• Invest in the digital world's skeleton, the essential companies powering all modern technology.
• The AI boom is driving unprecedented demand for advanced chips and manufacturing equipment.
• High barriers to entry and specialized technology create durable competitive advantages for leading firms.
• Global chip independence initiatives and long-term tech trends may fuel sustained sector growth.

Beyond the Hype: Investing in the Gritty Bits of the Digital Age

The Real Engine Room of Tech

Let’s be honest, we all love our shiny gadgets. The latest smartphone, the thinnest laptop, the AI assistant that can write a poem about your cat. It all feels a bit like magic. But I’ve always found that the most interesting opportunities, and often the most durable ones, are found not in the magic show itself, but backstage, amongst the grit and the machinery that makes the whole spectacle possible.

While the world fawns over the latest consumer tech brand, a handful of companies are quietly building the very foundation of our digital existence. They are the unglamorous, indispensable architects of the modern world. They don’t have flashy stores or celebrity endorsements. What they have are monopolies on physics, colossal barriers to entry, and a client list that reads like a who’s who of global technology. To me, that sounds a lot more interesting than just another social media app.

The Dutch Company Holding the World Hostage

Deep in the Netherlands, there is a company that most people have never heard of, yet it holds more power over the future of technology than almost any other. The company is ASML, and it builds machines that are, frankly, preposterous. These are extreme ultraviolet lithography systems, costing north of $200 million a pop, that use light to print impossibly small circuits onto silicon wafers.

Without these machines, there are no advanced chips. No new iPhones, no NVIDIA AI processors, no nothing. ASML has a complete and utter monopoly on this technology. Their competitive moat isn’t just wide, it’s an ocean patrolled by battleships. As every tech giant scrambles to make chips smaller, faster, and more powerful, they all have to queue up, cap in hand, at ASML’s door. It’s a beautiful business model, if you can get it.

The Factories and Their Toolmakers

Once you have one of ASML’s miracle machines, you need someone to run it. That’s where a company like Taiwan Semiconductor Manufacturing Company, or TSM, comes in. TSM is the world’s master foundry. It doesn’t design its own chips, it simply builds them for everyone else, from Apple to AMD. Its expertise and scale are so immense that it has become critical global infrastructure.

And who supplies the foundries like TSM? An army of specialists, like America’s Lam Research. They make the hyper-specialised equipment that performs the mind-bogglingly precise tasks of etching and depositing materials, atom by atom, to build a modern chip. Think of it this way, if TSM is the world’s most advanced kitchen, Lam Research is the one making the impossibly sharp knives and self-regulating ovens. These firms operate in niche, high-margin markets where switching suppliers is almost unthinkable for their customers.

The AI Gold Rush Needs Shovels

Now, pour some petrol on this fire. The artificial intelligence boom is creating a demand for computing power that is simply off the charts. Training a single large AI model requires thousands of the most powerful chips on the planet, all working together for months. This isn't a gentle, cyclical upgrade. It's a step-change in demand.

This is the classic gold rush scenario. You can take a punt on which AI company will win, or you can invest in the companies selling the shovels. ASML, TSM, and Lam Research are selling the shovels, the pickaxes, and the geological maps to every single prospector. It’s a far more pragmatic way to approach the boom, I think. Of course, no investment is without risk. This is a notoriously cyclical industry, and geopolitical tensions around chip manufacturing are a constant worry. But the long-term trend seems undeniable. Our world is only going to demand more, not less, computing power. For those looking to invest in the very skeleton of the digital age, a collection of these foundational companies, such as the Digital World's Skeleton, might present a way to capture the theme.

Deep Dive

Market & Opportunity

• The digital economy is entirely dependent on foundational elements like silicon wafers, specialty chemicals, and precision manufacturing equipment.
• The artificial intelligence boom has created unprecedented demand for specialized AI chips, memory, and the advanced manufacturing processes required to produce them.
• Governments worldwide are creating massive subsidy and investment programs to build domestic chip production capabilities, creating long-term growth tailwinds.

Key Companies

• ASML Holding NV (ASML): Produces extreme ultraviolet (EUV) lithography machines used to print circuits on silicon wafers. Its technology is essential for creating advanced processors for smartphones, EVs, and AI systems. The company holds a monopoly position in EUV technology, with individual machines costing over $200 million.
• Taiwan Semiconductor Manufacturing Company Limited (TSM): Operates as a "foundry" that manufactures semiconductors for fabless design companies like Apple, NVIDIA, and AMD. The company invests over $40 billion annually in research and development to maintain its lead in advanced manufacturing.
• Lam Research Corporation (LRCX): Produces specialized etching and deposition equipment that transforms raw silicon wafers into functional semiconductors. Its tools perform processes with atomic-level precision and the company holds quasi-monopolistic positions in its niches due to high switching costs for foundries.

Primary Risk Factors

• The industry is notoriously cyclical, with periods of rapid growth often followed by sharp downturns.
• Geopolitical tensions, including trade restrictions, export controls, and tariffs, can significantly impact company operations.
• Rapid technology shifts can render entire product categories obsolete.
• Economic downturns can reduce consumer and business demand for technology products.
• Currency fluctuations can impact companies that generate revenue globally.

Growth Catalysts

• The expansion of Artificial Intelligence is driving structural demand for high-performance chips and memory.
• Long-term trends like the Internet of Things (IoT), the growth of electric vehicles, and the build-out of 5G networks require more advanced semiconductors.
• The industry has extremely high barriers to entry, including tens of billions of dollars in capital investment for foundries, which protects established companies from new competition.
• Industry consolidation, particularly in the memory sector, has led to an oligopolistic structure with greater pricing power.

Investment Access

• These stocks are accessible via fractional shares.
• Fractional share investing can start from as little as $1.
• The basket of stocks is available on the Nemo platform.