The big world ETF guide

The big world ETF guide

Reading time: approx. 12 min

1) INTRODUCTION

Anyone entering the world of investing and wanting to start investing often wants one thing above all else: Simplicity.

A globally diversified ETF offers just that: an uncomplicated way to participate in global economic growth at low cost without having to familiarize yourself with complex investment strategies. But when it comes to choosing the right global ETF, many beginners are faced with the question: Which is the right one for me? me?

In this article, I will introduce you to various options for building a diversified world ETF portfolio. We start in the first section with the "one ETF for everything" solution, which is particularly suitable for investors who prefer not to deal with the topic at all. These one-ETF solutions can be saved like a piggy bank and are probably the most passive form of investment.

For investors who find the single-ETF solution too boring or under-complex, we turn to so-called multi-ETF solutions - i.e. investment ideas that include several ETFs. In the final section, we will take a closer look at a special variant that can be considered complex and requires more activity.

If you are a beginner, you can safely stop reading after the first section on the one-ETF solution, as this section contains all the information you need for a simple but effective investment in ETFs. The interested and advanced reader will then get their money's worth in the last section.

2.) THE ONE-ETF SOLUTION

Let's start with the simplest of all conceivable options: one ETF for everything. But even with the simplest form of building a world portfolio, it's the small but fine details that count. Each variant includes specific ETF suggestions with which you can realize such a one-ETF solution.

2.1 MSCI World

Probably the best-known world index is the MSCI World Index. This focuses on the largest companies in the so-called developed markets. The index contains the 1500 largest companies from 23 industrialized countries and comprises around 85% of the market capitalization of the world's industrialized nations [1]. The USA has by far the highest weighting, accounting for around 70% of the entire MSCI World Index. The second-highest weighted country is Japan with around 6%, followed by the UK with around 4%. German equities account for just over 2% of the index. The largest 10 positions - with illustrious names such as Microsoft $MSFT (-1.05%) Apple $AAPL (+1.34%) or Nvidia $NVDA (+2.01%) - already make up 24% of the overall index.

The easiest way to invest in the MSCI World Index is via an ETF. The most cost-effective option is the Amundi $MWRD or SPDR $SPPW (+0.25%) which only incur annual costs (TER) of 0.12% [2]. These are accumulating ETFs that do not distribute the income from the individual shares but reinvest it at fund level. If you prefer regular distributions, you can also choose a distributing ETF such as $MWOE (+0.25%) or $HMWO (+0.26%) you can also choose a distributing ETF.

2.2 FTSE All World

Another classic in the field of world indices is the FTSE All World. In addition to the industrialized countries, it also includes so-called emerging markets (emerging markets). The index includes the 4000 largest companies from around 50 countries [1]. In addition to the industrialized nations, the index therefore also includes shares from China, India, Brazil and Taiwan, for example. The total weighting of the USA in the FTSE All World is around 60% and the 10 largest positions account for around 21%. About 90-95% of global market capitalization is covered by the FTSE All World.

The biggest difference to the MSCI World Index is that the FTSE All World also includes emerging markets and is therefore even more broadly diversified worldwide. According to [3], the cheapest accumulating ETF on the FTS All World Index with an expense ratio of 0.15% is the one from Invesco $FWRG (+0.25%) . However, the FTSE All World ETF from Vanguard $VWCE (+0.17%) enjoys enormous popularity here on Getquin (@Lorena). Distributing variants would be the $FTWG (+0.27%) from Invesco or the $VWRL (+0.18%) from Vanguard.

2.3. MSCI ACWI IMI

Probably the most broadly diversified index is the MSCI ACWI IMI. The somewhat unwieldy name stands for MSCI All Country World Index (ACWI) Investable Markets Index (IMI). This comprises over 9000 shares from industrialized and emerging countries.

The biggest difference to the FTSE All World apart from the fact that the number of shares in the index is more than twice as high, is that the MSCI ACWI IMI also includes small caps and thus achieves an even broader diversification. According to MSCI, the index covers approx. 99% of global market capitalization.

With an expense ratio of only 0.17% and at the same time the only accumulating ETF on the MSCI ACWI IMI is the $SPYI (+0.26%) from SPDR. The distributing variant has also been available since June 2024 $SPSA (+0.23%).

In my opinion, the MSCI ACWI IMI the all-in-one package when it comes to broadly diversified global investing. I therefore personally use the $SPYI (+0.26%) and the $SPSA (+0.23%) for my child's custody account.

The following chart provides an overview to illustrate this:

To calculate the real performance, I have created sample portfolios with the corresponding ETFs. For the MSCI World I chose the $SC0J (+0.16%) as it has been tradable in Germany since June 2009. For the FTSE All World, I opted for the classic $VWCE (+0.17%) from Vanguard, which has been available in Germany since July 2019. For the MSCI ACWI IMI, I opted for the $SPYI (+0.26%) which has been available to buy in Germany since 2011.

As a result, the maximum comparison period is July 2019 to the present day. During this period of just over 5 years, the MSCI World ETF $SC0J (+0.16%) has performed best with a performance of around +102% (+13.6% CAGR). The FTSE All World $VWCE (+0.17%) follows with a performance of +90% (+12.4% CAGR) and in last place is the $SPYI (+0.26%) with +85% (+11.8% CAGR).

Unsurprisingly, the MSCI World is ahead in the selected comparison period. This is mainly due to the significantly higher weighting of the USA in the MSCI World and the absence of the emerging markets, which performed comparatively poorly in this period. Although the ACWI IMI is similar to the FTSE All World, it performs somewhat worse, as the small caps also lagged behind the broad market in the comparison period.

As past performance is no guarantee of future performance, this does not automatically mean that the MSCI World will perform better than the other two variants in the coming years. That is why I personally continue to prefer the MSCI ACWI IMI for long-term investment $SPYI (+0.26%).

3.) THE MULTI-ETF SOLUTION

Why keep it simple when you can make it complicated? That's what many investors think - myself included. There are several ways to construct a global portfolio with more than one ETF to allow a certain degree of flexibility. However, this is only necessary if you consciously over- or underweight certain countries, factors or sectors. This may be because you have a very positive view of emerging markets or because you consider the 70% US share in the MSCI World to be too high.

However, flexibility and personal views also entail more complexity and work than the one-ETF solution. As soon as we have more than one ETF in the portfolio, the question of weighting, rebalancing and when to rebalance at all automatically arises. This also increases transaction costs, and rebalancing can lead to early taxation and an interruption of the compound interest effect. To justify this, you should be very sure that the one-ETF solution is not the ideal solution for you personally after all.

A detailed performance comparison is provided after the presentation of the world portfolio solutions at the end of this section.

3.1. 70/30 Portfolio MSCI World & Emerging Markets

A classic variant to cover the emerging markets missing from the MSCI World is a portfolio consisting of an MSCI World ETF and an MSCI Emerging Markets ETF. A weighting consisting of 70% MSCI World and 30% emerging markets is established and often quoted.

Compared to the FTSE All World, this is a higher proportion of equities in the emerging markets, as this is only around 10%. You should therefore consider a 70/30 portfolio above all if you want to overweight the emerging markets compared to the FTSE All World.

The cheapest MSCI Emerging Markets ETF with a TER of 0.18% is the $AEME (-0.15%) from Amundi. China is the largest position with a weighting of 24%. It is followed by India with a good 20% and Taiwan with around 19%. In the 70/30 portfolio, the country weighting is currently 48% USA, 7.2% China, 6% India, 5.6% Taiwan and 4.1% Japan. Germany is represented with around 1.6%. The total expense ratio of the 70/30 portfolio is 0.187%.

3.2 FTSE All World & Smallcaps

As already described in the previous sections, the FTSE All-World already contains a 10% share in the emerging markets. Only the global small caps are missing. In order to still cover these, an MSCI World Small Cap ETF can be used. In so-called factor investingthe small-cap factor is one of the best-known factor premiums [4] - small-cap stocks should achieve higher average equity returns. However, the details of factor investing will not be discussed here. You are welcome to use the source cited [4].

A portfolio consisting of 85% FTSE All World and 15% small caps is an example of a possible world portfolio that takes small caps into account. The practical implementation could be realized with the FTSE All World ETF $VWCE (+0.17%) from Vanguard and the MSCI World Small Cap ETF $WSML (+0.52%) from iShares. However, the expense ratio for the $WSML is already comparatively high at 0.35%. The overall portfolio has a TER of 0.24%.

3.3 Modular portfolio

If you want even more leeway when creating a global portfolio with ETFs, you can take the next step and put together a portfolio based on the modular principle. Instead of using the traditional division into industrialized countries and emerging markets, you select the individual world regions separately and determine their weighting yourself. This approach offers great opportunities and freedom, but at the same time significantly increases complexity.

Such a modular world portfolio could look like this, for example:

• 50% USA via S&P500 ETF $SPXS (+0.29%)
• 20% Europe via MSCI Europe ETF $XMEU (-0.82%)
• 20% emerging markets via MSCI Emerging Markets ETF $AEME (-0.15%)
• 10% Japan via MSCI Japan ETF $LCUJ (-0.59%)

The selected weightings and regions are of course subjective and depend on the individual preferences of the investor. The world's strongest stock market in the USA is represented by the well-known S&P500 index. The entire European region, including non-EU countries, is covered by the corresponding ETF. The advanced industrial nation of Japan is represented by a special ETF, while China, India and Taiwan are included in the portfolio via the Emerging Markets ETF. The total expense ratio of this example portfolio is 0,097%.

3.4 Performance comparison

Due to the start dates of the ETFs used, a performance comparison is possible here from August 2019. For the performance comparison, I have created corresponding sample portfolios here on Getquin and rebalanced them at annual intervals. rebalancing at annual intervals.

The rebalancing proceeded as follows:

• the weighting of the portfolio is checked once a year
• if an individual weighting deviates by more than 30% from the target weighting, the entire portfolio is adjusted back to the original target allocation

Specifically, I have (arbitrarily) chosen June 15 as the cut-off date for rebalancing. The annual review of the weighting is a compromise between effort and cost. Rebalancing too frequently would cut profits too quickly; rebalancing too infrequently, on the other hand, would blur the intention behind the portfolio, as the weightings of the positions would move too far away from the original weighting.

Overall, the 70/30 portfolio was rebalanced once during the period mentioned, as the share of the MSCI Emerging Markets had fallen below 21% (30% below the target weighting of 30% in the portfolio). No rebalancing was necessary in the FTSE All World & Smallcap portfolio. By contrast, the modular portfolio had to be rebalanced twice. As you can see, more ETFs usually mean more work.

The performance of the individual world portfolios over 5 years was:

• 70/30 portfolio+80% (+11.7% CAGR)
• FTSE All World & Smallcaps: +86% (+12.3% CAGR)
• Building block portfolio: +87% (+12.5% CAGR)

No portfolio has outperformed the MSCI World (+102%) over the last 5 years, which is hardly surprising given the lower proportion of US stocks in the portfolios. In retrospect, the best performance over the last 10-15 years would probably have been achieved with a 100% US allocation. However, the aim of a global portfolio should not be to achieve the maximum possible return, but to achieve the return of the global equity market with the lowest possible risk.

4) CAN IT BE A LITTLE MORE EXCITING?

Some people may now be thinking: why always just these boring ETFs when Bitcoin $BTC (-0.43%) exists? Interest in Bitcoin has continued to grow worldwide in recent years and Bitcoin ETFs now offer easy ways for private and institutional investors to invest in Bitcoin. Just recently, Blackrock rated a Bitcoin allocation of 1-2% in a portfolio of 60% stocks and 40% bonds as risk neutral compared to investing in the Magnificant 7 Stocks [5].

Furthermore, the US share in the portfolio cannot only be represented by the supposed standard index S&P500. Many more risk-averse investors also like the NASDAQ 100, which primarily contains high-growth tech companies.

Example may-be-somewhat-more-exciting-world-portfolio:

• 25% NASDAQ 100 over $EQAC (+0.04%)
• 25% S&P500 Equal Weight over $XDEW (+0.67%)
• 20% Europe over $XMEU (-0.82%)
• 15% Emerging Markets over $AEME (-0.15%)
• 10% Japan over $LCUJ (-0.59%)
• 5% Bitcoin $BTC (-0.43%)

The total 50% US share in the portfolio is divided into the NASDAQ 100 and an equally weighted S&P500. The equally weighted variant was chosen to avoid too much overlap with the heavyweights in the NASDAQ 100 and to create a broader base. The 5% Bitcoin weighting corresponds to a more risk-averse approach than the 1-2% suggested by Blackrock and still keeps the volatility of the overall portfolio within a reasonable range.

As in the previous examples, I have created a sample portfolio on Getquin and carried out an annual rebalancing check. As Bitcoin is generally somewhat more volatile, I set a wider range than the 30% deviation from the target weighting: the rebalancing was only triggered when Bitcoin accounted for either more than 10% or less than 2% of the total portfolio on the reporting date.

According to these rules, a rebalancing was triggered exactly twice in the period from December 2018 to date: 2021 and 2024. In June 2021, the Bitcoin share in the overall portfolio reached 20% and 75% of the BTC position was sold. The rebalancing also triggered the sale of a smaller share of the NASDAQ 100 ETF. The proceeds were then used to reallocate the remaining ETFs. In June 2024, Bitcoin also reached the upper limit and another rebalancing took place.

In the selected period from December 2018 to the present day, the may-yet-be-somewhat-more-exciting world portfolio achieved an overall performance of +176% (18.4% CAGR), clearly outperforming the MSCI World (+122%). The main drivers of this outperformance are firstly Bitcoin (which traded at around €3,700/BTC in December 2018) and secondly the NASDAQ 100, which clearly outperformed the MSCI World during this period.

The outperformance would of course have been much greater with a higher Bitcoin or NASDAQ100 share. In my opinion, however, the chosen overall weighting of 30% reflects a good compromise between opportunity and risk. The highest maximum drawdown of the overall portfolio in the period under review was around -20%.

5) CONCLUSION

Despite the wide range of investment options, I believe that for most investors the world ETF is the best solution for long-term wealth accumulation. Nowadays it is easier than ever to acquire a low-cost world portfolio based on an ETF.

For investors who want a little more spice, numerous options have been presented to build their own world portfolio - you don't have to build your own ETF like @Simpson 🙃

Which portfolio do you find most interesting? If you are interested, I would be happy to provide you with the (more complex) sample portfolios on Getquin for you to view.

Stay tuned,

Yours Nico Uhlig (aka RealMichaelScott)

#etfs
#stocks
#guide

Sources:

[1] Stock Finder: https://aktienfinder.net/index-profil/MSCI%20World-Index#:~:text=Der%20MSCI%20World%20ist%20ein%20globaler%20Aktienindex%20und,im%20Dezember%202024%20-%20Alle%20wichtigen%20Infos%20hier.

[2] justETF: https://www.justetf.com/de/search.html?search=ETFS&index=MSCI%2BWorld&sortOrder=asc&sortField=ter

[3] justETF: https://www.justetf.com/de/search.html?search=ETFS&index=FTSE%2BAll-World

[4] Gerd Kommer Website: https://gerd-kommer.de/factor-investing-die-basics/

[5] Forbes: https://www.forbes.com/sites/digital-assets/2024/12/12/115-trillion-blackrock-recommends-a-2-bitcoin-allocation-comparing-it-to-the-mag-7/

Eight years ago, my wife and I decided to really step on the gas: We saved ironcladly, invested our money in Bitcoin and other cryptos and bought a property at the same time. At the time, 95% of people thought: "My goodness, you're completely crazy!"

Despite setbacks, we were really shaken up by the Celsius Network (lost 3.5 BTC and 23 ETH!) .... we kept going. Now we've finally reached a huge milestone that makes us incredibly proud. $BTC (-0.43%)
$ETH (-2.51%)
$VWCE (+0.17%)

To everyone out there: Don't let anyone talk your visions and ideas down. Just do it! Get up when things aren't going well and keep going your way. Success belongs to those who take action.

I am particularly impressed by the many young people here at Getquin who start investing at the age of 14, 15 or 16. Respect! The future belongs to you, you have the chance to achieve financial freedom much earlier than most.

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PS: Go Getquin offers so much added value to become even BETTER. Thank you!

@Simpson asked me, presumably as a joke, to sell my ETF and switch into Bitcoin. That cost me a sleepless night. But after I'd actually been toying with the idea for a while (also thanks to @stefan_21 ), I did it 😳. At least the first step. I sold my entire $VWRL (+0.18%) sold my entire position. As soon as the money is in the account, it will go to a crypto exchange and be put into Bitcoin.

As I haven't bought any Bitcoin for a while: Which exchange do you recommend? I will buy approx. 1 $BTC (-0.43%) and have accounts with Bison, Binance and Kraken. I don't want to open an additional account.

From sand to chip: how is a modern semiconductor made?

Reading time: approx. 10min

1) INTRODUCTION

Since 2023 at the latest and the rapid rise of Nvidia $NVDA (+2.01%) semiconductors and "AI chips" in particular have been the talk of the town. Since then, investors have been chasing after almost every company that has something to do with the manufacture of chips, driving share prices to unimagined heights. However, hardly any investors really know how complex the value chain is within the production of modern chips.

In this article, I will give you an overview of the entire manufacturing process and the companies involved. Even if many of you have a vague idea that the production of modern chips is complex, you will certainly be surprised by how complex it really is in reality.

2) BASIC

The starting point for every chip are so-called wafers [1] - i.e. thin wafers, which usually consist of so-called high-purity monocrystalline silicon. In the field of power semiconductors, which primarily comprises chips for applications with higher currents and voltages, silicon carbide (SiC) or galium nitride (GaN) has recently also been used as the base material for the wafers.

In the so-called front end the actual core components of the chips - the so-called dies - are created and applied to the wafers. The dies are rectangular structures that contain the actual functionality of the later chip. The finished dies are then tested for their functionality and electrical properties. Each die that is found to be good is then integrated into the so-called backend where the individual dies are separated on the wafer. This is followed by the so-called packaging. The individual dies from the front end are then electrically contacted and integrated into a protective housing. In the end, this housing with the contacted die is what is usually called a chip chip.

Now that we have a rough overview of the overall process, let's take a closer look at the individual processes involved in producing the dies on the wafer. This is the area in which most highly complex machines are used and which is usually the most sensitive.

3) FROM SAND TO WAFER

Before wafers made of high-purity silicon can even be produced and the actual process for manufacturing dies can begin, the actual wafer must first be manufactured in almost perfect quality. To do this, quartz sand, which consists largely of silicon dioxide, is reduced with carbon at high temperatures. This produces so-called raw siliconwhich, with a purity of around 96%, is not yet anywhere near the quality required for the production of wafers.

In several chemical processes, which are carried out by Wacker Chemie
$WCH (+1.9%) or Siltronic
$WAF (-3.21%) are used to turn the "impure" silicon into so-called polycrystalline silicon with a purity of 99.9999999%. For every billion silicon atoms, there is then only one foreign atom in the silicon. However, this pure polycrystalline silicon is still not suitable for the production of wafers, as the crystal structure in the silicon is not uniform enough. In order to create the right crystal structure, the polycrystalline silicon is then melted again and a so-called ingotwhich is made from monocrystalline silicon is produced. A comparison between raw silicon and the ingot can be found in the following image [3]:

This ingot is then sawn into thin slices, which are then the final wafers for semiconductor production. The best-known wafer producers are Shin Etsu
$4063, (-1.14%)
Siltronic or GlobalWafers
$6488.

4) FROM THE WAFER TO THE DIE

The wafers described in the previous section can now be used to produce dies. The overall process for producing dies basically consists of applying a large number of layers using various chemical, mechanical and physical processes. The overall process (depending on the product) takes approx. 80 different layers on the wafer, requiring almost 1000 different process steps and 3 months
non-stop production are required [4].

A macroscopic analogy is useful here, which I have also taken from [4]. You can compare the overall process for producing dies with baking a large multi-layer cake. This cake has 80 layers and the recipe for baking consists of 1000 steps. It takes 3 months to make the cake and if even one layer of the cake deviates from the recipe by more than 1%, the whole cake collapses and has to be thrown away.

In the first process steps, the wafer is covered with billions tiny little transistors are created on the wafer, which are then all individually electrically contacted in the following steps. The final steps consist of electrically connecting the transistors to each other, resulting in a complete electrical circuit [4]:

Each individual layer of the approximately 80 layers in the die requires highly specialized processes, which can be roughly summarized as:

• Applying masks: Photolithography, photoresist coating (applying photoresist)
• Apply material: Chemical Vapor Deposition (CVD), Physical Vapor Deposition (PVD), Atomic Layer Deposition
• Remove material: Plasma annealing, Wet annealing, Chemical Mechanical Planarization (CMP)
• Modify material: Ion Implanting, Annealing
• Material cleaning
• Inspecting the layers: Optical, Microscopical, Focused Ion Beam, Defect Inspection

Apply masks

Ultimately, a mask can be thought of as an enlarged copy of the structure of a special layer in the die. These so-called photomasks are then scanned using so-called scanners or steppers "copied" in reduced size onto the wafer. The best-known manufacturer of such lithography systems is ASML
$ASML (-1.59%). It is currently the only producer of lithography systems that make it possible to produce structures smaller than 10 nanometers on the wafer. In today's powerful and modern chips, such as those found in smartphones, AI chips and processors, the smallest structures are around 3 nanometers in size. Other manufacturers of lithography systems for larger structures (10nm and larger) are Canon Electronics
$7739 or Nikon $7731 (+1.29%) .

The photomasks - i.e. the enlarged "copies" of the structures - are produced by companies such as Toppan $7911 (-7.06%) , Dai Nippon Printing
$7912 (-1.09%) or Hoya $7741 (-3.54%) manufactured. Systems for cleaning the photomasks or for applying the photoresist are produced, for example, by Suss Microtec
$SMHN (+0.76%) for example.

Apply/remove/modify/clean material

As can be seen in the overview above, there are a variety of methods and processes for modifying the material of a particular layer. As a result, there is a lot of different equipment that can handle a process very well with incredible specialization. The best-known and most successful equipment manufacturers include Applied Materials $AMAT (+0.53%), LAM Research
$LRCX (+0.38%), Tokyo Electron (TEL)
$8035, (-0.76%)
Suss Mictrotec, Entegris
$ENTG (-0.55%) and Axcelis $ACLS (-0.8%).

The material - for example, highly specialized chemicals - is of course also required for production. Companies such as Linde
$LIN (+0.54%), Air Liquide
$AI (-0.22%), Air Products
$APD (+0.04%) and Nippon Sanso
$4091 (+0.26%) are major manufacturers of process gases such as nitrogen, hydrogen and argon.

Inspect

As mentioned, every single layer in the manufacturing process of a die must be perfect in order to obtain a functional die at the end. Any small deviation or foreign particles can impair the functionality of the die. As the function of the die can only be checked precisely on the finished die, it is advantageous to inspect the individual layers for defects and deviations during production. Special machines are required for this, which must be able to do different things depending on the layer. Manufacturers of such machines include KLA
$KLAC (+0.46%) or Onto Innovation
$ONTO (-0.62%).

The following applies to almost all of the companies mentioned in this section: the companies are highly specialized and have quasi-monopolies on the machines for certain process steps. quasi-monopolies. Suitable equipment therefore usually costs several million dollars. In addition, some of the systems are so complex that they can only be serviced by the manufacturer's own service staff, which results in recurring service revenues for every machine sold. As a rule, each machine requires several highly specialized engineers to ensure long-term stable operation.

5) FROM THE DIE TO THE FINISHED CHIP

Once the wafer has been processed, the dies on the wafer are checked for functionality. There is highly specialized equipment for this, so-called probers. These probers test each individual chip several times, if necessary, to check the functionality implemented in the design. Manufacturers of such probers include Teradyne $TER (-0.02%), Keysight Technologies
$KEYS (+1.5%), Onto Innovation or Tokyo Electron. These probers have to control each individual die, some of which are only a few square millimetres in size, and contact the corresponding much smaller test structures with tiny needles. The testing process is sometimes outsourced to entire companies that offer die testing as a complete package. One example of such providers is Amkor Technology
$AMKR (-0.58%).

The processed and tested wafer is now sawn to obtain individual dies. The dies that are found to be good are then integrated into a protective housing in the backend. The dies that have not passed the functionality test are either sorted out or (depending on the error pattern) processed as a variant with reduced functionality similar to those with full functionality. After a final functional test in the package, the chip is ready for use.

6) FOUNDRIES, FABLESS & SOFTWARE

Now that we have an overview of the complex process of manufacturing a chip, let's zoom out a little further to understand which companies perform which tasks in the semiconductor industry.

It's funny that not once in the manufacturing process has the name Nvidia $NVDA (+2.01%) or Apple $AAPL (+1.34%) has been mentioned? Yet they have the most advanced chips, don't they?

The pure production of the chips is done by other companies - so-called foundries. Companies like Nvidia and even AMD $AMD (-0.35%) are in fact fablessThis means that they do not have their own production facilities but only supply the chip design and let the foundries manufacture the actual chip according to their design.

The design of a chip is like the blueprint for production - the foundries then take over the recipe creation and the actual production. There is special software for designing chips. Companies known for this software include Cadance Design
$CDNS (+0.16%) and Synopsys $SNPS (-1.06%). But also the industrial giant Siemens
$SIE (-0.29%) now also supplies software for designing integrated circuits. Synopsys also offers other software for data analysis within foundry production.

Speaking of foundries; the best known foundry is probably TSMC
$TSM, (+0.43%) which is the global market leader in foundries. TSMC designs itself no chips itself and specializes exclusively in the production of the most advanced generations of chips. Another major player that also masters the most advanced structure sizes is Samsung $005930. In contrast to TSMC manufactures Samsung also produces its own designs. Other large foundries are Global Foundries
$GFS, (+0.33%) which was originally a spin-off from AMD and the Taiwanese company United Micro Electronics
$UMC. (-0.79%)

The best-known fabless companies - i.e. companies without their own chip production - are Nvidia, Apple, AMD, ARM Holdings
$ARM, (-2.66%)
Broadcom $AVGO (+0.31%), MediaTek $2454 and Qualcomm $QCOM. (+2.48%) In the meantime Alphabet $GOOGL, (+0.94%)
Microsoft $MSFT, (-1.05%)
Amazon $AMZN (+0.26%) and Meta $META (-2.23%) have designed their own chips for certain functionalities and then have them manufactured in foundries.

In addition to foundries and fabless companies, there are of course also hybrid models, i.e. companies that take on both production and design. The best-known examples of this are, of course, companies such as Intel
$INTC (+1.8%) and Samsung. There is also a whole range of so-called Integrated Device Manufacturer (IDM)which for the most part only manufacture their own designed chips and do not accept customer orders for production. Well-known companies such as Texas Instruments
$TXN, (-0.01%)
SK Hynix
$000660,
STMicroelectronics
$STMPA, (-0.02%)
NXP Semiconductors
$NXPI, (+0.87%)
Infineon $IFX (-1.35%) and Renesas $6723 (+2.12%) are among the IDMs.

FINAL WORD

The aim of this article was to provide an overview of the complexity of the semiconductor industry. I do not, of course no claim to be complete, as there are of course many other companies that are part of this value chain. As Getquin thrives on active exchange, I'll give you some food for thought to discuss in the comments below the article:

• feel free to link any other companies in the comments if you think I've forgotten any relevant ones
• what was the most surprising new information for you from the article?
• which companies from the article have you never heard of?
• before reading the article, did you know approximately how a modern chip is produced and what steps are necessary for this?

In general, I can recommend the 20-minute YouTube video at [4] to any interested reader. It provides an excellent animated overview of the manufacturing process of modern chips.

Stay tuned,

Yours Nico Uhlig (aka RealMichaelScott)

SOURCES:

[1] Wikipedia: https://de.wikipedia.org/wiki/Wafer

[2] https://www.halbleiter.org/waferherstellung/einkristall/

[3] https://solarmuseum.org/wp-content/uploads/2019/05/solarmuseum_org-07917.jpg

[4] Branch Education on YouTube: "How are Microchips Made?" https://youtu.be/dX9CGRZwD-w?si=xeV0TYgJ2iwNOKyO

Preparation for a temporary exit from the system.

Good morning everyone.

I would like to hear some suggestions on how you would proceed in my position.

I have been unemployed for almost 9 months now and only get rejections or no replies. I am from the logistics sector. I am 46 years old, currently live alone and have no children.

The economic situation in Germany is currently a challenge, ALG 1 is over at the end of March 2025. That means I need an alternative source of income if nothing changes by then. With my capital, there won't be any citizen's income anyway, and it will be almost impossible to hide the capital somewhere quickly. And in my situation, I don't want to be dependent on the state either, if at all possible.

In any case, I need a strategy to bridge the time after the end of ALG 1 benefits. Who knows how long it might take.

My aim is to cover my living expenses with the capital I have and, if possible, to generate a monthly cash flow of between 1500 - 2000€ net per month. That's enough for me to live a normal life, without big jumps of course. So my portfolio must be between 22000 - 28000€ gross per year.

The return is also secondary in this case, a high payout is important. This inevitably means taking on more risk.

I already have the $QYLE (-1.41%) in the portfolio, but in this case I would invest my entire $VWRL (+0.18%) and $CSNDX (-0.01%) and add JEQP IE000U9J8HX9. Roughly speaking, I would need at least 300k in JEQP IE000U9J8HX9. I personally rule out individual shares for the time being.

Part of $QYLE (-1.41%) may be sold to lend my brother the equity for the possible purchase of a property in Singen. But I'll get it back as soon as he sells his other apartment around the corner from me next year.

The only thing that worries me is the statutory health insurance. If I want to stay with voluntary statutory insurance, I don't understand exactly how the monthly contribution is calculated. About 12500€ a year is tax-free, because of the basic tax-free allowance plus 1000€ exemption.

Dividends are income, of course. The contribution for the GKV is calculated from this. But what if you live from your current account and cash? That does not generate any income. Is the minimum contribution for GKV calculated from this? I don't understand this system.

Perhaps someone can recommend who I should contact with this question. Health insurance company, tax consultant or lawyer? Which specialty?

In any case, I would like to hear your suggestions on how you would proceed in my case. Please without moralizing like part-time etc., because I don't want to sell myself for an apple and an egg or temporary work (yet).

Thank you very much