February 1st, 2022 | 10:38 CET
BYD, BrainChip, Daimler: The chip strategy decides
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
BYD: Why the Chinese are well positioned
Apart from Bosch, no other company has built a chip factory in Germany in the past 15 years - no wonder Chinese automakers are rubbing their hands in the face of the shortage. Although China is also a minor player in the international production of semiconductors compared to Taiwan and South Korea, the situation in the Middle Kingdom is at least better than in Europe: China produces 16% of the world's chips, Europe 9%. Chinese carmaker BYD is also getting into the act. The Company manufactures cars and has its own subsidiaries for batteries and chips.
This position pays off, especially in the current shortage. The Company in which Warren Buffett, among others, has invested, impresses above all with its growth. In 2021, BYD sold 232% more electric vehicles and hybrids than in the previous year. Tesla's growth was only around 87%. But while Tesla only sells electric models, BYD also offers hybrid models, which are very popular in China. Consequently, BYD also has more models than Tesla.
BYD's stock crashed recently despite the rich growth, losing more than 10% within five days. However, if you look at the long-term trend, you can still see the stock in a positive trend over a period of several years. At the current level, it will be decided where the journey will lead. However, with its own chip production and the most important sales market on its doorstep, BYD is ideally positioned to gain market share in the future.
BrainChip: Financial giants invest in AI chips
The innovative chip developer BrainChip is not yet concerned with market share. Instead, the revolutionary technology must first be launched on the market. But from the market's point of view, it is evident that this will succeed: the share price has risen rapidly in recent weeks and demonstrated great relative strength even in the midst of the correction. BrainChip designs semiconductors based on the human brain. The chips are self-learning, self-sufficient and require hardly any energy. The Company, therefore, wants to score points above all in autonomous driving and powerfully support the vision of the mobility turnaround.
Looking at the list of BrainChip's 20 largest shareholders shows that BrainChip is not alone in this vision. They include HSBC Australia, Citicorp, Merril Lynch Australia, BNP Paribas, JP Morgan, UBS, LDA Capital - even ex-BrainChip CEO Louis Dinardo remains loyal to his former Company. After the correction, BrainChip could be a promising bet on the future of chip technology. The current CFO, Ken Scarince, will present his Company and answer questions at no cost at the online International Investment Forum on February 17. Growth investors should make a note of this date and all other presentations by the top-class panel.
Daimler needs a European chip solution
BrainChip's chips are also likely to be of interest to traditional automotive producers, such as Daimler. After all, it makes sense to evaluate the potential of the future in good time. Looking at the valuation of Daimler's stock, the market has moved sideways over the past three months, but the share is still in solid long-term waters. Fundamentally, Daimler also came through the second crisis year 2021 well. Both the sales of all cars and the growth in e-cars can be seen at Daimler. On top of that, the Company offers a dividend of almost 5%. However, Daimler also needs to keep its eye on the ball regarding chips and other key upstream products to remain competitive. Both current supply and access to new chip generations are crucial for a company like Daimler.
Industrial companies like Daimler are likely to benefit most from the new European semiconductor offensive. But it will be some time before the strategy bears fruit. It also remains questionable whether the Europeans will be able to secure technological leadership so quickly. Innovative disruptors like BrainChip, therefore, remain attractive.
Conflict of interest
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