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Published:22 February 2024 15:26 CET

Analyst:

Stephan Jöhri, CTO, stephan.joehri@adviscent.com, +41 1111111

The semiconductor industry is currently at the forefront of technological innovation, making it an attractive investment opportunity. This white paper outlines the reasons why investing in semiconductor companies is a strategic move right now. Firstly, the demand for semiconductors is growing exponentially. Semiconductors are the backbone of modern electronics, including computers, smartphones, and electric vehicles. As these technologies continue to evolve, the demand for semiconductors will only increase. The global semiconductor market is expected to reach $726 billion by 2027, growing at a CAGR of 4.7% from 2020 to 2027.Secondly, the industry is experiencing a global shortage. The COVID-19 pandemic has disrupted supply chains, causing a significant gap between supply and demand. This shortage has led to increased prices, benefiting semiconductor companies' bottom lines. As companies and governments work to resolve this issue, those who invest now stand to gain.Thirdly, the semiconductor industry is a key player in the ongoing digital transformation. Semiconductors are essential for artificial intelligence, machine learning, and cloud computing. As these technologies become more prevalent, the semiconductor industry will continue to grow.Fourthly, government support is increasing. Recognizing the strategic importance of semiconductors, governments worldwide are investing in the industry. The U.S. government, for example, has proposed a $50 billion investment in semiconductor manufacturing and research.Lastly, the industry is ripe for consolidation. As the cost of developing new chips increases, smaller companies may struggle to compete. This could lead to a wave of mergers and acquisitions, providing investors with potential exit opportunities.In conclusion, the semiconductor industry presents a compelling investment opportunity due to increasing demand, supply shortages, its role in digital transformation, government support, and potential for consolidation. However, like any investment, it carries risks, including market volatility, regulatory changes, and technological disruption. Therefore, potential investors should carefully consider their risk tolerance and investment objectives before investing in semiconductor companies.

Semi Conductor usage

Source: Source: BB

Nvidia's stellar performance over the last 12 months can be attributed to several key factors. Firstly, the global pandemic has led to an increased demand for technology, particularly in the areas of remote work, online education, and digital entertainment. Nvidia, as a leading player in the tech industry, has been well-positioned to capitalize on this trend.Secondly, Nvidia's strategic focus on high-growth areas such as Artificial Intelligence (AI), data centers, and gaming has paid off. The company's GPUs are not only used in gaming but also in AI applications and data centers, which have seen a surge in demand due to the increased need for data processing and storage in the digital age. Nvidia's data center business, in particular, has been a significant growth driver, with revenues surpassing the gaming segment for the first time in Q2 2020.Thirdly, Nvidia's successful product launches, such as the Ampere architecture GPUs, have also contributed to its strong performance. These products have been well-received by the market, further strengthening Nvidia's competitive position.Lastly, Nvidia's proposed acquisition of Arm Holdings, a leading semiconductor IP company, has been viewed positively by the market. This acquisition, if completed, would significantly enhance Nvidia's capabilities in the semiconductor space, opening up new growth opportunities.In conclusion, Nvidia's stellar performance over the last 12 months can be attributed to the increased demand for technology due to the pandemic, strategic focus on high-growth areas, successful product launches, and the proposed acquisition of Arm Holdings. These factors have collectively enabled Nvidia to deliver strong financial performance and create significant shareholder value.

Analyst:

Stephan Analyst, Analyst, stephan.joehri2@adviscent.com, 07633115

Recommended instruments

Name	ISIN	Sector	Market Cap (m)	Rating	Sustainability Rating
NameTexas Instruments	ISINUS8825081040	SectorInformation Technology	Market Cap (m)150,492	RatingHold	Sustainability Rating-
NameQualcomm	ISINUS7475251036	SectorInformation Technology	Market Cap (m)167,966	RatingBuy	Sustainability Rating-
NameNVIDIA Corporation	ISINUS67066G1040	SectorInformation Technology	Market Cap (m)416,724	RatingStrong Buy	Sustainability Rating1
NameMicron Technology, Inc.	ISINUS5951121038	SectorInformation Technology	Market Cap (m)66,498	RatingBuy	Sustainability Rating-
NameIntel	ISINUS4581401001	SectorInformation Technology	Market Cap (m)152,111	RatingBuy	Sustainability Rating3

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* Positive performance in the past is no guarantee of positive performance in the future. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate movements cannot be ruled out.

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Essential sources of information

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Cycling high