The 9 High Technology Value Chains
We define 9 high tech value chains, where we believe most of America’s innovation occurs in sustaining product innovations and radical technology crossover between industrial sectors.
The nine value chain main categories are:
1. Chemicals
2. Precision Instruments
3. Engine Equipment
4. Computer and Electronic Equipment
5. Information Services
6. Pharmaceuticals
7. Fertilizer and Chemical Products
8. Industrial Machinery and Distribution Equipment
9. Aerospace
Each main category of a value chain has members from different industrial sectors who trade with each other in producing a final finished good or product. Sometimes this activity is called a “supply chain, or a value chain.”
In the Feser methodology of deriving the value chains, each value chain consists of industry i, for example firms in Petro Chemicals are trading partners with firms in the 13 other industrial sectors who make up the Chemicals Value Chain. Firms from the Petro Chemical sector buy supplies from its suppliers (upstream firms) and sells to firms who are customers in (downstream) industries. For example, Petro Chemicals sells products to Plastic Materials & Resins.
In principle, there is a distinct value chain for each main value chain category. For example, the Chemicals Value Chain can be identified by the 13 members who trade with each other.
In practice, the Feser method applies statistical factor analysis on coefficients in a national input output table to identify a reduced number of value chains that are, in essence, groups of industries with highly similar—and therefore linked—chains. The great value of the Feser method is that it describes both the production technology of how a good is made, and also identifies the market of buyers for that good, as it winds its way to becoming a finished good, in the final demand marketplace.
In the Feser method, any given value chain category would be comprised of members from industrial sectors whose trading relationships and linkages with one another are stronger than their linkages with sectors outside the group.
In the New Technology Markets Newsletter, we start with the nine high technology value chains, and apply the insights from a theory of technological evolution, called Structural Evolutionary Regional Economic Theory (SERET) , to come up with ideas and insights for investment opportunities in future markets.
The Nine High Technology Value Chains and Individual Industrial Sector Members
Title of Input Output Industrial Sector Members
Value Chain Classification
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1. Chemicals
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325110
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Petro Chemical Mfg.
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325211
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Plastic Materials & Resins Mfg.
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325190
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Basic Organic Chemical Mfg.
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325212
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Synthetic Rubber Mfg.
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325222
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Organic Fiber Mfg.
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325520
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Adhesive Mfg.
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325613
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Surface Active Agents Mfg.
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325221
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Cellulosic Organic Fiber Mfg.
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325998
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Misc. Chemical Products Mfg.
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325991
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Custom Compounding Resins
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325320
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Pesticides/Agric. Chemical Mfg.
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325311
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Nitrogenous Fertilizer Mfg.
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325910
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Printing Ink Mfg.
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2. Precision Instruments
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334513
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Industrial Process Variable Instruments
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33451A
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Watches Clocks, Measuring and Control Instruments
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334516
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Analytical Lab Instruments
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334512
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Automatic Environmental Control Instruments
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333314
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Optical Instruments and Lens Mfg.
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334514
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Fluid Meters and Counting Devices
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335314
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Relay and Industrial Control Mfg.
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334515
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Electricity and Signal Testing Instruments
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3. Engine Equipment
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33396
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Fluid Power Pump and Motor Mfg.
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33361A
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Speed Changers/Mechanical Power Transmission Mfg
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333911
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Pump & Pumping Equip Mfg.
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333912
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Air & Gas Compressor Mfg.
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333618
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Other Eng. Equipment Mfg.
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332910
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Metal Valve Mfg.
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333995
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Fluid Power Cylinder and Actuator Mfg.
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333995
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Measuring & Dispensing Pump Mfg.
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333611
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Turbine & Turbine Generator Mfg.
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332994
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Small Arms Mfg.
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33399A
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Scales, Balances, Miscl. Machinery
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333991
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Power Driven Hand Tool Mfg.
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335312
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Motor & Generator Mfg.
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336300
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Motor Vehcile Parts Mfg.
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333992
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Welding & Soldering Equipment Mfg.
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336992
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Military Armored Vehicles Mfg.
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4. Computer & Electronic Equipment
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334112
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Computer Storage Device Mfg.
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33441A
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Other Electronic Equipment Mfg.
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334119
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Computer Peripheral Equipment Mfg.
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334220
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Broadcast & Wireless Communications Equipment
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334515
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Electricity & Signal Testing Instruments
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334511
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Search Detection & Navigation Instruments
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334111
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Electronic Computer Mfg.
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334210
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Telephone Apparatus Mfg.
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334413
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Semiconductors & Related Device Mfg.
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334113
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Computer Terminal Mfg.
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334517
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Irradiation Apparatus Mfg.
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334411
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Electron Tube Mfg.
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334510
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Electromedical Apparatus Mfg.
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5. Information Services
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514200
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Data Processing Services
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54151A
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Other Computer Related Services
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541512
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Computer System Design Services
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511200
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Software Publishers
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541511
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Custom Computer Programming Services
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514100
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Information Services
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513300
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Telecommunications
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513200
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Cable Networks and Distribution
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6. Pharmaceuticals
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325612
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Polish and Sanitation Goods Mfg.
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325620
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Toilet Preparation Mfg
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