Semiconductors

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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:+1: Cheers

Wish I had invested more!

That is all on point.