Not another bubble: How semiconductors are powering a real future

Semiconductors sit behind almost every modern experience – from smartphones and cars to cloud computing and today’s AI tools – yet they remain largely invisible to most people. They are more than chips only, and the demand is being supported by several long-term forces. We believe that today’s semiconductor excitement is not a repeat of the dot-com bubble, as investment is tied to real infrastructure and revenue-generating services. And the opportunity is broader than a handful of headline AI names.

Key points:

• The market opportunity is large and expanding. The industry is projected to grow strongly through 2030.
• Unlike the dot.com bubble, this semi-conductor cycle has more tangible foundations than past technology manias. Spending is tied to physical infrastructure and monetisable services, not just hype.
• Semi cycles and sub-sectors differ and don’t move together. An active, global value-chain approach is better positioned to capture broader opportunities than a couple of headline AI or semiconductor names.

A typical day now runs on semiconductors.

You wake up, check your phone, and the screen adjusts brightness automatically. You commute in a car filled with electronics that manage safety, power and navigation. At work, you open documents stored in the cloud. At night, you stream, game, or ask an artificial intelligence (AI) tool to help you learn something new.

Most of this feels like “apps” and “software.” But under the surface, it’s driven by an industrial-scale ecosystem that designs, builds and tests the electronic components that make the digital world function. That ecosystem is the global semiconductor industry.

Semiconductors isn’t one product – it’s a whole ecosystem

“Semiconductors” don’t just mean one kind of chip. It includes different device types, each doing a different job:

• Logic: the “brain” that runs calculations such as central processing units (CPUs) and graphic processing units (GPUs) used in phones, personal computers (PCs), and data centres
• Memory: the “storage” and working space that keeps data available
• Analog / power: the “electricity manager” that manages power and signals which are important for electric vehicles (EVs) and renewable energy
• Sensors: the “five senses” that measure light, motion, temperature used in cars, industrial systems and consumer devices
• Opto / lasers: convert electricity to light or detect it, used in face recognition, security and optical communication

But the industry is also the supply chain that makes these devices possible – spanning design, raw materials, wafers, photomasks, manufacturing equipment, production, and back-end inspection, testing and packaging.

In other words, semiconductors are the backstage crew behind model life. The sector can mean a much wider set of businesses than just the most talked-about chip brands.

Why demand can be durable: three forces pulling in the same direction

The world is being rebuilt around three forces that reinforce each other.

1. AI and data centres are scaling fast

AI is pushing data centre demand higher – and not only for raw computing, but also for the connectivity that links processors, memory, and networks. Compute capacity is a bottleneck and can be “consumed as soon as it is installed,” which is another way of saying demand is pressing hard on supply.

And the spend is no longer theoretical. The capital expenditure (CapEx) of the major U.S. hyper-scalers is projected to rise from US$77 billion (2020) to US$986 billion (2028E) – a 7.3x increase.

2. The world is electrifying

From electric vehicles (EVs), charging to renewables to modern data centres, energy is increasingly a constraint. That puts a spotlight on power efficient chips – exactly the kind of challenge that power-related semiconductors help solve.

3. Technology is moving into the physical world

Robotics and automation are long-term themes, including humanoid robots, which require multiple types of semiconductors: sensors to perceive, logic to decide, and power management to operate. All of these are not ‘one-quarter’ trends, they are multi-year shifts.

Spending is real, and when pullbacks create openings

When markets pull back, it’s easy to assume the story is over. But in semiconductors, the long-term story is tied to real budgets and long-lived infrastructure.

The global semiconductor market is projected to reach US$1.6 trillion by 2030, up from US$775 billion in 2024 – at 13% compound annual growth rate (CAGR).

These underline the direction of travel that huge amounts of investments are being committed to build capacity.

And this is where today’s environment starts to look different from the dot-com era.

The semiconductor hype is unlikely to be the dot.com bubble

Don’t bet on one horse – own the track

Parts of the market can get overheated; drawdowns happen. But the direction is hard to ignore: a larger chip market by 2030, accelerating infrastructure spend, a widening set of real-world applications, and tightness in advanced supply.
If AI is a race, semiconductors are the track, the timing system, the stables and the supplies. You don’t need to know exactly which runner wins to believe that the race itself is getting bigger.

Buying a couple of headline AI or semiconductor names may feel simple, but it may also make your portfolio fragile. Semiconductor sub-sectors don’t move together; different parts of the chain may peak at different times. And what’s popular today may not be the leader tomorrow.

That’s exactly why an early pure player, with an active management approach may matter and help:

• spread exposure across the value chain (chips, equipment, connectivity, and selective “AI beneficiaries”);
• balance large established leaders with small-mid under-followed niche players;
• adjust as the cycle and valuations shift across segments;
• build a truly global portfolio across regions and company sizes to capture larger opportunity set as the value chain is global;

For investors, the opportunity may be less about guessing the next headline winner – and more about owning the ecosystem that makes the digital world work.