The global pipeline of chips and electronics is restarting. Last year, many companies at the core of the semiconductor industry stepped down their production lines, either cutting back working hours or firing staff outright. Now, those idled assembly lines are lurching into motion again. This all starts out as a sign of Chinese infrastructure investments, but it could easily spill over into other sectors and geographies as well. Tech stocks will make you rich again.
Taiwan Semiconductor Manufacturing (NYSE:TSM) -- a.k.a. TSMC -- is the world's largest chip-making specialist. The company takes designs from fab-less chip designers like NVIDIA (NASDAQ:NVDA), Atheros (NASDAQ:ATHR), and Silicon Laboratories (NASDAQ:SLAB) and turns the theory into real pieces of working silicon. TSMC moved to a four-day work week recently in order to control costs. Now, everyone is back to the factory for five full days per week.
This comes only days after Taiwanese gadget assembly specialist Hon Hai Precision Industries went on a hiring spree to replace workers sacked over the holidays. And you haven't forgotten about the pending consolidation in Taiwan's massive computer memory operations, right? There are big things afoot in Taiwan today.
And of course, what happens in Taiwan often starts in its very, very big northern brother. China has started working on a nationwide 3G mobile network, which is great for parts suppliers like Texas Instruments (NYSE:TXN) and LM Ericsson (NASDAQ:ERIC). At TSMC and Hon Hai, you see the trickle-down effects of that trend.
Can that extend into a global recovery, fueled by an increasingly affluent and connected Chinese middle class? It's by no means an automatic global recovery, but you see how one huge market force can push new revenue into many smaller conduits across the globe, including chip designers, hardware assembly experts, service providers, and much more. This can all add up pretty quickly.
Stay tuned. We'll keep you posted on how the Chinese dragon is doing, and where it's taking us.
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