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Semiconductor companies love it Nivea And other technologists say Moore’s Law is dead — a prediction originally made 60 years ago that the number of transistors on a chip would double every 18 months and double in two years. Basically, the computer technology industry has been using fast, consistent computing power for the same or lower cost for decades.
This effect has been Rejected For technology and the general economy. However, if Moore’s Law is coming to an end, semiconductors may begin to be. Inflation For the global economy.
If this happens, new investment rules for tech investors could be in place. If inflation really starts to hit chip stocks, a metals and minerals exchange-traded fund (ETF) could be an amazing way to invest in the tech world’s continued growth. That’s an ETF. iShares MSCI Global Metals & Mining Producers ETF (Choose 4.63%).
Amazing! Computers may be changing inflation.
For decades, computers have been largely rejected. Not only have technology hardware decreased in absolute value (personal computers cost several thousand dollars 40 years ago), but they have also increased exponentially in what they can do at once. This has helped many businesses save on costs, or at least be more efficient with computer technology so they can invest the cost savings elsewhere.
However, the end of Moore’s Law could be a game changer. Transistors are being built only a couple of nanometers in size, which means physics will quickly become limiting to making them even smaller (individual atoms are a few tenths of a nanometer in size).
Certainly, computing power will continue to advance for decades to come. But software development itself may be the source of this increase in computing efficiency. And other hardware-related solutions can actually be inflationary.
For example, there is quantum computing, but that is still years away from being commercially viable (and quantum computers are huge and very complex to build). Using new materials instead of silicon as the main ingredient to build chips will help increase performance.
But silicon is abundant and relatively cheap. Other materials (such as gallium arsenide or silicon carbide, to name two) are less expensive. In addition to driving computer innovations with the power of individual chips, entire chip systems can also be built. But more and larger chips (which means more raw materials are used) tend to be more expensive.
The semiconductor industry itself can be a good indicator of this. In the year Global chip sales are expected to reach $600 billion in 2030, up from $1 trillion in 2022.
Mineral deposits enter the left level
In short, computer technology may begin to require a lot more raw materials to sustain computing growth in the coming decades. An increase in demand can mean a gradual increase in prices, a big boost for mining companies.
But investing in individual mining stocks can be difficult. This is a highly regulated industry, and international competition is fierce. Small changes in supply and demand can dramatically change the price of metals and commodities, causing the fortunes of many companies to rise or fall rapidly.
That’s where the iShares MSCI Global Select Metals & Mining Producers ETF can have a place in a tech portfolio. The fund is one of the largest in the ETF world to invest in mining companies. ETFs offer some of the largest and most well-organized market leaders, such as Australia BHP Group (BHP 3.04%) And Rio Tinto (RI 3.95%)of Brazil Vale (Vale 2.74%)And Freeport-McMorran (FCX 4.91%) Here in the US, these top stocks make up the bulk of the fund’s investments.
However, the ETF is also invested in many smaller companies with a more narrow focus on metals and materials used in chips. For example, a small copper producer The first quantum minerals (FQVLF -0.73%)High platinum producer Impala Platinum (IMPUY 8.85%)And initially the lithium company Lithium America (LAC 5.43%) They are also top holdings.
Overall, the iShares MSCI Global Select Materials & Mining ETF has 252 stocks and charges 0.39% annually (or $3.90 deducted from fund performance for every $1,000 invested). The most recent annualized return on the fund’s portfolio over the past 12 months was 9.8 percent.
Semiconductors are not just an end market for metals and mining companies. However, many other related technologies these days can cause price increases in basic mineral products. For example, electric vehicles have sent lithium prices through the roof in recent years. Renewable energy development is also a consumer of raw materials and metals, especially new energy storage and transmission ways are being built.
To be fair, some commodity prices have been recovering from record highs in recent months. Supply chains aimed at reducing sky-high inflation and aggressive interest rate hikes by the US Federal Reserve are causing problems for the mining stock party.
Data by YCharts.
But Moore’s Law may only contribute to inflation by the end of this decade as the world invests in new infrastructure to support technological change. Picking individual mining stocks is difficult, but an investor can gain instant exposure to the industry through the iShares MSCI Global Select Metals & Mining Producers ETF. These basic materials producer stocks can be volatile, but they can be a great hedge if inflation is part of the tech sector’s equity.
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