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February 9th, 2022 | 13:42 CET

Infineon, BrainChip, AMD - Chip industry holds enormous potential

  • Technology
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The chip industry is not even close to keeping up with production, which will remain the case in 2022. Overall, the industry's revenues increased by about 25%, partly due to manufacturers' price increases. To meet demand, companies are investing in their production facilities. Micron plans to invest USD 150 billion, Intel USD 20 billion. Due to the new developments in electric vehicles, artificial intelligence, cloud computing and the continuously growing data centers, demand will also likely increase further in the coming years. We, therefore, take a look at three chipmakers.

time to read: 4 minutes | Author: Armin Schulz

Table of contents:

    Infineon - Will the EU help?

    On February 8, the EU will present the "Chips Act". The EU wants to become more independent from the chip market in Asia and the USA. By far the most chips are produced there. A total of EUR 40 billion is to be invested in the program in Europe. Infineon will probably be able to claim a large share of this. The chip company is the only major player that manufactures in Europe. It will be interesting to see what Ursula von der Leyen presents and whether the delivery problems of microchips will indeed be a thing of the past.

    The Infineon share came under pressure despite the good quarterly figures and forecast increase on February 3, as the group pointed to supply bottlenecks that could have a negative impact on production. At the same time, sales were up 20% YOY to about EUR 3 billion, and profits were also higher than experts' estimates at EUR 717 million. The order backlog stands at around EUR 31 billion and has doubled within a year. CEO Dr. Ploss said, "Our capacity utilization is strong, and we are gradually expanding it."

    Although business is humming and demand is expected to remain high, the stock has been falling steadily since the quarterly figures. At the same time, Goldman Sachs and UBS had put the share at Buy after the report. Before the business figures, the share price was still at EUR 36.60. Currently, the share is only worth EUR 32.71. The support level, which was tested on February 8, is at EUR 32.47. The share price should not fall below this level. If the share price closes below this level, it is likely to test the EUR 30.21 mark.

    BrainChip - Mercedes tests the Akida chip

    BrainChip has caused a stir in recent weeks, with its stock shooting up over 230% to 2.34 Australian dollars (AUD) in early 2022. The Australians have developed a high-performance, low-power artificial intelligence chip that operates completely autonomously without a CPU or Internet connection. The so-called Akida chip mimics the human brain and responds to impulses or events. This approach makes the chip interesting for use in certain areas, such as IoT devices. Mercedes is also interested in the chip and will use it in its Vision EQXX concept car.

    That is one of the reasons for the share's soaring performance. Another reason is the recently obtained patents. On February 2, the Company announced the receipt of another US patent that protects the basic structure and function of a digital neuron. The Company now has 8 granted patents in the US, and one in China, with 21 additional patents pending worldwide. The patents enable the Company to underpin its pioneering role in the field of neuromorphic artificial intelligence. Company founder Peter van der Made said, "This recognition also protects us from others developing similar offerings that would infringe on our work."

    Interested investors can get more information first-hand from CFO Ken Scarince at the International Investment Forum, where he will present the Company. Additionally, there will be an opportunity to ask questions live. By January 19, the share had reached a new all-time high but has since been in consolidation and is currently trading at AUD 1.63. Since February 3, trading has been possible on the Depository Trust Company (DTC) in the USA. Yet another step to increase the visibility and attractiveness of the share. Well-known investors have long been on board, such as Merril Lynch, BNP Paribas, JP Morgan, UBS and many more.

    AMD - Good growth prospects for 2022

    Advanced Micro Devices (AMD) has been dragged down by the NASDAQ. At its peak, the technology exchange has lost about 18%, AMD comes to over 39%. The volatility is currently very high in this segment. However, the manufacturer of CPUs and GPUs is doing very well operationally. The Company is also active in the field of artificial intelligence (AI) but instead calls it machine learning and deep learning. As its main contribution, AMD develops high-performance computers for these areas and simultaneously offers associated software to accelerate the development and testing of AI systems.

    How well the Company is positioned was made clear by the 2021 figures, which were presented on February 1. Record sales of USD 16.4 billion were achieved, representing an increase of 68%. Gross margin increased to 48%. Operating income was USD 3.6 billion, and free cash flow also reached a new peak, increasing 314% YOY to USD 3.2 billion. The Company also announced a USD 1 billion strategic investment for long-term supply capacity and a USD 1.8 billion share repurchase program. For the coming year, management expects another sales record of USD 21.5 billion, with gross margins continuing to rise.

    With this outlook, the Company underscores the continued strength of the chip market. With the news, the share has stopped its downward trend for the time being. Closing prices above USD 141.25 are needed to break the trend. The support level of USD 100 is developing into an important support line. Currently, the security is quoted at USD 123.67. Barclays Capital and Goldman Sachs see the stock as a buy, with price targets between USD 148 and 159.

    The chip shortage will be with us for some time. In addition to full order books, Infineon can also hope for subsidies from the EU package. BrainChip has a very exciting iron in the fire with its autonomous AI chip. If the Mercedes chip proves convincing, a major order beckons. At AMD, the signs are pointing to growth. After the record year 2021 is before the record year 2022. The chip market looks very promising in the next few years.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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