Close menu




June 28th, 2021 | 13:38 CEST

Infineon, Nvidia, BMW, Defense Metals - Exploding commodity prices ahead!

  • Commodities
Photo credits: pixabay.com

The explosion in commodity prices is foreseeable. Due to the fatal misjudgment of the governments on how the COVID pandemic will develop, the economies are currently in a supply shock. The months-long lockdowns have broken off some supply chains, and the breakdown in the Suez Canal has further aggravated the situation. Ever Given's wrecked ship is still stuck in the Egyptian Bitter Lake with 20,000 containers on board. Whether in cell phones, electric vehicles, non-fossil power generation and storage, or modern server farms - industrial metals are needed everywhere. For special applications, we even need rare earths, which makes it highly political.

time to read: 5 minutes | Author: André Will-Laudien
ISIN: INFINEON TECH.AG NA O.N. | DE0006231004 , NVIDIA CORP. DL-_001 | US67066G1040 , DEFENSE METALS CORP. | CA2446331035 , DE0005190003

Table of contents:


    Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
    "[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG

    Full interview

     

    Infineon - Chip production in Europe on the decline

    The COVID pandemic has massively accelerated a trend: Digitalization. Almost every business model in the world today has some element of digitized business processes. It requires a lot of IT, cloud connectivity and some computing power. Digitization in production is happening gradually through the introduction of Industry 4.0 - this describes production using all the possibilities of Big Data. In supplier logistics and delivery to the customer, the levels of digitization are already close to 100% today.

    Europe is dependent on imports from Asia for its supply, especially of chips and components, and the adverse effects of globalization can be seen here in detail. The pandemic, in particular, has shown that our industry must become more autonomous again. An almost "lost industry" is our chip production because it is simply too expensive in Europe. But without an increase in competence in this topic, Germany's position is not only weakened towards car manufacturers and industry, but also environmental and climate protection.

    The inequalities in global competitive conditions are increasing. While China, Japan, Korea and the USA promote their digital industries, the EU is miles behind. In the German auto industry, short-time work has been going on for months due to a lack of chip deliveries. A strong industry only works if the location policy is solid and supported. Here, too, there is great uncertainty about the outcome of the elections in September. A purely green coat of paint will do considerable economic damage to Germany.

    Infineon combines a great deal of technological expertise; it is one of the world's market leaders for chip-based power control and sensor technology. At the moment, however, concerns about future growth are spreading, as Infineon's share price has not risen since December. Perhaps a market cap of EUR 42 billion and a KUV of 5 for just under 7% growth per year is also already well priced in this scarcity environment.

    Nvidia - The AI miracle from Santa Clara helps BMW

    Nvidia Corporation is one of the largest graphics processors and chipsets developers for personal computers, servers, and game consoles. Its headquarters are in Santa Clara, California. As a pure technology Company, Nvidia has no manufacturing facilities of its own and thus operates according to the fabless principle. In the Forbes Global 2000 of the world's largest companies, Nvidia is ranked 489th in 2020.

    Since the beginning of May, Nvidia's stock has risen a full 50% and an astounding 91% over a year. That is one of the most significant increases by a Nasdaq 100 technology company in recent times. What is the reason for this extraordinary performance? Nvidia is a specialist in producing AI software in addition to its core graphics card business. Artificial intelligence is crucial in self-driving electric cars but also already in their production. BMW's board of production believes it can reduce production costs per vehicle by 25% with the help of AI. Now that is a significant number!

    The BMW Group and Nvidia are already collaborating on robotics. So far, BMW builds just over 2 million cars but is already expecting a capacity of 3 million vehicles per year before 2030. Above all, the "New Class" platform, which will start in 2025, is intended to decisively reduce the complexity of building BMWs with different drive systems. The highlight here is the use of Nvidia's AI platform Omniverse, which allows internal planning processes to be made 30% more efficient. With its technologies, Nvidia supports the virtual mapping of entire production networks. Industrial processes can be perfectly designed, waiting times are reduced, and machinery can be better utilized, which increases output.

    Nvidia's share price recently soared to USD 776, and in terms of market capitalization, it now weighs in at just under USD 400 billion. With earnings per share of just under USD 7, the P/E ratio is thus over 100. It should be interesting to see where the stock corrects when the NASDAQ also goes into reverse gear. Due to expected profit increases, the P/E ratio should at least fall below 50 in 2023, which almost sounds cheap again.

    Defense Metals - Rare earths in a political quandary

    They are not only needed in the chip sector. Rare earths are only sporadically available on Earth, with 85% of the world's resources provided by China. The dependence of Western industries could not be worse, as there is currently no significant mine build-up. Demand in the electromobility and IT industries are already causing supply shortages in critical metals such as copper, nickel and lithium. The so-called rare earths are a particular group of extremely rare metals. A basic distinction is made between light and heavy rare earths. On average, the four light rare earths cerium, lanthanum, neodymium and praseodymium account for more than 95% of the rare earth deposits.

    Even under the Biden administration, a constant bone of contention is US arms exports to Taiwan, a major thorn in the side of the Chinese government. But there are also many accusations the other way around. US President Joe Biden is stepping up the crackdown on Chinese companies with alleged ties to the Chinese military. He just signed an executive order banning Americans from trading in securities of an initial 59 Chinese firms starting Aug. 2. What shadow boxing on both sides!

    Canadian explorer Defense Metals (DEFN) has come under investor scrutiny with its property in Wicheeda, British Columbia. The results of an X-ray study show that REE grades can be best extracted using low-cost front-end processing. The neodymium-praseodymium present is an important raw material for the manufacture of magnetic components, e.g. in the production of nuclear magnetic resonance tomographs, micromotors, wind turbines, and electric and hybrid vehicles. Mineral resources of 4.9 million tons have already been identified on around 1,700 hectares. Exploration is continuing, and a pilot plant is already being planned.

    After a solid start to the year, the DEFN share has recently consolidated to CAD 0.23. The market capitalization is now manageable at around CAD 25 million, and CAD 5 million was newly raised a few weeks ago. In our opinion, interest will soon flare up again because of the political importance.


    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 in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and etc. on news.financial. These contents serve information for readers and does not constitute a call to action or recommendations, neither explicitly nor implicitly. implicitly, they are to be understood as an assurance of possible price be understood. The contents do not replace individual professional investment advice and do not constitute an offer to sell the share(s) offer to sell the share(s) or other financial instrument(s) in question, nor is it an nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but rather financial analysis, but rather journalistic or advertising texts. Readers or users who make investment decisions or carry out transactions on the basis decisions or transactions on the basis of the information provided here act completely at their own risk. There is no contractual relationship between between Apaton Finance GmbH and its readers or the users of its offers. users of its offers, as our information only refers to the company and not to the company, but not to the investment decision of the reader or user. or user.

    The acquisition of financial instruments entails high risks that can lead to the total loss of the capital invested. The information published by Apaton Finance GmbH and its authors are based on careful research on careful research, nevertheless no liability for financial losses financial losses or a content guarantee for topicality, correctness, adequacy and completeness of the contents offered here. contents offered here. Please also note our Terms of use.


    Der Autor

    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.

    About the author



    Related comments:

    Commented by Stefan Feulner on September 27th, 2022 | 13:47 CEST

    Barrick Gold, Tocvan Ventures, Newmont, Glencore - Long-term positioning in gold makes sense

    • Mining
    • Gold
    • Commodities
    • Investments

    The FED's recent interest rate hikes and Chairman Jerome Powell's statement sent both equity and precious metals markets into the valley of tears. By all means, the monetary guardians want to curb rampant inflation. Whether this will succeed seems at least questionable. After all, it should not be forgotten that this would put an end to the already sputtering engine of the global economy. In addition, many already highly indebted countries are falling into ever greater problems due to higher interest payments. Thus, it is time to take a long-term, anticyclical position in the precious metals sector.

    Read

    Commented by Armin Schulz on September 26th, 2022 | 12:41 CEST

    BASF, Manuka Resources, Varta - Buy when the cannons thunder!

    • Mining
    • Commodities
    • Batteries
    • chemicals

    That is Warren Buffet's motto, and the Oracle of Omaha has done very well with it over the past decades. In the biggest crises, the investor always made a bold move, while others waited rigidly in fear. This could also be observed during the last Corona Crash. Many waited for lower prices, or at least a retest of the lows, which never came. At the moment, it seems to be the case again that no one wants to buy shares, and this is precisely where the opportunity lies. No one can predict the exact low, but if you want to be there, you have to get in at some point. We look at three companies that have great potential.

    Read

    Commented by Stefan Feulner on September 26th, 2022 | 10:28 CEST

    BYD, Globex Mining, Newmont, Freeport-McMoRan - Copper with doubling potential

    • Mining
    • Copper
    • Gold
    • Commodities
    • Electromobility

    The price of copper has lost around a third since March of the current stock market year. Investors are selling the metal, which is known as an economic barometer, due to global recession fears and concerns of a drop in demand. However, due to the great importance of copper with regard to the energy turnaround, the tide is likely to turn again soon. Mining companies and commodity traders are already warning of a massive shortage of the world's most important metal. Goldman Sachs expects the price of copper to reach USD 15,000 per ton by 2025, which would mean a doubling of the current level.

    Read