The Next Great "Tech War" Has Already Started - And Here's Who's Winning

The war has already started.

You probably missed the first shots being fired.

I know I did.

I think everyone missed the first skirmishes.

At first, this conflict was so unexpected that it seemed like it could never even rise to the level of David and Goliath.

At the start of this conflict, Goliath was too big and powerful, and David was too technologically backward and behind.

When China first began developing a semiconductor industry in the 1990s, no one gave them much of a chance.

The United States dominated the global semiconductor industry, especially in high-end semiconductor technology.

We underestimated China’s desire, drive, and ruthless determination to win the race for technological supremacy.

We also underestimated China’s dedication to the idea of winning at all costs.

If they could not develop and build a given technology themselves, they would have no problem stealing it from the West.

The drive and dedication of the Chinese people, together with some well-executed intellectual property theft, have made the race closer than anyone expected back when those almost silent first shots were fired.

Winning the chip race does not seem all that important until you understand where we are on the technology curve and what it means to be the first to the finish line.

The company that wins the high-end chip race wins the AI race, and that leads to victory in quantum computing.

The nation or coalition that dominates those parts of the technology spectrum will dominate the world and the global economy.

They would have absolute control of space.

That nation would have an enormous edge in autonomous warfare, including drones and robotic attack forces.

It would have more advanced weapons systems.

Its influence on global economies and markets would be enormous.

The winner of this race will dominate the discovery and production of drugs and life-saving medical devices.

Their cyberwarfare and cybersecurity programs will be dominant.

The winner will control so many facets of life that they will become the envy of both Pinky and the Brain as they finally achieve the objective of obtaining world domination.

This war is not in the headlines much, but it may be the most important conflict in modern history.

What can we do about it?

The answer is not very much, with the exception of those readers who toil in the tech industry and are feverishly scrambling to win the race.

The battle will be won by technocrats and (unfortunately) politicians along with the assistance of the people who finance innovation and technology.

What we can do is recognize that, even if it is not on the front page of the New York Times or Washington Examiner (see how I threaded the political needle there?), it is the highest priority both at home and abroad.

Trillions of dollars will be spent on this war.

That is going to lead to massive profits for companies in the semiconductor industry and suppliers to those industries.

Chip manufacturers, semiconductor packaging and test equipment companies, and raw material companies are going to see enormous benefits.

Much like Quint, Hooper, and Brody needed a bigger boat, we will need a lot more data centers to win this war.

Bringing the semiconductor and related industries back to the United States will also involve the construction of an enormous number of new facilities.

This opens opportunities for REITs, construction companies, fiber optic cable manufacturers, and other companies that will supply the material to build the infrastructure and operate the centers.

The battle for semiconductor supremacy and the leadership role in Artificial Intelligence will require enormous energy.

There is no need to involve politics in this decision. Winning this war will require all forms of energy. Fossil fuels, renewables, and nuclear energy companies will also be in massive demand for this conflict.

It is critical for the United States and the West to at least fight China to a draw in this conflict. A victory would be best, but the mutually assured destruction of a draw would suffice for survival and prosperity purposes.

Under either scenario, massive, almost unimaginable amounts of money will be spent, and the profits will go to patient and aggressive investors who seize opportunities when they are available at the right price.

Traders will miss this stunning opportunity if they insist on focusing on the short term.

There are two ways to play the profiteering potential of the semiconductor war.

One is to wait for sectors that can be expected to see waves of cash from the conflict to be out of favor and create the opportunity to buy companies at sale prices.

Today, that opportunity exists in the natural gas sector of the energy industry. The demand for natural gas to power the war effort will be enormous, as will the cash generated by the owners of assets like pipelines that transport energy from one place to another.

Certain real estate assets that will be huge beneficiaries of the demand for data centers and factory space are also cheap.

When you step away from the narrow spotlight on the industry leaders, you will see that several mission-critical semiconductor companies are also trading at bargain basement prices right now.

The modest selloff in semiconductor equipment and material stocks would also create a handful of bargains, with the potential for returns of several times current stock prices.

The war is not going to happen.

It is happening now.

Privateers have always gotten rich off wars.

The potential profits from this one will be the largest in modern history.

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