Pensions & Retirement, but there’s more!

Prior to Covid, semiconductors were a relatively unknown industry in the context of everyday conversation. Covid-induced shortages and the knock-on impact that a lack of semiconductors have had in the supply of pretty much everything has shone a bright light on this once under-the-radar industry.

Some of the statistics surrounding the semiconductor industry are absolutely fascinating. For example, a modern chip factory costs $10-20 billion to build and takes 3-4 years to complete. These facilities are equipped with automated systems that allow companies to operate 24 hours a day, 7 days a week, 365 days a year. However, once a facility is up and running, it still takes 3 months on average to make a single chip given that the industry relies on tens of thousands of global suppliers for key inputs.

Billions of dollars in capital investment, high and continuous R&D requirements, almost unfathomable complexity, and we think you would be forgiven for being shocked that the average selling price of a semiconductor is a mere $0.48 (that’s 48 cents, not 48 dollars!).

Semiconductors are essential components in pretty much all electrical goods. These chips may cost next to nothing in isolation, but the absence of a 48 cent piece of silicon means the final product cannot be sold. Semiconductors are a great illustration of a small but incredibly important part of a bigger thing.

Data Source: Bank of America “Semiconductor Primer 2022” & Goodbody Asset Management