Chip makers have received a massive windfall, as a result of increased demand for Internet of Things (IoT) devices. Chip business has nearly doubled since 2003 to $352 billion, according to IHS Markit, and analysts estimate revenue from chips could triple in the coming decade.
The brains inside smart devices are typically ordered six months in advance of when they are installed in computers, servers, cars and home appliances. The growth of the IoT industry has surpassed the U.S. fast food and automotive sectors, and consolidation creates high barriers for new entrants.
Tech companies pay premiums to ensure the flow of semiconductors to the manufacturing factory, which has steadily pushed up chip prices. Prices are expected to ease later this year, once manufacturers master the craft of producing a newer, high-end semiconductor that device makers want.
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