Semiconductors, or chips, should be included in your investment portfolio if you’re serious about growing your wealth over the next decade, says the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The observation from Nigel Green of deVere Group comes against an escalating, trillion-dollar chip battle between geopolitical superpower rivals, the US and China.
It also follows this week the Japanese government overhauling its chip strategy to triple sales of domestically produced semiconductors to over $108 billion by 2030; as France confirms it is to plough $3.1 billion of public money into a factory to make microchips; and as Europe and the United States have both passed so-called Chips Acts.
In addition, chipmaker Nvidia this week briefly broke into the club of companies with a $1 trillion market cap.
The deVere CEO says: “Semiconductors are tiny, but these mighty chips power our world. They are fuelling this current industrial revolution.
“Semiconductors are at the forefront of technological progress. As our reliance on electronic devices continues to grow, the demand for semiconductors is skyrocketing – and will continue to do.
“From smartphones and computers to automobiles and advanced infrastructure, semiconductors are indispensable in powering our daily lives. This ever-increasing demand has created a fiercely competitive market, with companies vying to capture larger market shares and gain technological superiority.”
He continues: “Beyond their technological significance, semiconductors have also become critical strategic assets. They are vital for national security, defense applications, and emerging technologies such as artificial intelligence, 5G, and the Internet of Things (IoT).
“The ability to control semiconductor manufacturing and develop cutting-edge chip designs has become a matter of top level strategic importance for countries and companies alike.”
Against this backdrop, Nigel Green says that investors looking to create and build wealth for the long-term should include exposure to chips in their portfolios.
“Their far-reaching – and growing – impact on our lives makes it a no-brainer for almost everyone to have semiconductors within a well-diversified portfolio.”
However, his bullish approach does come with a warning.
“But, with every boom, there will be winners and losers. A good fund manager will be critical in helping you make informed decisions.”
Seeking advice, it could be reasonably argued, is perhaps particularly important considering that semiconductors have become entangled in geopolitical tensions and economic considerations.
Major powers such as the US and China are engaged in a race for technological supremacy, with semiconductors at the forefront.
Concerns about intellectual property theft, national security risks, and economic dominance through control over semiconductor technology have prompted trade restrictions, export controls, and investment scrutiny, further fuelling the battleground.
“Semiconductors will remain a fiercely contested battleground for market dominance and technological advancements.
“Their strategic importance is what makes them such an attractive, a potentially hugely rewarding, proposition. Savvy investors keen to build wealth over the next decade,” concludes the deVere Group CEO.
