Last week, Ford (NYSE: F) announced plans to cut North American vehicle production in July. The reason? A massive shortage of semiconductor chips. Cars today more closely resemble iPhones than the Model T. That's why a lack of computer chips has forced Ford's production lines to a screeching halt. As Jim Rogers, co-founder of the Quantum Fund, has remarked, "No one can revoke the law of supply and demand." Whenever demand exceeds supply, someone somewhere is going to make a lot of money. That's good news for semiconductor companies. Today's State of Play The semiconductor market is on fire. The pandemic accelerated the arrival of the digital economy by a decade. This shift spurred demand for the thousands of devices that depend on semiconductors. Jensen Huang, CEO of Nvidia (Nasdaq: NVDA), believes that demand for semiconductors could outstrip supply for years. That threatens the availability of everything from laptops to video games to Teslas. But the shortage is only getting started... Semiconductors are the backbone of a technology-driven economy. Think of them as the picks and shovels in today's digital gold rush. Cloud computing, artificial intelligence and machine learning, 5G networks, online gaming, blockchain, cryptocurrencies, the Internet of Things, autonomous vehicles, virtual reality, and wearables all require semiconductors. Throw in changes in consumer behavior like remote work, web-based learning, videoconferencing, video gaming, social media, streaming and online shopping, and you have tailwinds for semiconductor stocks as far as the eye can see. The Chinese Wild Card Semiconductors have become pawns in the high-stakes game of geopolitical security. In a little-reported story, Chinese President Xi Jinping pledged last Thursday to complete "reunification" with Taiwan. He vowed to "smash" any attempts at formal independence. Taiwan is a perennial political hot potato in Chinese-American relations. The soaring importance of semiconductors only adds fuel to the fire. Taiwan is home to the world's largest chip manufacturing industry. Taiwan Semiconductor Manufacturing (NYSE: TSM) alone accounts for more than 50% of the global semiconductor market. The U.S. will never allow the Chinese Communist Party to take over such a critical industry. Meanwhile, China has been stockpiling semiconductor chips made in the U.S. due to fears that the Biden administration could cut China off amid rising political tensions. | 
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