Autos: Chip Shortage Good News/Bad News

Investment Analysis Clubs Destiny Solutions Corporation
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Auto Evolution headline: The Chip Shortage: The Good News and the Bad News for Carmakers

Sub-headline: 15 Aug 2022, 14:38 UTC · by Bogdan Popa

https://www.autoevolution.com/news/the-chip-shortage-the-goo…

The U.S. CHIPS act is supposed to give a boost to semiconductor manufacturing in the United States, with other countries also planning to offer subsidies to chipmakers that invest in expanded capacity in the region.

In the short term, however, the chip shortage is expected to continue until at least 2024, tech giant Intel says. The automotive industry will be among the most affected sectors, even if the production of chips for the computing and mobile market is eventually aligned with the demand.

In the meantime, chipmakers struggle with other challenges of their own. The rising costs of materials, as well as a shortage of equipment required for the production of chips, mostly as a result of geopolitical tensions in China and Europe, make the long-term manufacturing power impossible to predict, therefore fueling the uncertainty regarding the actual date when the chip shortage could come to an end.

$SOXL daily chart

https://schrts.co/RJHyYyBs

$SOXL weekly chart

https://schrts.co/fZVXzVBK

$SOXL monthly chart

https://schrts.co/RFAhsJIf

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Irregardless of the auto biz, do you have any particular chip companies you like? Besides Fritos…

I have NVDA, but I’m open to others.

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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I an in $SOXL again as a day trade for all things chips, but like you, I favor $NVDA indvidually.

If and when this $SOXL trade closes with a GAIN, I’ll buy $NVDA shares at “zero-cost” from my gains in the $SOXL trade. I think Jensen is one of the best CEOs on this planet, and I don’t know if you’ve seen their A/I autonomous drive initiative, but I feel it is one of the best out there.

There’s a guy on Twitter I’ll hunt down who is the sharpest analyst on chips. He writes transcript notes in threads on days of cc’s and he’s always supplying sugar cubes of info about which manufacturers of which machines are in ascent or descent depending on all the new semi-conductor constructs coming out of DARPA, MIT, etc.

Hang tight, let me get his bio page to you here. And this is a note for myself: read this guy, Eric Jhonsa, daily for your chip fix.

https://twitter.com/EricJhonsa

This is Eric’s latest on $ON where he also introduces you to a screenshot from an investor slide show (which he does all the time). Like I said, if you’re looking at semis (I am) this guy is always on a conference call live tweeting things which stand out to him. He writes for The Street, btw.

https://twitter.com/EricJhonsa/status/1558195750109974529

Here’s $ON’s SiC presentation, for those interested. I trimmed my position a little today, just because action like this suggests hot money is chasing. But at 14x forward EPS, the stock still doesn’t look expensive.

Here’s $ON’s SiC presentation, for those interested. I trimmed my position a little today, just because action like this suggests hot money is chasing. But at 14x forward EPS, the stock still doesn’t look expensive.

Also, Rob, I just saw these factoids on Twitter tonight for $NVDA:

https://twitter.com/Trading_Safely/status/155925736573157376…

$NVDA has been analyzed by 42 analysts, with a consensus of buy. The mid price target is $223.50, and the high price target is $433.82. It is one of our top stocks, with an average volume of 54.77M.

p.s. In the past I have traded $NVDA with options. I love the volume, OI, and deltas on some of their calls. But going forward, any gains made from trading $SOXL or even Calls in $NVDA - all gains plow right back into $NVDA.

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Thanks, PT. Lots of helpful stuff for now and ongoing. :slight_smile:

I think I could be a lot smarter with my options purchases. Typically, I buy the longest ones (like Jun24 NVDA, which is everything I have with NVDA (~6% of portfolio). $170s and $180s). I suspect that isn’t efficient for maximum growth, but it gives me more latitude for being wrong on timing.

BUT… earlier, I bought some CRWD Oct22 calls and it’s been more profitable than I expected. They report 9-1 and I’ll sell shortly thereafter. Maybe reposition higher and further out.

I’ll start following Eric Jhonsa. It’ll take a while probably to adjust my thinking for non-NVDA chip companies. Different valuations with the cyclicality. But it seems like this will be a longer than usual up cycle.

Trip to FL: Seems we were chewing up electrons faster than originally expected by the trip planner. Wasn’t a problem, but we needed an extra stop. Got to PCB with under a 40 mile range, which is hard on the battery. We hit the Supercharger shortly after checking in for a few miles and will hit it again before leaving to near the top. Taking a slightly longer route back in order to avoid Atlanta (through Macon and Augusta). We probably should have scheduled a later time to visit… heat/sun is still too intense for my liking. Plus, they built up the beach since our last visit and it’s hard to walk on the slope near the water. Might grab a week on the SC coast for later this year instead of returning to PCB soon.

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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$SOXL daily chart (just posted a Bullish crossover on the 20 x 50 EMAs)

https://schrts.co/pGiisJRF

$SOXL weekly chart

https://schrts.co/YvTDWUED

$SOXL monthly chart

https://schrts.co/DtqKEcfd

$NVDA daily chart

https://schrts.co/YvGGGcgP

$NVDA weekly chart

https://schrts.co/fwASdxED

$NVDA monthly chart

https://schrts.co/eIhyrUht

Rob, $ON slideshow which Eric Jhonsa linked us to on Twitter looks very interesting. This seems to be a backdoor play on electrification charging and vehicles. Just browsed it and its over my head. So, making a cup of coffee to come back to this and see if I can figure out what makes their chips so special. (Check out slide #8, and if you have a background in chips, Rob, might you opine on $ON architecture or whatever is being discussed here and explain this in plain English? Thanks.

https://schrts.co/eIhyrUht

$ON daily chart just hit its ALL-TIME HIGH on Monday, 15 AUG 22 :+1::eyes::ok_hand:

https://schrts.co/YVMVAQRs

$ON weekly chart

https://schrts.co/IMVJBjYY

$ON monthly chart

https://schrts.co/EnUMAmwz

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Rob, I buy the long ones too, for safety purposes. If I can scrape buy a 20% gain, I’m happy. But like today, a one-day hold of $LLY is already up 30%.

p.s. $CRWD is one of my longterm holdings. It’s the only “Saul Stock” I never sold out of. I add to the stash by taking gains in some other traded and buying some more $CRWD. (I did this today as a matter of fact. Added some $CRWD $CWH $F and $AMLP from gains in just closed trades.)

You said, “Got to PCB with under a 40 mile range, which is hard on the battery.”

Might you explain why? Does running the battery down to a low range mean the battery degrades more quickly?

Okay, safe trips up and down I-95, and if you see any new buildouts of chargers by any company anywhere, call them out here.

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Just browsed it and its over my head. So, making a cup of coffee to come back to this and see if I can figure out what makes their chips so special. (Check out slide #8, and if you have a background in chips, Rob, might you opine on $ON architecture or whatever is being discussed here and explain this in plain English? Thanks. – PT

LOL… I haven’t looked yet, but I’m too much of a knuckle dragger to be a likely source of insight there. LOL

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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You said, “Got to PCB with under a 40 mile range, which is hard on the battery.”

Might you explain why? Does running the battery down to a low range mean the battery degrades more quickly?

Okay, safe trips up and down I-95, and if you see any new buildouts of chargers by any company anywhere, call them out here. – PT

Tesla recommends to keep charge levels between 20%-90% for battery longevity. Over time, the available range declines and big discharges accelerate that process. Of course, it’s kind of an unknown IMO because the expected battery life is not clear. How long will it last? At least 300k miles, maybe quite a bit more.

Now, given that we only put on maybe 20k miles/year… between BOTH Teslas… and we’re around 70 years old… battery life doesn’t appear to be much of a concern. :slight_smile: But we’d like to take care of things anyway. Eventually, I imagine we’ll get around with either a self driving car or Uber. I’d like to think that’s at least 90 years of age, but maybe I’m kidding myself. :slight_smile:

We took I-85 much of the way here. Sort of a backwoods plus I-75/I-20 back to Charlotte. As for charger buildouts, those just aren’t noticeable. You don’t even know about existing chargers without the internet or the Tesla trip guidance. One thing I DO notice is that major gas stations (like Pilot, etc) are adding chargers just to bring people in to their convenience stores.

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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ON would like us to believe that the future of semiconductors is based on silicon carbide and they point to a lot of markets that would benefit from it.

Maybe. I’m in no position to judge.

HOWEVER…

… when the tech is uncertain to me, I can always go back to the bottom line (of which there is often more than one).

In this case, I look at ON’s sales. Recent performance and expected performance.

(And this is where the bottom line comes in…)

I don’t see anything in ON’s performance to impress me.

Not saying it isn’t worth watching, but for me… not worth buying at this time.

That’s my two pesos.

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

1 Like
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Just keeping this thread going with $NVDA, $ON and $SOXL charts:

p.s. I exited $SOXL Friday for a 3-day win of a swing trade. I’ll be playing this one a lot going forward, using gains in closed trades to buy LTBH shares of $ON and $NVDA at opportune spots.

$SOXL daily chart

https://schrts.co/maRUQJpx

$SOXL weekly chart

https://schrts.co/PazZgiKV

$SOXL monthly chart

https://schrts.co/VqcgyUGD

Another one I exited yesterday was $ON for another winning trade. Kept gains from that trade in $ON shares which also was helped by that winning trade in $SOXL as well. Just didn’t want to keep either over the weekend. I can always re-enter early next week if the charts still look good.

$ON charts are in this thread I just completed earlier this morning:

https://discussion.fool.com/wsj-tech-outlook-darkens-35162369.as…

And then there’s $NVDA which so many are writing off as “dead money” for the next two-quarters. I’m looking for the bottom somewhere in here, and this would be my fave play in A/I driving stocks (and a fave also in gaming & robotics.) I might discover new Autonomous Driving stocks in the next 12-months, but the more demonstrations I see of $NVDA A/I for cars, the more I’m thinking it’s one of the very best Driver Assistance programs out there, way better than offerings from many auto manufacturers.

$NVDA daily chart

https://schrts.co/dsEnYbuK

$NVDA weekly chart

https://schrts.co/zdGBnSCQ

$NVDA monthly chart

https://schrts.co/enNrpxfB

One more thought: we know that with Ethereum’s hard fork coming which changes all computations for Ethereum from Proof of Mining/Work to Proof of Stake, the power of the $NVDA 30s chips are no longer in demand for crypto on that platform and the chips formally used for Ethereum Proof of Work (chewing through 99% more electricity and computing power) means eBAY has a load of these chips to work through.

Well, this past Friday, the news out of the White House is the government might be taking a harsher look at Bitcoin Mining and it’s burn of electricity. Should the Feds step in and demand better from the Bitcoin Cult, we could see more $NVDA 30s chips come onto the re-sell market. Just keeping that in the back of my mind, should it hurt the share price even more.

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