The Rise of Silicon 2.0: Investing in the Next Generation of Semiconductor Tech
Below you’ll find an excerpt from the January issue of The George Gilder Report which features a portfolio recommendation that you simply won’t want to miss…
Back when the computer was primarily a logic machine, silicon circuits dominated. With good reason…
Silicon switches work well at low power. That allows us to cram many-fold more switches onto a single chip compared to other switches that require greater force.
So, with silicon we can do more logic in a smaller space and adhere to the prime directive of the computer age: Stay on the chip until the job is done. And silicon can do this as long as we are not asking to manipulate anything more challenging than a symbol. A zero or a one digit “bit” weighs nothing in our minds; in the machine it weighs hardly more.
To move a logic switch from on to off requires mere nano-watts of power. But today’s computers are asked to do more than manipulate symbols. Nowadays we increasingly require computers to act directly upon the physical world: to sense, see, hear, and smell the world — even to trigger physical events in the world.
The internet of things (IoT), the autonomous automobile, the growing complexity of the electrical grid itself — all demand computers to act directly upon the physical world. And most of these uses demand more switching speed, more power, and more durability than silicon can readily provide.
5G technology in particular will test the limitations of silicon. Consider that the old- fashioned AM radio waves, for instance, operated at frequencies between roughly 500 and 1600 kHz, cycling between peak and trough some 500,000 to 1.6 million times per second.
That little FM “transistor radio” we carried around as teens operated at 88 to 108 megahertz (mega = million cycles per second). And 4G frequencies range between 700 MHz and 2300 mHz, 2.3 billion cycles per second. Comparatively, 5G will use some parts of the 4G spectrum, down to 600 MHz and ranging up to 6 GHz (giga=billion). It then jumps up to the millimeter wave bands, 24-86 GHz, or roughly 50,000 times as fast as an AM radio.
Silicon isn’t well equipped to handle the frequencies or the power required at the high frequencies.
Indeed, we are now reaching the limits of what silicon can achieve out in the physical world. That’s where this month’s recommendation comes in…
So, what can replace silicon as technology continues to advance?
The leading candidates to go where silicon cannot are silicon carbide (SiC) and gallium nitride (GaN), which are sometimes combined in the same device.
That’s exactly why the leading integrated device manufacturer for both materials is our portfolio company of the month…
Is the stock a buy? We think that’s a definite yes, and not just because of a potential takeover — though that would be sweet!
The company’s stock has been volatile over the years. It seems to have been viewed alternately by investors as a solid — but niche — manufacturer or the “next big thing.” During the next big thing period, the stock soared.
Then as it quietly resumed growing its niche businesses, the stock consolidated into a long slow upward trend.
With the convergence of 5G, electric vehicles, IoT, and a growing consensus that America’s power grid needs a generational upgrade — we think the stock finally deserves “next big thing” status.
We view its billion-dollar investment to meet a projected a 30-fold increase in demand, as an investment in learning curve effects that are likely to enrich the company and its stockholders for years to come.
The real question is are you going to reap the benefits as well?
Editor, Gilder’s Daily Prophecy