Has anyone noticed the recent jump in share prices for anything semiconductor related companies lately!
Micron jumped up after they beat expectations for their recent ER
Yeah it’s honestly pretty crazy, you’ve got a few massive events all aligning.
Chip Shortage
The chip shortage has driven TSMC, Samsung, Intel to hike capex to increase fab capacity. It looks like the sector could be supply constrained until 2023 so they are all keen to take as much of that as possible.
TMSC: $100bn / 3 years
Samsung: $116bn through 2030 (just on logic)
Intel: $20bn though 2023
Politics
Coupled with that you’ve got the US and EU both trying to onshore foundries / boost domestic manufacture. The EU has allocated $145bn to increase it’s market share from 10% to 20% by 2030 and the US has similar goals with the CHIPS act to improve the US current 12% share.
These events means you’ve got 100s $bn of spending being pushed into the entire upstream supply chain.
The shortage is also meaning foundries are running at 100% capacity and selling everything they can at high prices (discounts have been slashed). This means they are hitting record revenues in the short term.
Chip designers are constrained by wafers, so they are doing the sensible thing and focussing on the highest margin products. So you’ve got Nvidia just releasing top end GPUs, AMD focusing on datacentre, high-end CPUs and holding off on lower-margin products (cheaper CPUs, consumer GPUs) and making record earnings
On top of all of that you’ve got the memory cycle ticking up as well, which is boosting that side of things.
It’s hard to know if all of that is enough to justify the current prices or if the markets are overreacting, I guess time will tell.
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Cheers
Wish I had invested more!
That is all on point.
Why Intel did so badly compare to the others? Is NXPI in S&P 500 since March overvalued the share?
There has been a lot of volatility with shortages etc maybe that had an effect?
There’s no single reason for Intel’s decline.
Part of it is external factors with the changing business landscape. The fabless/foundry model is just better - you need to have huge scale on the manufacturing side to be able to afford to keep up as process improvements gets harder and more expensive.
Intel should have seen this sooner and gone fabless or opened up a foundry business (which they have finally done).
Then you’ve got the change in workload, the rise of the GPU / heterogeneous compute and the move from monolithic dies to chiplets both of which Intel responded to too slowly.
The internal reasons are that Intel got complacent with their monopoly. They didn’t innovate hard enough and instead focused on how to make the most from their dominant position and distribute cash to investors rather than investing in themselves. This was personified in them appointing a CFO as CEO and failing to retain Jim Keller.
This is an oversimplification that neatly ties in with popular views: competition breeds innovation and
innovative companies need an engineering/product-oriented CEO, but that said I think it’s still a useful narrative to assess what went wrong.
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I added a few as the shares are oversold. I like the CEO visit to EU for support on building factory there. The West can’t just getting the chips from the Far East.
I’d have to disagree, I do think there is still potential with Intel and I even got close to buying in November, but I couldn’t quite justify the prices then and I certainly can’t now.
You’ve got to be in it for the long run, realistically it’s still 2/3+ years before they can even hope to make a competitive product (perhaps a peep between SR and Genoa) and so they are going to keep losing market share for at least that long. The silver lining is that if the shortage lasts long enough customers will be forced to buy Intel’s products, because nothing decent will be available. For example: if you need data centre CPUs and you want a Rome/Milan you will be waiting until at least August but if you settle for Intel’s Ice Lake you can have it next week.
You are braver than me, but if they can get enough government subsidies and you have the patience it could certainly pay off.
I take your points. I sold my AMD at 81-83 (bought 76-77) and got onto INTC on weaknesses. Last week I bought into NXPI on the dip after the report. NXPI maybe also be a take over target after the saga with QCOM and Samsung is after a takeover target. I am back onto AMD and added INTC on Tuesday’s dip. I will sell INTC when it reached oversold territory, hopefully soon. I won’t touch QCOM as Apple will develop their own chips. I don’t hold stocks continuously. I trade according to the price and events. I normally sold UK high dividend shares at a reasonable price before x-d and return to them later. I sold my RDSB mid April as x-d later this month.