If you follow the chip sector, you might be confused.
Check out what's happened in just the past month...
On Nov. 3, we learned that Marvell Technology Group Ltd. (Nasdaq: MRVL) is in talks to buy Cavium Inc. (Nasdaq: CAVM). The pact would create a chip firm worth some $14 billion, but the deal is yet to be consummated.
But that was small potatoes compared to what came next.
On Nov. 13, Qualcomm Inc. (Nasdaq: QCOM) rejected a $105 billion buyout offer from Broadcom Ltd. (Nasdaq: AVGO) - what would have been the biggest tech buyout in history. As a leading supplier of mobile-chip technology, Qualcomm says it's better off operating on its own rather than merging with Broadcom.
And all that comes after Qualcomm offered $39 billion to buy NXP Semiconductors NV (Nasdaq: NXPI). At the time, that was the record amount for a chip sector takeover.
Moreover, Wall Street analysts seem to be constantly putting the semiconductor sector on "watch" - saying the current chip surge is about to run out... today... tomorrow... next week.
But they're always wrong.
If you're not sure where you should be putting your money after mixed messages like that, I understand. Like I said, it gets confusing.
However, you do want some money in semiconductors.
See, the chip industry is consolidating not out of weakness, but strength.
A recent report by industry trade group SEMI forecasts that silicon shipments will hit 11.49 billion square inches this year, 11.8 billion next year, and 12.24 billion in 2019. Total shipments of "wafers" - the format silicon is produced in - for this year will break the record set back in 2016. And shipments will continue at record levels for each of the next two years.
And that's just one robust forecast - I'll show you a couple more below.
Still, if you're not up for picking and choosing among the acquirers and acquireds, there is a way to make money off the on again/off again Qualcomm-Broadcom merger, the Marvell-Cavium lockup, and just about any other chip-sector M&A that comes along.
It's a wallet-expanding way to profit from the chip sector's ascendance and merger mania in a way that is crushing the market by nearly threefold...
My Only Prediction Is Profits
Let's be clear about one thing. Broadcom said it would like to proceed with the takeover even if that Qualcomm-NXP deal falls through - and even if Qualcomm keeps declining its advances. That means pulling off this merger will require more money. It's a hurdle but not an impossibility.
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That brings up a second challenge - federal regulatory concerns. The sheer size of the deal will likely lead to government officials taking a close look at it - and maybe even attempting to block it.
After the U.S. Department of Justice sued to block the $85.4 billion bid from AT&T Inc. (NYSE: T) for TimeWarner Inc. (NYSE: TWX) a couple of weeks back, it's clear that the Trump administration is watching corporate consolidation closely.
At this point, that outcome is impossible to predict.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.