Quantum Wealth Summary
- The Covid pandemic and Chinese tensions are disrupting the microchip industry.
- This is having a domino effect on global supply chains, which is predicted to last until 2023.
- Could investors position themselves to benefit from this speed bump?
- We do a deep dive into 2 different companies offering exposure to semiconductor manufacturing.
Cars. Planes. Televisions. Computers. Smartphones.
What do they all have in common?
Well, semiconductors. Or to use a simpler term: microchips.
Generally speaking, they can be divided into two kinds:
- Logic chips — they act as the ‘brains’, performing calculations at warp speed and processing streams of data.
- Memory chips — they act as the ‘libraries’, storing data for instant retention and retrieval.
Source: Review Journal
Microchips are pretty much everywhere these days. They are omnipresent. And we’re so dependent on them that we take them for granted. But watch out: our daily lives would run into some serious trouble if they ever stopped working.
For example, can you imagine not being able to drive your car? What if you couldn’t visit the hospital and receive treatment? And what if your utility company had trouble delivering electricity and gas to your home?
Certainly, these post-apocalyptic scenarios feel frightening. They are the nightmares that doomsday preppers and survivalists regularly dream about. You can see this in novels, video games, and movies. They are filled with dramatic narratives that depict what the end of civilisation might look like.
Stephen King, the great American storyteller, was once asked why he wrote horror. To which he replied: ‘Why do you assume I have a choice?’
Uh-huh. He hits the nail on the head perfectly, doesn’t he?
As a society, we are predisposed to horrible news — even if history has shown us that our feelings about existential crises have never really prevailed in the long-run.
Here’s a case in point. Right now, throughout the world, we’re experiencing a major shortage of microchips. The Covid pandemic has led to supply-chain disruption. And rising tensions with China have also amped up the problem.
What this means is that we could experience a chip shortage until 2023. It’s the reason you’re finding it hard to get hold of a new PlayStation or Xbox for Christmas, for instance.
Of course, here at Quantum Wealth Report, we don’t believe that civilisation is in imminent danger of falling over. In fact, humanity as a whole is far more resilient and innovative than we tend to give it credit for.
We actually see this microchip shortage as a production problem, not an existential one. It’s a speed bump. A temporary inconvenience. And even as we speak, countries are investing hundreds of billions of dollars to get supply chains back on track.
So, given the circumstances, we want to explore how investors could position themselves to potentially benefit. In the words of the US Marines: ‘Adapt, Improvise, and Overcome.’
Therefore, in our opinion, here are 2 companies worth taking a closer look at…