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Technology Stocks : Investing in Exponential Growth

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From: Paul H. Christiansen4/26/2017 4:32:06 PM
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In the Chips: Tech’s Sleeping Giant Becomes a $352 Billion Cash Cow



Semiconductors give self-driving vehicles their brains, help servers crunch data and dictate how fast a smartphone can juggle texting and streaming videos. That has put the unheralded chips business at the front line of Silicon Valley’s biggest battles today.

Semiconductors are in nearly every electronic gadget and home appliance. In 2014, there were 3.8 billion connected “things” world-wide, from televisions to baby monitors to thermostats, according to Gartner Inc., which projects that number will rise to 8.4 billion this year and 20.4 billion by 2020. Analysts estimate revenue from chips will double, if not triple, in the next decade.

“This is just the start,” said Avril Wu, research director at DRAMeXchange.

The annual revenue of the chip business has almost doubled since 2003 to $352 billion, according to IHS Markit—more than twice the output of the U.S. auto-manufacturing industry and more than what Americans spend at fast-food restaurants. A decade of consolidation, plus the steep cost of developing new chips, has discouraged new entrants and allowed a handful of established companies to vacuum up profits.

wsj.com

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