This week I listened to the popular tech investor, Dan Niles, discuss his stock investments and the overall tech market in a podcast interview. In the episode, he mentioned something simple, but very insightful about Apple. He said that over the last few years, Apple's margins were positively impacted by the decline in memory chip prices, and now that memory prices have increased, Apple's margins will be negatively impacted.
The connection between memory chip prices and Apple's profitability was obvious when Dan Niles mentioned it, but I did not connect the two prior to hearing his interview. His simple comment reminded me of how important it is for investors to understand how the different parts of the industry they're in interact with each other.
Semiconductor Industry Report
After hearing the interview, I started looking for the semiconductor industry report that I found a few weeks ago, but kept on dragging my feet to read. The report was done by the US Commerce Department in 2023, and it is based on surveys the Department did with companies in the semiconductor industry.
It's a long report (107 pages), but if you're not an expert on the industry, I highly recommend reading it. It provides a bird's eye view of the semiconductor industry, the concerns companies have, the strengths of different countries, company expense structures, market statistics, and many other gems. I plan on reading this report a few times.
Here is the report with some of my comments.
I hope you're having as much fun as I am becoming an expert on the semiconductor industry.
Stay strong, stay blessed, and God willing, I will see you next week.
The hand of the diligent will rule, while the slothful will be put to forced labor.
Proverbs 12:24 ESV
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