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TSMC, AMD, and NVIDIA propel semiconductor boom in global economy

The semiconductor industry has experienced a dramatic surge in recent years, significantly influencing the S&P 500 index. In 2014, semiconductor companies constituted a modest 2% of the index. By 2024, their weight had surged to approximately 11%, reflecting their growing importance in the global economy.

Taiwan Semiconductor Manufacturing Company (TSMC) has emerged as a pivotal player in the semiconductor industry. As the world’s largest dedicated independent semiconductor foundry, TSMC’s stock has appreciated by 62% year to date. The company is crucial to tech giants such as Apple, AMD, and NVIDIA, serving as a critical supplier in high-demand markets like mobile computing and artificial intelligence.

AMD has also shown impressive growth, with its stock rising by 22% year to date. Under the leadership of CEO Lisa Su, AMD has aggressively expanded into the AI chip market, positioning itself as a key competitor to NVIDIA. Su projects that the data centre AI chips market will reach $400 billion by 2027. Despite often being perceived as the industry’s second-in-command—first to Intel in computer chips, now to NVIDIA in AI chips—AMD is making significant strides in establishing itself as a formidable force.

NVIDIA stands out with its remarkable $3 trillion market cap. With 29,600 employees, NVIDIA has a $102 million market cap per employee, far surpassing industry giants like Apple and Meta, which have $19 million, Microsoft at $14 million, and Alphabet at $12 million per employee.

The wealth generated within NVIDIA is noteworthy, with employees’ net worth ranging from $3 million to $100 million, attributed to the company’s stock awards and the Jensenisation effect, which provides an additional 25% in restricted stock units (RSUs) through the Jensen Special Grant.

NVIDIA’s growth has been phenomenal: a 150% increase year to date, 210% over the past year, and a five-year growth of 3,200%. Analysts predict that NVIDIA’s stock could surge by 258% by 2030, potentially reaching a $10 trillion market cap. Since its IPO on January 22, 1999, at $12 per share, NVIDIA has delivered exponential returns to its investors.

NVIDIA’s success is in its cutting-edge products, particularly its graphics processing units (GPUs). The Hopper and Blackwell series have been pushing the boundaries of computational power, catering to the needs of artificial intelligence and machine learning applications.

The dramatic ascent of semiconductor companies, led by NVIDIA, is reshaping the global economic landscape. Their rapid growth within the S&P 500 highlights their increasing importance and underscores their role as the backbone of modern technology. As these companies continue to innovate and expand, their influence on the global market grows even further, solidifying their position as crucial technological advancement and economic growth drivers. CNBCTV18

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