26. May 2021 | 11:12 CET
Chips sold out: Nvidia, Infineon, AMD, Defense Metals - E-mobility empties the shelves!
The high-tech industry is currently not coming to rest. The great excitement in the industry is enormous, resulting in delivery bottlenecks for important control and sensor chips, especially for the automotive industry. In addition to delayed deliveries, there are also general resource bottlenecks in the raw materials sector. Often, 50% higher immediate delivery prices for individual components have to be included in the calculation. The chip shortage is a side effect of the Corona Crisis. Due to home offices and misjudgments of the limited manufacturing capacities, supply bottlenecks for semiconductors and components have been occurring since 2020. We take a look at an industry that has had a hard time since the trade war between the USA and China.
time to read: 4 minutes by André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Nvidia - Super numbers expected and 1:4 stock split
Graphics chip maker Nvidia (NVDA) announced a 1-for-4 stock split on Friday, just days before it reports first-quarter results. Nvidia shares, which were among the top performers on the NASDAQ in 2020, reacted to the news with a jump of more than 4%. The Santa Clara, California-based CompanyCompany has been booked solid with its graphics cards for months. Much of the demand comes from pandemic gaming PC makers, gaming consoles, and crypto miners, who prefer to use Nvidia's high-performance graphics chips.
Nvidia plans to report its first-quarter results after the market closes today. Analysts expect revenue of USD 5.4 billion and earnings per share of USD 3.27. That would represent 75% and 82% growth, respectively, proof that things are humming at Nvidia. The announced stock split is intended to make the stock more tradable for retail investors. In the past, the publication of such a plan alone led to real price jumps. However, the planned split still has to be approved at the AGM on June 3.
The NVDA share is at an all-time high of USD 624, corresponding to a market capitalization of USD 388 billion. Incredible what has become of the CompanyCompany in 5 years, the share price has increased more than tenfold in this time.
Infineon - Leading role threatened by China
For the German high-tech Company Infineon (IFX), tough competition is increasingly growing in China. One example is the upcoming launch of the new IGBT6.0 chip, which the Chinese manufacturer BYD has just announced. Infineon currently holds 58% of the market and BYD only 18%, while the other ten well-known manufacturers together account for just 24%. Infineon can still be said to have a dominant position in this segment.
However, especially in the case of the IGBT chips required in the automotive industry, the economic and political trends that will favor the Chinese challenger over the Germans in the coming years are already apparent. The performance and quality characteristics are constantly improving and are gradually causing the German technological edge to fall behind.
According to a market study by CITIC Securities, the Far East manufacturers' market share will quickly grow to over 20%. The Chinese BYD, one of the biggest beneficiaries of the new boom in e-mobility with its e-cars, is now producing its IGBT chips and is considered a serious competitor of established semiconductor producers such as Infineon or Mitsubishi Electric at the latest since 2019.
Infineon is still much more broadly positioned with its product range than BYD. After all, since its acquisition of Cypress Semiconductors, the Germans are the world's largest automotive chip manufacturer. The Munich-based Company is also currently the clear number one in MOSFETs, memory chips and special chips for powertrain, ADAS or infotainment systems. After a brief consolidation, the IFX share price has risen again to EUR 32.2, with an all-time high at EUR 37.3.
AMD - A new chip with the codename Milan-X
Rumors about a stacked processor solution from Advanced Micro Devices (AMD) have been around since the long weekend, and yesterday (Tuesday), a codename even appeared on the Internet: Milan-X.
A mysterious "lasagna tweet" opened the rumor mill around the new chip wonder on May 24. Further sources interpreted the following: The codename Milan-X indicates that its use is planned for the professional segment for now. In later generations, the design could find its way into other areas, just as Intel will soon try to do in almost all segments. The market is in great turmoil here as well.
The fact that AMD is working on these solutions has been known for years and was last officially confirmed a year ago. AMD's goal is quickly formulated: Much more bandwidth than anything available on the market so far! AMD stock has peaked at USD 95 and is currently consolidating at USD 78. We are curious when the high-tech Company from Santa Clara will come out with the news.
Defense Metals - Capital increase successfully placed
The manufacture of high-tech devices requires chips in abundance and sensors, permanent magnets, and other sensitive components. These materials always contain a certain amount of rare earths. Deposits of these special metals are found primarily in China (more than 80% of the world's reserves) and North America. In particular, we are talking about electromagnetically important elements such as neodymium, praseodymium, dysprosium and terbium.
Defense Metals Corp. is a Canadian explorer focused on exploring and producing rare and critical mineral deposits commonly used in the power market, military, and national security applications. High-strength alloys and rare earth magnets are also needed to produce green energy, such as in solar power plants or wind turbines. Here, the Company aims to become a sought-after supplier.
According to current studies, demand in 10 years will be five times the amount needed today. Here the current trends in the e-mobility and electricity storage industries are simply extrapolated forward. At the moment, governments around the world agree that strategic metals have long been talked about. Threats to a supply-side dominated by China come from many political directions.
Defense Metals Corp. has completed its announced private placement of common shares and warrants to purchase common shares to institutional investors, raising aggregate gross proceeds of CAD 5 million for 15.6 million common shares. The related warrants are exercisable at any time until May 17, 2024, at an exercise price of 42.5 Canadian cents per common share. Defense intends to use the net proceeds from the placement to complete a preliminary economic assessment of the Wicheeda project, a pilot plant, undertake a further exploration program and environmental studies.
With a market price of CAD 0.29, Defense's market capitalization reaches CAD 22.4 million. The current decline is due to the ongoing placement. After that, the share price should rise steadily again; in February, it stood at over CAD 0.70.