Unlike photo-sharing app makers and Web-based business software developers, who constantly have to put resources into tracking and beating back the new competition, companies in the chip market can focus their investments on products and listen to the demands of their customers.
"Over the long term, that's what creates competitive moats," said John Pitzer, an equity analyst covering semiconductor companies for Credit Suisse in New York. "In all of tech, they tend to have the highest barriers to entry."
Silicon Laboratories hasn't seen a direct correlation in its recent stock performance—it's up only 8 percent in the past year—but smart investors are finding plenty of opportunity in these chip companies. The Philadelphia Semiconductor Index (SOX), consisting of 30 chip-related stocks, has jumped 27 percent in the past year, through Aug. 6, topping the 12.5 percent gain in the Standard & Poor's 500 and 23 percent Nasdaq 100 return. This year, the semi index is up 12.5 percent versus an S&P 500 return of 3 percent and Nasdaq 100 gain of 7 percent. The SOX members are benefiting from a spate of acquisitions in the market, which is leaving fewer players to compete for the pool of available dollars. The most recent was Applied Materials' agreement last year to buy Tokyo Electron for more than $9 billion, a deal that's yet to close.
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Lam, a major equipment supplier to chipmakers and No. 16 on the CNBC RQ 50 list, has been a recent winner, with its stock up 40 percent in the past 12 months, through Aug. 6. The Fremont, California-based company sells to the likes of Samsung and TSMC and is profiting from surging demand for chips in all sorts of mobile devices. In June industry group Semi forecast that semiconductor fab-equipment spending would jump 24 percent this year, to $35.7 billion, and another 11 percent in 2015 to near-record levels.
Ruben Roy, a semiconductor analyst at Piper Jaffray in New York, calls Lam his favorite stock in the semiconductor equipment market.
"They're a share taker," said Roy, who has an $80 price target on the stock, approximately 15 percent above its current share price. "From a pure R&D perspective, they've probably done the best job over the past five years."
Lam CFO Doug Bettinger said the company's R&D expertise comes from close interactions with its customers and research institutions, which are critical to meet the engineering challenges of building more sophisticated features onto smaller chips. Lam signed an agreement in June with Imec, a nanoelectronics research center in Belgium, expanding an R&D partnership that includes sharing of tools and resources for the development of integrated circuit technology.
"We spend a lot of time talking with our counterparts at a customer level, trying to understand what they're going to need in three years and how can we work together with them to anticipate what's going to be needed," Bettinger said. "There are only so many dollars you can spend to do all the development you need to do and still meet the financial model for your investors," he said.
—By CNBC's Ari Levy. Follow him on Twitter: @levynews