Dear fellow investor, I want you to imagine a dire circumstance with me for a moment. Economic activity around the world grinds to an immediate halt. Worldwide production of everything from smartphones… to computers… to TVs… to the servers inside data centers… to medical devices… to automobiles plummets, or even stops completely for an indeterminate period of time. Any software systems even remotely relying on that hardware are also disrupted. All in all, trillions of dollars’ worth of economic value are wiped out, as lights — yes, them too — quite literally go out around the world. The scenario I’m raising isn’t the fallout from WWIII or a nuclear winter. It’s not some post-apocalyptic situation out of Mad Max or The Terminator. There isn’t any violence whatsoever. No, what I just described is the very realistic outcome if ONLY the No. 1 global manufacturer of the single most valuable technology in the world were to disappear from the face of the earth. It’s not the smartphone in your pocket or the autonomous electric vehicle you may hope to have in your garage one day. Nor is it some humanoid AI program… or one of Elon Musk’s new spaceships bent on taking us to Mars. And no, it’s not the countless servers packed to the brim inside warehouses enabling the nebulous “cloud computing” network that connects our iGizmos around the world. Fact is, without this tiny device all those shining examples of human invention would be rendered utterly useless in the span of a heartbeat. Empty vessels of wires, plastic, glass, and metal. So, what is it? First, do me a quick favor. Hold up your hand in a “thumbs up” gesture… And realize that likely the most important piece of technology mankind has ever created is the size of your thumbnail.

You’ve heard the name of this all-important piece of technology before… This is a semiconductor.

And in my opinion, it’s the single most important sector on the face of the earth today.

No need to take my word for it though. Experts agree we haven’t seen this kind of reliance on single factor of our economy since we first tapped oil. A securities analyst at Bank of America calls semiconductors “the new oil of a rapidly digitizing global economy.” Financial Review says, “Semiconductors are to the technological revolution what oil was to the industrial revolution.” And investment management firm Capital Group adds: It’s also why semiconductors are far and away my single highest-conviction investment opportunity for the coming decade. But before we proceed, let’s back up for a minute and shed some light on an important question we’ll need to answer. “What exactly IS a semiconductor?” When you look at something technologically advanced like a semiconductor, you may be surprised to discover the tasks they perform are actually astoundingly simple. They’re made up of numerous “transistors” that basically function as a kind of binary On-Off switch. They’re either “On” and passing electrical currents, which is represented as the number One. Or they’re turned “Off” and aren’t passing electrical current, which is represented by a Zero. On the face of it, it’s about as simple as it gets. The magic happens once you get a lot of transistors working together, allowing the semiconductor as a whole to perform some technological marvels. How advanced can we get? By the turn of the century, semiconductors were complex enough that transistors measured about 500 microns across. This infinitesimal scale meant single semiconductors functioning as smart chips to power devices like computers could fit hundreds of millions… even billions of transistors on a single chip. Which sounds mindboggling until I reveal that today’s semiconductors two decades later are now so complex that the transistors inside them are separated by a gap smaller than a single strand of human DNA! Nowadays, a chip the size of your thumbnail can pack a staggering 50 billion transistors. Yes, that’s more than SIX times the population of planet Earth right now.

We are literally pushing the physical limits of the known universe in our quest for ever-increasing computing power.

And remember, each one of those 50 billion transistors effectively serves as an On-Off switch, telling the overarching semiconductor what to do. So when we’re talking about the total number of functions a single one of these thumbnail-sized chips can perform, you’d ultimately get… A number so astronomically high it won’t make a whole lot of sense on your calculator. So, yes, these semiconductors are incredibly advanced. Despite being perhaps the single great technological achievement on planet Earth, you’ve been hearing about semiconductors forever. The first observed instance of a semiconductor in action was all the way back in 1821. And the industry itself has been around since the 1960s. Which raises a fair question… What makes the industry any more exciting right now compared to the past six decades? First off, you have to understand that the industry has gone through a series of eras. In the beginning, they were primarily used for old-school computers. Think of those clunky old desktops that used to line offices in the 1980s.

Then came the dawn of the internet age in the 1990s, which brought new opportunities via data centers.

Of course, the internet was expanded even further by the rise of mobile devices, especially after the initial iPhone was released in 2007.

And nowadays technology is growing faster than ever before. I’m sure you can feel it all around you. Artificial intelligence. Augmented reality. Virtual reality. The so-called “Internet of Things.” 5G. Electrification and self-driving cars. Whatever the heck the Metaverse is. The list goes on and on.

And literally ALL of them are entirely dependent upon semiconductors to power their technology.

As Forbes puts it… As you can imagine, not only does this require an increasing number of chips… But they’re also far more complex. And by extension, yep, you guessed it… Expensive. Back in 2002, a new manufacturing facility cost about US$2 billion to build. At the time, there were roughly 25 companies in the world capable of spending that kind of money in order to produce the most technologically advanced smart chips of the day. And while that’s wonderful for consumers, it doesn’t make for much of an investment opportunity. Just think about it… When you have a couple dozen companies all doing the same thing, what do you have? A commodity. Going back to our oil metaphor from earlier, when you drive down the street you don’t really care whether you’re stopping at Exxon… Shell… BP… Chevron… Conoco… or wherever. The prices in any region are always within a few cents of each other, and the product is almost exactly the same. But as the digitization of the economy has exploded over the past twenty years, fewer and fewer companies have been able to keep up with the sky-high costs to build these increasingly complex and expensive semiconductors. Instead of US$2 billion for a manufacturing facility, nowadays we’re looking at more like US$20 billion. 10X the price! (I know inflation’s been high, but it hasn’t been that high.) Here’s how that Forbes article from earlier explains it: Remember how I said that in 2002 roughly 25 companies were actually capable of producing the most sophisticated smart chips of the day. A mere two decades later? There are three.

And only two of them are currently taking orders!

So instead of a commodity, investors these days are instead looking at a classic Coke and Pepsi situation.

For my money, if you’re an investor that’s an ideal investing situation. Particularly if you can get in early. And as Forbes ultimately concludes… That said, when only a precious few companies can even manufacture these highly advanced chips in the first place, even the slightest blip in the supply chain can leave a big mark. And the pandemic was no slight blip. As you’re perhaps aware, no industry has been hit harder by the pandemic’s supply chain shortages than the semiconductor industry. You’ve probably heard about how new cars were on massive backorder, sending both used and rental car prices skyrocketing. That’s just one small and highly visible outcome from the chip shortages. Of course, we’ve all felt the impacts of the supply chain squeeze one way or the other. And you know who else has felt it? Semiconductor stocks themselves!

Companies up and down the production pipeline got hammered as a result.

Just look at Nvidia, a leading graphics chip distributor which has been an incredibly successful U.S. recommendation for us here at The Motley Fool. Down 50% in 2022 alone.

Chart refers to U.S. market.

Or their arch-rival AMD, down 55%.

Chart refers to U.S. market.

Taiwan Semiconductor is the leading semiconductor manufacturer on the face of the earth, producing a staggering 90% of today’s most advanced chips. It’s also one of the two companies I consider “the most important on the planet.” Well, the company’s stock was “only” down 38% on the year.

Chart refers to U.S. market.

How about ASML, which is the only company on the face of the earth today with the proprietary technology to develop the machines that make manufacturing today’s most advanced smart chips possible in the first place. They’re my other most important company on the planet along with Taiwan Semiconductor, yet that company was down 31%.

Chart refers to U.S. market.

Idaho-based Micron Technology is a well-known name in the smart chip space, particularly focused on memory chips. Down 46% in 2022.

Chart refers to U.S. market.

Lam Research, whose products are primarily used in front-end wafer processing? Down 41%.

Chart refers to U.S. market.

And Applied Materials, another company that supplies the actual equipment used in the semiconductor fabrication process lost 38%.

Chart refers to U.S. market.

The list goes on and on. I’m sure it’s jarring seeing all those 30%+ haircuts in a single year. Not much of a selling pitch, huh? You’re probably wondering, “Why is this guy so fired up about a sector that got downright hammered in 2022?” Here’s why.

Because when we zoom out and look at the industry over the past 10 years — as we’re wont to do, being long-term investors here at the Fool — things get a lot more intriguing.

How about Nvidia +6,109%, 62X your money over the past decade?

Chart refers to U.S. market.

AMD? +2,556% for 26X your investment.

Chart refers to U.S. market.

Taiwan Semiconductor is “only” up 432%, but I think any of us would take a 5X return in just 10 years.

Chart refers to U.S. market.

ASML is up 804% for an impressive 9X return.

Chart refers to U.S. market.

Micron Technology is up 678%, for an almost 8X return.

Chart refers to U.S. market.

Lam Research is up 11X at 1,065%.

Chart refers to U.S. market.

And Applied Materials is also up nearly 9X at a 780% return.

Chart refers to U.S. market.

There’s no need to cherry-pick individual companies, either. The Philadelphia Semiconductor Index (^SOX) as a whole is up 601% over the past decade alone!

Chart refers to U.S. market.

And bear in mind that all of those returns would be even higher than what they are now if near-term problems like supply chain issues and inflation weren’t still weighing on their share prices. Plus…

Not only is there a massive long-term track record of success for this sector…

But the sector has been on an absolute tear in recent months!

In fact, since we first alerted members to the generational opportunity we’re seeing in this sector over the next decade just as recently as last fall, the Philadelphia Semiconductor Index has outperformed the broader market by more than 2X, with the U.S. S&P 500 gaining “only” 10.4% compared to the semiconductor sector’s 23.4%. And while these semiconductor stocks are still trading at a dramatic discount to what they were trading a little over a year ago, that upward momentum could be just the beginning. That’s because semiconductor companies are re-investing in their businesses more than ever. CNBC recently ran headline saying, “Chip giants are ramping up spending by the billions as semiconductor demand booms.” Intel announced plans to spend US$20 billion across two new manufacturing plants in Arizona. Samsung, the largest company in South Korea, allocated an astounding 90% of its 2021 capital expenditures toward the semiconductor industry, totaling US$36.09 billion, and just recently another US$15 billion for a 1,000 square-foot facility to lead “advanced research on next generation devices.” And while those numbers may seem astronomical, they pale in comparison to the world’s leading chipmaker… Taiwan Semiconductor — which, if you remember, is among the two companies I personally consider “the most important on planet Earth” — has committed a staggering US$100 billion through 2023 to ramp up semiconductor production. And the investments aren’t slowing down any time soon. Semiconductor industry specialists at research firm Bain expect capital expenditures to double across the industry over the next half-decade. Other experts agree that, even if demand slows in the face of a recession, we could see as much as 100% upside for the sector over the next two years. But with all that investment could we actually be headed for a glut of chips in the future? Don’t count on it. Glenn O’Donnell, research director at analyst firm Forrester, says: And it’s not hard to see why, considering you can find smart chips in everything from Bluetooth headphones to fighter jet missile systems. Washing machines to, yes, even the electric tea kettle you use to heat your water. The average car in your garage? It may hold up to 1,200 different semiconductor chips. That’s just for a normal car, not the electric and autonomous vehicles we’re beginning to produce that look straight out of a science fiction novel. Consulting firm McKinsey estimates the cost of semiconductors in a standard 2030 auto with an electric drivetrain could total roughly US$4,000… For comparison, that’s 8X the US$500 worth of chips currently needed in today’s internal combustion engine vehicles!

Little wonder that McKinsey analysts have taken to referring to the 2020s as “The Semiconductor Decade.”

Or that they project global semiconductor sales to reach a staggering one TRILLION U.S. dollars — yes, trillion with a T — as soon as 2030. To give you a sense of scale, that’s:

4X the size of the global SaaS market

8X the size of the entire artificial intelligence market

16X the value of the global 5G market.

No wonder Capital Group says, “a massive semiconductor spending cycle is coming.” And it’s not just individual companies investing in the semiconductor sector. It’s entire nations. The European Union has a stated goal of doubling their global share of semiconductor production by 2030 in order to become a powerhouse. Last December, India announced a US$10 billion economic package to attract semiconductor manufacturers. South Korea has a US$450 billion spending plan, and just last month it was reported that South Korea-based Samsung is eyeing close to US$200 billion in capital expenditures to be built in Texas. Japan is creating a national project to catch up in China, who’s also made domestic semiconductor production a top priority When it comes to the semiconductor sector, countries don’t view this as simply a matter of revenue and profits.

It’s so vital, it’s a matter of national security.

Case in point, the United States’ National Security Commission for Artificial Intelligence prepared a recent report directly for U.S. President Biden. Included in it was this harrowing warning about China: In response, the U.S. has already blacklisted SMIC, China’s partially state-owned and publicly traded semiconductor manufacturing company. And the Biden Administration announced restrictions on exports of U.S. chip technology to China… Leading to the Chinese government accusing the U.S. of a “technological blockade,” and vowing to ramp up domestic production even more! But that was nothing compared to the drastic recent action the U.S. government took in passing the CHIPS Act, which President Biden formally signed into law on August 9 of last year. The bill appropriates a staggering US$52.7 billion over five years to fund and incentivize semiconductor manufacturing in the United States. For context, that US$52.7 billion investment would be more than the 2021 profits from Motley Fool darlings Tesla, Netflix, Meta, and Shopify. Combined. Despite just recently being passed, The Washington Post writes that, “The Chips Act is already a boon to the U.S.”

But here’s the really intriguing part…

While U.S. President Biden formally signed the Chips Act into law in August of last year… In a more recent statement, unbeknownst to the public, the U.S. Department of Commerce announced that the application process by which certain companies will actually receive these funds, will be opened by early February 2023. In other words, the “moment of truth” is upon us. Loans will be made, and money could start flowing in the near future! As you can imagine, a spending bonanza of this size will have a huge impact. And I expect that once the application process gets underway, the chip stocks that apply and are granted those funds could start moving incredibly quickly.

If there were ever a more obvious short-term catalyst for a specific sector, I’d certainly like to see it.

And if you’re starting to see direct ties to a previous technological sprint between the U.S. and an adversarial foreign superpower, you wouldn’t be alone… Fortune ran an article saying, “Addressing this challenge and strengthening U.S. semiconductor manufacturing and research is the space race of our time.” But unlike back in the 1950s and 60s when national pride was the primary thing on the line, nowadays everyday investors like you and me have the opportunity to walk away with a fortune! Just think about it… How often do you find an investment opportunity that checks this many boxes?

Sustained history of long-term success industrywide, including more than 7X over the past decade alone.

In a sector so vital technology as we know it would cease to exist without it.

Yet the sector as a whole is down roughly 26% since its high just a little over a year ago, due to near-term supply chain shortages.

Meanwhile, geopolitics are inciting both semiconductor companies and entire countries to invest billions in manufacturing and R&D going forward.

Including the US$52.7 billion trump card the U.S. government itself played in the form of the CHIPS Act.

All buoyed by a fast-approaching deadline when we expect to find out precisely how and where those funds are going to be appropriated!

And after learning all of this information, the unparalleled investment opportunity here seems so obvious it’s almost a slap in the face. By now, I hope you’re beginning to see why I consider this “My single highest conviction investment opportunity for the next decade.” But the question remains… How exactly do you set yourself up to take advantage?

Introducing… “The Motley Fool’s Top 12 Stocks to Dominate the Semiconductor Decade”!

Some of the Fool’s brightest minds who’ve spent years covering the semiconductor sector and yours truly have put our heads together to bring you this hot-off-the-presses report. Why? Because despite the incredible returns I showed you earlier from the semiconductor sector, in my opinion the opportunity in the industry has NEVER looked remotely as tantalizing as it does now. Remember, this is my single highest-confidence sector on the face of the earth for the coming decade. And it’s trading at an industry-wide discount of 26%? Talk about a straight-up BARGAIN. Now it’s time to position our portfolios to take advantage. Our team firmly believes the stocks inside “The Motley Fool’s Top 12 Stocks to Dominate the Semiconductor Decade” are the 12 U.S.-listed companies best positioned to control the industry in the years ahead. Because while you may think that after today’s presentation you can simply Google “best semiconductor stocks” and just start purchasing whatever comes up in the search results, I have to issue a word of caution. You should know by now that this industry is astoundingly complex. I’ve done my best today to explain it in laymen’s terms, but I think this is about as straightforward and simple of a breakdown as you’ll ever find. Investors going out on their own to invest in semiconductor stocks would need to understand the entire process, from start to finish. That’s where it’s starts getting insanely complicated in a hurry. Wafer fabrication. Photomasking. Ionic implantation. Diffusion. Metal deposition. Those are just a few of the terms commonly associated with the semiconductor manufacturing process. And if you’re legitimately going to go out on your own to invest in the semiconductor space, you’d darn well better understand them on a granular level.

If not, you’re liable to lose your shirt.

My suggestion instead? Just grab your own personal copy of “The Motley Fool’s Top 12 Stocks to Dominate the Semiconductor Decade” while it’s available for the next few days only. Not only are all 12 semiconductor stock picks accompanied by a deep-dive analysis in plain English to make understanding each and every U.S.-listed company as quick and easy as possible… … But we’ve balanced those 12 picks up and down the semiconductor manufacturing pipeline. From the companies that provide the necessary software and hardware to design the specifications of chips up front… …to the companies that build and sell the proprietary machines that enable the chips to be assembled… …to the companies painstakingly assembling the chips themselves, an incredibly intricate process… …and finally, to the end clients that are actually SELLING various products that now contain these chips! What’s more, you won’t find well-known semiconductor giants like Intel, Samsung, or Micron in here, either.

In fact, I’m certain there are a handful of stocks you’ll discover for the very first time when you grab your personal copy of “The Motley Fool’s Top 12 Stocks to Dominate the Semiconductor Decade.”

Here are just a few examples:

Semiconductor Decade Dominator #1: Gone are the days of a “one size fits all” approach to semiconductor chips, where giants like Intel would develop a new piece of silicon and the world would build their devices according to those specs. To make the intelligent computing future a reality, we need specialized chips optimized for specific tasks.

Enter “Semiconductor Decade Dominator #1,” the go-to provider of software, hardware, and intellectual property that are the building blocks of intelligent electronic product design.

Semiconductor Decade Dominator #2: According to our analysts here at the Fool, this may very well be the single most “mission critical” company you’ve never heard of. Why? This company manufactures products that underpin what could be the next-generation supercycle, including optical communications components, commercial lasers, and 3D-sensing lasers used in consumer-facing devices.

All of which rely heavily on — you guessed it — smart chips in order to operate.

Semiconductor Decade Dominator #3: A leader in etching and deposition equipment for semiconductor manufacturing, literally operating with atomic levels of precision. If that sounds complicated, just know it’s a critical technology with high barriers to entry and no alternative.

Even better, this company currently operates in a global oligopoly — right along with another one of the companies inside our report that you’ve likely never heard of!

But that’s not all you’ll get when you join…

To help you build out a 25-stock portfolio like we always recommend here at The Motley Fool, we’re also including two VIP reports we consider extremely timely right now.

end bodycontent