Transformational innovation has been an engine of US economic growth since the nation’s founding. A review of the past suggests many parallels to what lies ahead.
Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities; Kayden Lee, Equity Strategist, CIO APAC; Kurt Reiman, Head of Fixed Income, CIO Americas; Delwin Limas, Equity Strategist, CIO APAC
For many, the mythology of the information technology sector’s rise begins in a modest garage somewhere in the neighborhood of Menlo Park or Santa Clara, California. But that’s not quite how it all started.
Before Silicon Valley became today’s hub, or central processing unit, for technology, there were numerous foundational discoveries dotting the US landscape along the way. For example, in the 1940s and 1950s, scientists at Bell Labs—a subsidiary of the telecommunications giant AT&T headquartered in central New Jersey—spearheaded much of today’s research into early transistors. A few years later and thousands of miles to the south in Dallas, Texas, researchers at a much smaller firm, originally founded for oil exploration, developed the first commercially viable silicon-based transistor. That breakthrough paved the way for that small firm to become one of the early titans of the microchip: Texas Instruments. Then, back on the Pacific Coast in Palo Alto, California, the first commercially viable integrated circuit was born at a company called Fairchild Semiconductor. Robert Noyce and Gordon Moore resigned from Fairchild to found Intel Corporation in 1968.
The early semiconductor industry was highly reliant on federal government policy and financial support, especially for defense and aerospace, to achieve scale and ultimately realize resounding commercial success. Government assistance of transformational technologies is nothing new. It played a large role in the building of the transcontinental railroad (Issue 1, 27 October 2025) and the viability of commercial aviation (Issue 3, 17 December 2025). Private-sector sales of semiconductors dominate today, but the industry benefited from government procurement to provide a kickstart.
After having lost substantial market share to Japanese producers of memory chips in the 1980s, the US sought and achieved market access concessions from Japan in 1986 in exchange for export restraints. The US government is once again actively working to revive some of the early dynamism of semiconductor production, exemplified by initiatives like the 2022 Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act. International competition to stay ahead in the artificial intelligence (AI) arms race, the harsh realities of supply bottlenecks during COVID-19, and the susceptibility to losing access to the critical minerals needed to manufacture semiconductors are all factors driving today’s policy decisions.
Ahoy, the AI race is on, helping to spur additional spending on semiconductor research, manufacturing, and design. The US semiconductor industry remains at the cutting edge of chip design, but it lags in manufacturing capabilities. While there is much anticipation about the future for semiconductors, nearly 70 years after their initial discovery, there is also no room for complacency.
Ulrike Hoffmann-Burchardi
Chief Investment Officer Americas
and Global Head of Equities
The speed at which technology has grown is staggering, and the invention of the microchip played a pivotal role in this evolution. The domino effect that began with the creation of the first transistor has led to the modern adoption of AI, and comparing the power of something as ubiquitous as today’s common smartphone to the computer behind the Apollo missions shows how far we’ve come in just a few short decades. The science behind semiconductors is equally as ever evolving, and the industry’s scale has reached unprecedented levels, making waves across markets and innovation.
Infographic sources
Sources: Semiconductor Industry Association, ASML, Google, Lam Research, Intel, MIPS, UBS as of 10 February 2026
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As AI adoption accelerates, chips will play an increasingly central role, not only in powering this transformation, but also in capturing a growing share of the resulting economic value and productivity gains in the years ahead. Semiconductors, therefore, remain a cornerstone of our AI Transformational Innovation Opportunity (TRIO).
Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities; Kurt Reiman, Head of Fixed Income, CIO Americas; Sunny Mehra, Equity Strategist, Consumer CIO Americas
Transformational innovation takes many forms. Often it emerges as a shiny, new product, like the incandescent lightbulb or the airplane, creating a before-and-after moment for everyone who encounters it. Steady refinements and advances in the product throughout its lifecycle help spur adoption and scale. Other times, innovation lies in the process. The discovery is not the product, per se, but rather in how it transforms productivity. The assembly line is a prime example of this “process” enhancement.
Meatpacking is often cited as a precursor to the assembly line given that it, too, relied on specialized labor and uniform inputs. However, these “disassembly” lines were powered by bulky, inefficient, and often hazardous steam engines to move a single conveyor belt.
The advent of electrification in the late 1800s heralded a shift away from steam to electric motors, but what it needed were visionaries to spur broader application. Even by 1910, electric motors were rarely used in manufacturing, despite their promise of modularity in product design and speed control at each stage of the process. This was the unique nature of Henry Ford's vision for the assembly line: bringing work to the worker using electricity to accelerate and control the production flow while specializing labor and standardizing components to reduce costs.
In 1913, the automobile was in its infancy. Only the truly well-heeled could afford one. For cars to become a mass-market product, Henry Ford knew that he would have to radically transform the production process to make them affordable. The assembly line boosted automobile output at much lower prices, leading to consumer surplus, steady employment, and reliable benefits throughout working life and retirement.
Even though the assembly line improved overall prosperity, it also led to the deskilling of workers, resulting in widespread job dissatisfaction and lost craftsmanship. Today, artificial intelligence (AI) and automation are having the opposite effect: disintermediating jobs with repetitive tasks, while increasing the value of specialization and once again promising to boost productivity.
As before, investing in transformational technologies requires a diversified set of exposures and an understanding of how the technology will shape the macro and political economies. Moreover, owning the application layer is every bit as important as the infrastructure layer. As we saw with electricity and the assembly line, one transformational technology can beget another. This lesson is instructive as we seek investment opportunities related to AI and automation.
Ulrike Hoffmann-Burchardi
Chief Investment Officer Americas
and Global Head of Equities
The introduction of the assembly line in 1913 drove gains in US prosperity. Ford increased auto production by nearly 200 times in just over a decade as the time to produce a car fell from more than 12 hours to less than two. Its profits more than doubled even as the company doubled daily wages. Millions would take to the road over the next decade as car prices fell by two-thirds. Although assembly line work was mundane, higher compensation reduced employee turnover rates.
Ford profits and Daily wages
Worker turnover rate and Production time
Ford statistics
Comparing Ford cars by model
Number of days worked to purchase car
Percentage of US population with cars
Automobile registration for passenger cars
Infographic sources
Source: Bruce W. McCalley, "Model T Ford: The Car that Changed the World" (1994), Shari Eli, Joshua K. Hausman, Paul W. Rhode, “The Model T” (2025), US Census Bureau, Bureau of Labor Statistics, Federal Reserve Bank of St. Louis, The University of Michigan Research, EBSCO, Library of Congress, The National Museum of Transportation, The Ford Motor Company, The Henry Ford Museum of American Innovation, UBS as of 22 January 2026.
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In 1913, Henry Ford introduced a new automobile manufacturing process that would change the world as we know it. His automotive assembly plants would produce 12 times more output—over two million units of the Model T—at two-thirds the cost in inflation-adjusted terms in just a decade. What was unique about the Ford assembly line was the combination of standardization and the use of labor-saving machinery, especially electric motors, to achieve ever-larger economies of scale.
The 250 years of U.S. innovation publication series highlights examples of how transformational innovation has been an engine of U.S. economic growth since the nation's founding. Today, we explore the history of the assembly line in the U.S. by referencing the next publication of the series: Made in USA - The assembly line. Featured are Kurt Reiman, Head of Fixed Income Americas, and Sunny Mehra, U.S. Consumer Sector Strategist, UBS Chief Investment Office. Host: Daniel Cassidy
Aviation
Into the wild blue yonder
17 Dec 2025
Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities; Kurt Reiman, Head of Fixed Income, CIO Americas; Nathaniel Gabriel, Equity Strategist, Industrials & Materials, CIO Americas
There are few moments in the history of American innovation as iconic as the Wright brothers’ first flight on the Outer Banks of North Carolina in 1903. Anyone who has ever visited the wind-swept, sand dunes of Kitty Hawk can only imagine their feat: traveling 120 feet in 12 seconds in a 750-pound aircraft (pilot included) with a 12-horsepower, custom-built, four-cylinder gasoline engine.
Blimps, balloons, and airships were already in operation during the mid-1800s, but they flew on the principle of buoyancy (lighter than air). The Wright Flyer achieved lift even though it was heavier than air. The engine provided the propulsion, but the Wrights managed to achieve sustained flight because their flyer integrated an improved wing design informed by testing in their own wind tunnel and by incorporating three-dimensional controls crucial to aerodynamics: pitch (front to back), yaw (side to side), and roll (top to bottom).
Having conquered the perilous and complex geography of the US with the building of the transcontinental railroad some 34 years earlier, American engineers, entrepreneurs, and innovators turned their gaze toward the skies with the invention of the airplane. Both the railroad and aviation benefited from federal legislation and governmental financial backing. Government procurement of airplanes during World War I gave the infant industry an initial early jolt and the resources to innovate. The postal service became the industry’s next large customer in the 1920s through an act of Congress.
Unlike the railroad, where the technology was already in place and the major achievement was the formidable investment in infrastructure, the success of aviation required iterative, technologically driven innovation flowing from research and development labs in the private and public sectors as well as academia. Steady improvements in range, altitude, speed, safety, and reliability spurred a growing revenue stream from commercial airlines to service paying passengers in the 1930s before the military once again became the dominant force in the airplane industry during World War II.
Buoyancy and aerodynamics are apt metaphors for investing in transformational innovations today. Investors must be wary of buoyancy when investment bubbles form and confirm that any outperformance isn’t just hot air. However, sound aerodynamics are the market equivalent of strong fundamentals like strong growth in revenues and earnings, justifying higher altitudes.
With that, please sit back, relax, and enjoy the flight in this, the third edition of our 250 years of US innovation series exploring the transformational innovation of aviation.
Ulrike Hoffmann-Burchardi
Chief Investment Officer Americas
and Global Head of Equities
Transportation and military strategy were forever changed with the first flight in 1903. Rapid advances in aviation technology increased a plane’s altitude, which extended a flight’s range and maximum speed while reducing the cost-per-mile of flight. Over the next several decades, passenger capacity of planes increased, as did the number of cities served and passengers per year. In the US today, 983 million passengers a year traverse more than 19,000 public and private airports nationwide.
Number of US airline passengers per year
US adults who've flown in an airplane
in %
Transport speed
Wright Flyer vs. Boeing 787-9 Dreamliner
Cost-per-mile flown
(Inflation-adjusted, January 1930 = 100)
Cities served in the US
(All public and private airports)
Plane capacity
Average number of passengers
Infographic sources
Source: United States Census Bureau, Boeing, Official Aviation Guide, Bureau of Transportation Statistics, Organisation for Economic Cooperation and Development, Wright Brothers Aeroplane Company, NASA, AirInsight Group, PIMA Air & Space Museum, Britannica, National Air and Space Museum, Air Transport Association of America, Lufthansa Group, Airlines for America, UBS as of 15 December 2025.
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The invention of the airplane in 1903 offered the promise of commercial passenger flight, but it was not until the late 1930s that the industry began to accelerate. Safety concerns, high ticket prices, and limited routes hindered widespread adoption. Airplanes were first validated through their use by the US government in combat and reconnaissance missions during World War I, and later for mail delivery by the US Postal Service. Download the full report to learn more.
The 250 years of U.S. innovation publication series highlights examples of how transformational innovation has been an engine of U.S. economic growth since the nation’s founding. Today, we explore the history of aviation in the U.S. by referencing the next publication of the series: Into the wild blue yonder - Aviation. Featured are Kurt Reiman, Head of Fixed Income Americas, and Nathaniel Gabrial, U.S. Industrials and Materials Sector Strategist, UBS Chief Investment Office. Host: Daniel Cassidy
Electrification
By the dawn’s early light
26 Nov 2025
Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities; Kurt Reiman, Head of Fixed Income, CIO Americas; Jay Dobson, James Dobson, Equity Strategist, Energy & Utilities, CIO Americas
The dawn of electrification
In October, we launched our 250 years of US innovation series with a focus on the transcontinental railroad. This month, I’m excited to present the second edition, featuring the dawn of electrification.
The incandescent lightbulb was a bright idea that sparked electrification. After nearly 3,000 prototypes, Thomas Edison created an incandescent lightbulb in 1879 with a carbonized cotton-thread filament that burned for 13 hours. His invention would receive US patent number 223,898 on 27 January 1880. Perhaps unsurprisingly, Edison got his start working in the growth industries of his era: railroads and telegraphs. Some of those early experiences spurred him to tinker and experiment to find new innovations, like the quadruplex telegraph that enabled four messages to be sent simultaneously. The same curiosity that spawned the lightbulb led to less well known but equally important advances in power distribution like generators, meters, and wiring switches. His overall approach to invention and entrepreneurship would inspire an entire new school of thought, embodied by people such as Henry Ford.
The lightbulb was a revolutionary invention, but it took more than a decade for electrification and its benefits to become essential for businesses and households—a necessity that sparked a wave of follow-on inventions. By the early 1900s, when electricity was just beginning to power commerce, the benefits of the telegraph and the transcontinental railroad were also becoming more entrenched. Productivity would rise rapidly in urban areas before climbing nationally in the 1920s as these transformational technologies reshaped the industrial and agricultural landscape. Electrification would spur yet another wave of productivity growth in the 1950s with the invention of household appliances.
Today, electric utilities are experiencing another significant growth phase—this time to power artificial intelligence (AI) and the energy needs for reshored manufacturing and electrification. Investors must now reconsider the electric utility sector, as its performance profile appears slightly less defensive and is instead powered by structural growth in revenues and earnings resulting from electrification and AI. In other words, the sector is experiencing accelerating power demand growth and investment like its dawning in the early light of the 1900s.
Ulrike Hoffmann-Burchardi
Chief Investment Officer Americas
and Global Head of Equities
The invention of the incandescent lightbulb sparked the electrification of America, driving steady gains in productivity, efficiency, and access to power. Historical data illustrate how advances in manufacturing and energy generation fueled economic growth and transformed households. From the first power stations to modern lighting, these figures showcase the scale of innovation that powered a new era of productivity and growth.
Avg. weekly hours worked, manufacturing
Wattage per coal-fired power station
Hours of light for a week of labor
Ford car assembly time and Ford Model T price
Efficiency of different lighting technologies (Lumen-hours per 1,000 Btu)
Share of US homes powered with electricity
Horsepower per wage earner in manufacturing
Infographic sources
Source: US Census Bureau, US Energy Information Administration, The Economist, Institute for Energy Research, William Nordhaus “Do Real Output and Real Wage Measures Capture Reality? The History of Lighting Suggests Not” (1994), Economic History Association, Our World in Data, UBS, as of 24 November 2025.
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The lightbulb was a revolutionary invention, but it took more than a decade for electrification and its benefits to become essential for businesses and households—a necessity that sparked a wave of follow-on inventions. Today, electric utilities are experiencing another significant growth phase—this time to power artificial intelligence (AI) and the energy needs for reshored manufacturing and electrification. Download the full report to learn more.
The 250 years of U.S. innovation publication series highlights examples of how transformational innovation has been an engine of U.S. economic growth since the nation’s founding. Today, we explore the history of electrification in the U.S. by referencing the next publication of the series: By the dawn's early light - Electrification. Featured are Kurt Reiman, Head of Fixed Income Americas, and Jay Dobson, U.S. Energy and Utilities Sector Strategist, UBS Chief Investment Office. Host: Daniel Cassidy
Transcontinental railroad
From sea to shining sea
27 Oct 2025
Ulrike Hoffmann-Burchardi, Chief Investment Officer Americas and Global Head of Equities; Kurt Reiman, Head of Fixed Income, CIO Americas; Nathaniel Gabriel, Equity Strategist, Industrials & Materials, CIO Americas
The spirit of enterprise
“No sooner do you set foot upon the American soil than you are stunned by a kind of tumult,” wrote Alexis de Tocqueville, taken by the pace of a young republic, in 1835’s Democracy in America. I, too, was stunned. Like Tocqueville, having been educated in Europe, America appeared to have turned things upside down. The question of “why could it work?” rather than “why will it not work?” seemed reckless yet enticing.
For the first time as a young professional, I stepped onto American soil in 2000 for a narrowly defined purpose—a project involving data, analytics, and a new way of systematic equity investing—much like Tocqueville, who crossed the Atlantic in 1831 under the banner of studying the US penitentiary system. I did not expect, however, to be swept into the same whirlwind that struck Tocqueville nearly two centuries earlier.
Everywhere I turned, I witnessed what Tocqueville described as “the spirit of improvement always abroad in the United States.” In conversations with investors, business leaders, and start-up entrepreneurs, I encountered the same impatience with the present. I saw associations—what Tocqueville had once described as “the art of pursuing in common the object of their common desires”—not only in civic groups but also in venture capital and incubators.
This passion, still vivid today, extends beyond material wealth. It is about impact, legacy, and the drive to leave something behind that is bigger than oneself. While I came to America for a project, I stayed because of this restless, inventive spirit that is part fever, part discipline, and part collaboration.
The almost 250-year history of the United States stands as a testament to the power of its unique democratic and societal spirit of entrepreneurship. Leading up to 4 July 2026, we will celebrate the semiquincentennial with a series of reports highlighting prime examples of uniquely American innovation and entrepreneurship that have not only transformed the US economic landscape but also impacted the world in profound ways.
I’m delighted to share our inaugural report, which takes us back to the mid-1800s and the building of the transcontinental railroad. This significant and foundational innovation revolutionized transportation and commerce, but only after overcoming numerous logistical and geographic challenges.
Transformational innovation has been an engine of US economic growth since the nation’s founding and is one of the three perspectives that shape our investment views. A review of the past—the capex cycles, capital flows, productivity booms, and wealth creation—suggests many parallels to what lies ahead, especially in the areas of AI, electrification, and longevity. This arc is what fascinates me most: the chance to learn from history in order to guide portfolios through the next wave of structural change.
Ulrike Hoffmann-Burchardi
Chief Investment Officer Americas
and Global Head of Equities
The transcontinental railroad, completed in 1869, revolutionized American society—it dramatically reduced travel time, lowered costs, and enabled economic expansion. Key “before” and “after” data illustrate the railroad’s transformative impact on transportation, industry, and settlement. From transit time traversing the continental US to population growth in the West, these figures showcase the scale of American innovation and infrastructure development.
Annual railroad construction
Number of official US time zones
Transit time to traverse the continental US
Total US rail mileage operated
Cost to traverse the continental US
Population in the western US
Telegraph wire built
Infographic sources
Source: United States Census Bureau, US Department of Transportation, Digital History, Iowa State Data Center, UBS
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The transcontinental railroad was a technological disruption every bit as significant as those unfolding today in the digital, energy, and health care arenas. Download the full report to learn more.
The 250 years of US innovation publication series highlights examples of how transformational innovation has been an engine of US economic growth since the nation’s founding. Today, we explore the history of America’s railroad by referencing the inaugural publication of the series: From sea to shining sea: The transcontinental railroad. Featured are Kurt Reiman, Head of Fixed Income Americas, and Nathaniel Gabriel, US Industrials and Materials Sector Strategist, UBS Chief Investment Office. Host: Daniel Cassidy
