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Tiny Circuits, Big Profits

An industry downturn may present bargains in the semiconductor equipment space.

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During the last couple of decades, semiconductor devices have come to be an integral part of our lives. From computers and video game consoles to  Apple (AAPL) iPods and cell phones, numerous chips are used to drive the functionality and features that we've come to expect from these electronic gadgets. While we marvel at how integrated circuits have transformed our lives, we often overlook one of the most critical enablers of the digital revolution: the semiconductor fabrication process.

Quick Overview of the Industry
Chip manufacturing is a highly complex endeavor and involves hundreds of steps. Tiny circuits are formed on silicon wafers by various key processes, such as photolithography, etch, and deposition. At the end of the process, during assembly and packaging, each wafer is separated into individual chips and encapsulated into a final, usable form.

Andy Ng does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.