There are somewhere between two and three billion computers in the world right now. And every last one is about to become obsolete. Sorry, but yes, that goes for the computer you're using to read this. It's a fundamental redesign of computing power that has been 50 years in the making.
You could probably manage to hang on to your current computer for a year or two, if you're patient.
But once your friends and neighbors start showing off the incredible
speed and power of their new gadgets, or it turns out that incredible
new software you've been eyeing won't run on your current computer,
well, it's only a matter of time until you'll sign up this
game-changing upgrade.
And consumer upgrades are just the beginning.
I predict this key breakthrough technology will soon have a dramatic
impact on everything from artificial intelligence and robotics to
medical research to aerospace to gaming and beyond.
It's very rare that a new technology truly represents a "sea change"
across so many industries and applications. The last one of this
enormity was the advent of the transistor in the late 1950s - the basis
of modern electronics and undoubtedly the greatest invention of the
20th century.
And when this next breakthrough makes its debut on April 29, 2012, I
believe it will deliver a bonanza payday for two very savvy companies
and their investors.
High Tech is About to Enter a Whole New Dimension
We're still waiting for atomic computing - computing technology in
which devices are made up of just a few molecules - to enter the realm
of possibility. But that's likely a decade or more off.
In the meantime, 3D computing is the breakthrough that will dominate the next decade, taking computing to a level almost unimaginable.
Now, you may already know that America's high-tech economy depends on
devices - called microprocessors - that are about the size and shape of
postage stamps. Ever since their invention, these chips have fueled
huge growth in computing as electronics have gotten ever smaller.
Let me explain the importance of small scale.
It's thanks to the steadily shrinking size of these chips that your
smart phone today packs more punch than the huge computers NASA had
when it put Neil Armstrong on the moon. If they hadn't gotten smaller,
cell phones would still be the size of bricks. And you could forget
about having wireless Internet, built-in video cameras, or music players in your phone.
As it turns out, there's a principle that explains - or really predicts
- this continued exponential growth in semiconductor speed and power.
It's called Moore's Law. A Silicon Valley legend, Gordon Moore predicted that processing power would double roughly every two years.
That doubling has come as engineers kept finding new ways to put more
transistors on a single chip. Transistors are the tiny gizmos that
move and store data. Today, semiconductors now boast more than one
billion transistors - ones so small you can't see them without a
microscope.
And therein lies the problem. Chip makers are simply running out of real estate.
Right now the physical limit of integrated circuits stems from their
basic design. Since they're flat, they only work in two dimensions. And
that's been standing in the way of Moore's prediction. But what if you could stack transistors on top of each other? You would
greatly increase computing capacity. Think of it this way. A file
cabinet holds a lot more information than a single sheet of paper.
As basic as that sounds, engineers have only just now figured out to go 3D and add "drawers" filled with transistors.
And one company is debuting its new chips this summer.
My Short-Term 3D Computing Play
Intel Corp. (NASDAQ:
INTC) is synonymous with the
computer revolution. How fitting then that the company is making what I
believe is the biggest chip design breakthrough in 50 years.
You see, Intel just added "fins," or "pillars," that rise above a
chip's flat surface. These fins allow data to move vertically as well
as horizontally. Multiple fins crisscross the surface like a grid,
boosting performance by 37% right out of the gate.
Not only that, but
Intel's new 3D chips use half as much power, too. This is significant for two reasons.
- First is straight-up marketing. Environmentalists want computer firms to design systems that use less power in a bid to save the planet.
- More importantly, however, is the potential for new sales.
In the past, Intel pushed speed over low-power chips. That's why it
excels in desktops and laptops - where speed is crucial. But it's an
also-ran in mobile phones, where makers are more concerned with heat
and battery life. So, the new design will help grab sales in the mobile
market. And it will push the rest of the chip industry to go 3D.
In electronics, of course, small is beautiful. How small? These days,
computing is all about the nanometer. A nanometer is just another unit
of measurement, like a foot or an inch. But we're talking very small
units, indeed. A human hair is roughly 100,000 nanometers wide. The circuits in
Intel's Tri-Gate chips measure just 22 nanometers across. Per Intel,
that means more than six million of its transistors could be crammed
into the period at the end of this sentence.Yet in just five years, those circuits will be less than half that size.
Intel intends to use its "Tri-Gate" technology across its product
lines. That covers the range from mobile-phone chips to those used in
computer servers that power the Internet and the cloud. And what's
more, by stacking transistors on top of each other, Intel will get
continued increases in processing as its slims the chips down even
further.
No less a luminary than Gordon Moore himself has weighed in on Intel's new design. "For years we have seen limits to how small transistors can get," Moore
said in a statement to the media. "This change in the basic structure
is a truly revolutionary approach." At this point, Intel is the clear leader of the pack in the 3D computing industry. Intel microprocessors using Tri-Gate technology entered into mass
production in the fall of 2011. Yet they will only begin making their
way into the first round of laptop and desktops starting April 29, and
rolling out over the summer, according to the latest reports from CPU
World. From there, I expect 3D computing to explode on the scene.
If you want a short-term play, buy Intel. It's had a nice rebound since
2009 lows, but I expect that, as the first (and, so far, only) company
to come out with 3D processing products this year, the stock is
certain to forge ahead. It'll pay you a nice dividend, currently at
3.0% annualized, while you wait.
Of course, the other players have no intention of letting Intel dominate the market.
My Long-Term 3D Computing Play
Nobody thinks of this company as a growth play. Besides being one of
the largest publicly traded tech firms in the world, it's a century
old. But when it comes to 3D computing, it is about to spark a revolution. Indeed, while Intel may be the first out of the gate with 3D chips, I believe
International Business Machines Corp. (NYSE:
IBM) will perfect them.
Right now IBM is working on a unique way of "stacking" up to 100 chips
on top of each other. The company says the process will lead to
electronic devices that run
1,000 times faster than what current technology allows.
Big Blue had succeeded in stacking chips several times in the past.
There was just one problem - they didn't have the right type of glue
that would allow them to scale up for production.
So, IBM forged a partnership with another tech giant,
3M Co. (NYSE:MMM),
which has deep
expertise
in special material and adhesives. Working together, the two believe
they can mass produce what amounts to computer towers on a single chip.
They say that in the very near future the technology will transform the
capabilities of mobile phones, computers, gaming devices, and more.
Yet if the team only manages to hit 10% of its goal, the result will be
a dramatic impact across the board. (Even 10 chips stacked vertically
would create a powerful new wave of technology.)
You may balk at owning a stock that is priced over $200 a share. But I
seem to remember people balking at buying Google when it was at the
same price... and it has since tripled.
IBM could be the stock of the decade.
One final note about IBM...
For decades, legendary investor Warren Buffett carefully avoided tech
stocks at all costs, saying they were too exotic to understand.
But it seems recently the Oracle of Omaha discovered a profound truth:
If you aren't invested in today's high-tech sector, you're leaving
money on the table. A lot of it. Just a few months ago, in November
2011, Buffett plowed into the sector with a $10.7 billion investment in
IBM, making a massive bet on high-tech.
Of course, we can't be sure that IBM's 3D advances are what made
Buffett finally sit up and take notice... but it's clear they didn't
scare him off.
This Ushers in a New Era of Moore's Law
I wrote this report on 3D computing because I believe it symbolizes the Era of Radical Change. It all goes back to Moore's Law.
Computing power has doubled more than 25 times in the past 50 years.
With 3D computing, those exponential increases will be able to keep up
with Moore's Law. With Tri-Gate transistors, Intel claims to have
extended Moore's at least another two years.
And after that? Well, I'll let you know.
Whatever happens, it's clear that the years ahead will be like nothing
we've seen before... and take the entire high-tech ecosystem to a
whole new level.
Consider this...
Because of 3D computing, just one technological advance I'm tracking -
one among many - the very near future is going to look a whole lot
different.
Imagine one U.S. soldier able to control dozens of drones and robots at
the same time from a device no bigger than a smart phone... An
autonomous vehicle driving itself down a safe, high-tech highway...
Some of your "coworkers" will be robots much "smarter" than humans...
You'll have the ability to download a video library in a matter of
seconds and store it on a flash drive the size of your pinkie finger...
and doctors will augment your IQ with chips implanted in your brain
that will give you the intelligence of 10 Albert Einsteins.
Personally, I just love this stuff. And if it grabs your attention the way it does mine, stay tuned. I'll have a lot more for you in the coming weeks about these profitable trends that make up this
Era of Radical Change.
Here's a sample of the exciting tech on my investment radar screen:
- A new see-through computer screen that converts files into 3D images you can move with your hands.
- Solar panels constructed as mini-towers that deliver 20 times more power than conventional arrays.
- The microdevice that amounts to putting a human stomach on a chip.
- The device is actually lined with cells from the intestine and is designed to go inside the body to detect disease.
- Making a robotic spy "plane" the size of a hummingbird that flies
like the real thing. The Pentagon paid a publicly traded, small-cap
firm to develop what I predict will be the next generation of drone
technology.
- Researchers are designing highways that act as charging stations
to juice up electric vehicles - while the cars are still racing down
the road.
- The trip from New York to Beijing could take just two hours,
thanks to a novel transport tube that looks like something out of
science fiction. Passenger capsules would float inside the tube, powered
by exotic superconductors, and zoom people around the globe at speeds
of up to 4,000 mph.
- Carbon nanotubes that can make objects appear invisible. In a
project funded by the Pentagon, scientists found that bending light in
certain ways created the "mirage" that objects weren't really there.
Other Avenues to Profit
Currently, Intel and the IBM team have the design "edge" in the 3D
computing world. But I have uncovered seven other companies that are
quickly developing their own ways to play this new technology. Take a
look:
- Applied Materials Inc. (NasdaqGS:AMAT) is
collaborating with the Institute of Microelectronics in Singapore on 3D
chip packaging. The two recently spent $100 million building the most
advanced research facility of its kind. With 3D chip packaging,
multiple chips can be stacked on top of each other and connected with
wires that run vertically through the stack.
- Hewlett-Packard Co. (NYSE:HPQ): Under a new
project code named "Corona," HP aims to create stackable 3D chips that
communicate using built-in microscopic lasers, according to the online
journal Endgadget. Currently targeted for release in 2015,
this product would constitute a form of optical communications with
blazing speeds, with the added benefit of reducing power consumption by
as much as 80%.
- Altera Corp. (NasdaqGS:ALTR) and Taiwan Semiconductor Mfg. Co. Ltd.
(NYSE:TSM): As a contract chipmaker, Taiwan Semi recent said it has a
new technology for making 3D chips. The company said chip firm Altera
is the first to complete a key test of the new chip. Taiwan Semi
doesn't expect much 3D revenue until after 2015.
- Samsung Electronics Ltd.
(OTC:SSNLF.PK): It's more well known for its TV sets, but Samsung
recently began shipping a 3D memory module. These aren't processors
that serve as PC "brains," but are vital for doing calculations and
running programs.
- United Microelectronics Corp. (NYSE:UMC) had
invested heavily in a breakthrough process with Japanese company Elpida
Memory Inc. Where that partnership now stands remains uncertain, after
Elipda's recent bankruptcy filing - unrelated to 3D chip technology.
But I expect UMC to forge ahead, especially now that the industry is
embracing the technology.
- Hynix Semiconductor Inc. (OTC:HXSCL.PK): A
leading supplier of computer memory chips, it also is bidding on the
assets of Elpida. Last year, this leading memory-chip maker joined a
key industry research group investing in next-generation 3d computing
technology.
Remember, we're still in the early stages of this revolution. I do
expect to see more opportunities emerging that represent a more "pure
play" on this technology. And, of course, as soon as I spot them, I'll
let you know. So, I hope you'll check back with me often.
Nine 3D Computing Stocks at a Glance
| Co. |
Ticker |
Mkt Cap |
P/E |
Cash |
Debt |
Div% |
| Altera |
ALTR |
12.6B |
16.7 |
3.4B |
.5B |
.8 |
| Applied Mat. |
AMAT |
16.1B |
10.75 |
2.0B |
1.95B |
2.6 |
| HP |
HPQ |
47.4B |
8.4 |
8.1B |
31B |
2 |
| Hynix |
HXSCL |
13.7B |
N/A |
1.7B |
6B |
N/A |
| IBM |
IBM |
242B |
16 |
12B |
155B |
1.4 |
| Intel |
INTC |
142B |
12 |
14.8B |
7.4B |
2.9 |
| Samsung |
SSNLF |
142B |
N/A |
N/A |
N/A |
N/A |
| Taiwan Semi |
TSM |
80B |
17.6 |
5.1B |
1.7B |
3.4 |
| United micro |
UMC |
6.2B |
18.2 |
1.8B |
1.3B |
7.9 |
