry Association (SIA), worldwide chip sales reached $26.28 billion in January.
Not only did that represent an 8.8% annual increase, but it was also the biggest gain in nearly three years.
Independent analysts are expecting yet another good year for the sector.
For instance, Research and Markets forecast an additional 4.4% increase in worldwide sales of semis for 2014.
And I have unwavering belief you will continue to see torrid growth in this sector for years to come.
Here are three big reasons why:
First, of course, there's the impact of the Mobile Wave. Research firm Gartner believes that this year mobile products – including smartphones and tablets – will outsell PCs by a factor of $2.25 billion to $302 million – a whopping 745% margin. And all of these mobile devices are loaded with chips.
Then there's the auto sector. The "connected cars" of today are brimming with advanced sensors, micro-controllers, software, voice-activated GPS, glitzy infotainment systems – and, of course, plenty of semiconductors.
Demand for microchips in the global auto industry is projected to grow from $22.5 billion in 2010 to $46.9 billion in 2015 – meaning it will double in just five years.
And, finally, let's not forget the powerful new kid on the block: wearable tech. We're still in the very early stages of this field, which includes things like smartwatches and devices that monitor your health.
But the online trade journal Electronics360 says wearables have already become a $7 billion industry.
And forecasters at IHS are predicting that wearables will become a $30 billion sector a decade from now.
No wonder one of the biggest barometers of the chip sector, the Philadelphia Semiconductor Index, recently climbed to the 590 level – its highest point in nearly a dozen years.
Of course, semiconductor stocks as a group can be volatile.
Chip makers have to tool up for new products, a process that can take many months and consume hundreds of millions of dollars. So, if they miss a product launch even slightly, the firms can find their stocks hammered.
There is, however, a way to get in on this lucrative sector without exposing yourself to its inherent volatility…
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.