Moore's Law

George Moore, co-founder of Intel and Fairchild Semiconductor, published a paper in 1965 (and updated his forecast a decade later) observing the fact that the number of transistors on an integrated circuit would double approximately every two years. His forecast remarkably held true until 2012 but the pace of exponential growth has slowed in recent years. Nonetheless, Moore was prescient in his observations and benefitted handsomely from his 'Law'.

Today, the semiconductor industry remains on the cutting edge of innovation in the technology sector. Yet, the industry is also highly cyclical as semiconductor companies face huge swings in demand for their products in line with peaks and troughs in the broader economic cycle. After a sharp -26% correction 2015, the SOX Index has surged back to life, adding +165% in just the last two years.

 
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The SOX Index peaked in March 2018 at 1,465, corrected by -15% and is now attempting a challenge of its recent highs, albeit on weakening relative strength and momentum. If economic conditions are deteriorating, it will show up first in this sector. A break below 1,200 will confirm a broader change in trend.

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