How to cash in your chips

Semiconductors are a modern marvel that has transformed our lives - and investors are enjoying the financial benefits

- Max Riaz

We often consider fossil fuels, sunshine, clean water and air as the basic necessities of life. We know that we cannot exist without these basic resources. But there is a fifth resource without which our modern life will simply grind to a halt.

Astoundingly, this resource is controlled by a handful of global companies, and even more astonishing is the fact that there is only one company in the world that can produce a critical part of this resource.

What is this resource? It is semiconductors or chips.

At the core of almost every electronic device is either a memory chip or logic chip, or both. I am going to refer to these two, collectively, as chips. They are in your smartphones, computers, the infrastructure that runs the internet, military and medical equipment, cars, aeroplanes, industrial plants and machines, consumer electronics … the list goes on and on.

Basically, any device that has electricity running through it is likely to have a chip installed in it. Chips run our modern lives.

Next, let’s turn our attention to how chips are made. This knowledge is important as it will help you appreciate how incredibly complex the process is to design and manufacture chips – you can’t just set up a plant and start producing.

A chip is a set of electronic circuits etched on a small, flat piece of usually rectangular silicon sheet. This silicon-based chip is usually the size of a fingernail.