Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Are Apple, Tesla, and Bitcoin Entering Market Technical Excess Top Phase? - 18th May 21
Gold Watch Out as Price May Be Staging New Momentum Base In Preparation For A Big Move Upwards - 18th May 21
Why the Demand for US Real Estate Licenses May Soon Fall into a Sinkhole - 18th May 21
Semiconductor Equipment Maker ASML Is at the Center of the Global Chip Shortage - 18th May 21
Could This Be The Hottest Investment Sector For 2021? - 18th May 21
TESLA Tech Stock Bubble BURSTS! Stock Price Heading for CRASH to below $400 - 18th May 21
The Most Exciting Biotech Stock Of The Year? - 17th May 21
Gold Mining Stocks Fundamentals - 17th May 21
Junior Gold Miners Should be Rallying – What’s Holding Them Back? - 17th May 21
Stock Market - Should You Be In Cash Right Now? - 17th May 21
Learning the Financial Markets - 17th May 21
Is Stock Market Selling Madness About Over? - 16th May 21
Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
Budgies Birds of Paradise Indoor Grape Vine Singing, Chirping and Flying Parakeets Fun 3D VR180 UK - 16th May 21
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? - 16th May 21
Inflation Going Stag - 16th May 21
CHIA Coins After 1st Week of Plotting 140 Plot 14tb Farm. Crunching the Numbers How to Win - 15th May 21
Tips to Create the Best Cross-Functional Teams - 15th May 21
Gold: Lose a Battle to Win the War - 14th May 21
Are You Invested in America’s “Two-Hour Boom” Fast Shipping Stocks? - 14th May 21
Gold to Benefit from Mounting US Debt Pile - 14th May 21
6 Solid Signs You Should Have Your Smart Device Repaired Right Away - 14th May 21
Ways to Finance Your Business Growth - 14th May 21
Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
How Much CHIA Coins Profit from 100 Plot 10tb Farm? Hard Drive Space Mining - 13th May 21
Stock Market Bulls Getting Caught in the Whirlwind - 13th May 21
Legoland Windsor Mini land and Sky Train Virtual Tour in VR 360 - UK London Holidays 2021 - 13th May 21
Peak Growth and Inflation - 13th May 21
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic - 13th May 21
Coronavius Covid-19 in Italy in August 2019! - 13th May 21
India Covid Apocalypse Heralds Catastrophe for Pakistan and Bangladesh - 13th May 21
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Single Best Investment for the Semiconductor Tek Stock Boom

Companies / Tech Stocks Aug 15, 2014 - 08:30 PM GMT

By: Money_Morning


Michael A. Robinson writes: At first glance two of the major trends reshaping the semiconductor industry seem like polar opposites....

On the one hand, the industry is in the midst of a major boom. On the other, it's also contracting.

For tech investors these conflicting indicators raise two questions:

First, how is this contradiction possible?

Second, and more to the point, how can we make money from it?

After looking at the trends, I've come up with a plan for us to outperform the market over the long term with one easy investment...

Here's What's Driving This $30 Billion Industry

Turns out, the industry's boom is being driven by several expansions happening concurrently. We're talking growth in mobile, tablets, game consoles, and the broadband gear needed for e-commerce and online video streaming.

These drivers have had a substantial impact on semiconductor sales...

In fact, the Semiconductor Industry Association (SIA) recently announced that global sales reached $26.86 billion for the month of May. Not only is that figure impressive in its own right, it also represents fantastic industry-wide growth.

Moreover, it shows that global semiconductor sales have grown 8.8% year over year for the month of May, and 2% from the prior month. Research and Markets forecasts an additional 4.4% increase in worldwide chip sales for 2014.

And yet... the industry is consolidating. By that I mean we're seeing a major wave of mergers and acquisitions throughout the field.

Truth is, over the last several months chip firms have been on the prowl for mergers and acquisitions that add market share, sales, profits, and new patents to strengthen their current standing in the sector.

No doubt, these M&As had their original catalyst in an sector-wide slowdown in 2011 and 2012. These two lean years showed the industry had excess capacity.

But all the while, another catalyst was gathering force...

An ETF Capitalizing on a Seismic Industry Shift

I am referring to the rise of fabless semiconductor firms. These companies specifically focus on the design aspect, contracting out the actual production element of their operations. It gives them higher margins, which investors love to see.

And there was one more key event that helped lay the groundwork for the current wave of M&As.

Three years ago, Micron Technology Inc. (Nasdaq: MU) had nowhere near as much clout with investors as it does today. Now it is a clear leader in computer memory products.

It's also proved to be a very savvy acquirer. In many ways, Micron has really written the M&A playbook for chipmakers.

Last year, Micron bought Elpida Inc., a well-known supplier to Apple Inc. (Nasdaq: AAPL).

At the time, Micron's financials were a bit of a mess - it had reported losses in five of its ten fiscal years. Now, the company is in excellent financial shape.

Other major chipmakers followed suit, sparking a flurry of merger activity that continues to change the semiconductor landscape...

Last year, analog chip leader Avago Technologies Ltd. (Nasdaq: AVGO) announced a $6.6 billion deal to buy LSI Corp., a provider of memory products. The deal closed back in May.

Earlier this year, TriQuint Semiconductor Inc. (Nasdaq: TQNT), a company focused on radio frequency and microelectromechanical systems (MEMS) agreed to merge with RF Micro Devices Inc. (Nasdaq: RFMD). RF Micro is a manufacturer of high performance radio frequency systems, and the deal was valued at $1.6 billion.

And in June, Analog Devices, Inc. (NasdaqGS: ADI), which specializes in data conversion and signal conditioning, announced its plan to buy Hittite Microwave Corp. (Nasdaq: HITT), a fabless chip designer.

This is a trend that is likely to hand windfall profits to savvy tech investors. And I have a play in mind that provides plenty of upside while still reducing the risk inherent in focusing on a single stock in such a broad sector...

The investment is SPDR S&P Semiconductor ETF (NYSE: XSD). The fund is a leading semi ETF holding a broad range of chipmakers. With this one play, we invest in roughly 50 firms covering nearly every conceivable aspect of the chip industry.

This ETF has beaten the DJIA by 266%.

And in terms of M&As, the best part is XSD owns both potential buyers and sellers. For example, it owns Micron, RF Micro, and TriQuint.

Another noteworthy holding is Intel Corp. (Nasdaq: INTC). The chip giant has remained at the industry's leading edge for decades. Armed with a new CEO and new products for mobile and wearable tech, the stock has entered into a strong uptrend.

XSD also holds Avago Technologies. Avago has made two major acquisitions in the last year. Most recently, it agreed to buy Silicon Valley-based chipmaker PLX Technology, Inc. (Nasdaq: PLXT) for roughly $309 million.

Meantime, Skyworks Solutions Inc. (Nasdaq: SWKS) ranks as a force in the mobile and broadband markets and is another top company held by XSD. With this stock, XSD is also investing in a number of end markets that cover everything from defense to medical to automotive.

XSD holding Rambus Inc. (Nasdaq: RMBS) is developing next generation chips for smartphones and tablets. It also makes semiconductors for security and lighting systems.

The fact is, chips are at the heart of high tech. From smartphones and PCs to our WiFi routers and GPS in our cars to LED lights in our homes, semiconductors make it all possible

XSD is a great way to take advantage of the semiconductor industry's growth and its unique position in the global tech ecosystem.

And over the past year, XSD's performance reflects the sector's unique vantage point. Simply stated, this ETF has just crushed the broader markets.

Consider that over the past year, XSD has gained nearly 28%. That's roughly double the S&P 500's returns over the same period.

XSD is an excellent way to invest in exciting new technology and the M&A boom - all with a vehicle that delivers market-beating gains.

This is an investment that will help you lower risk while building your net worth over the long haul.

Source :

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in