29. April 2021 | 08:40 CET
Xiaomi, Royal Helium, AMD - The battle for capacity
The demand for semiconductors has grown dramatically in recent years due to energy walls. In addition to electric cars, the latest-generation wind turbines, solar, and smart grid solutions require significantly more chips. Added to this are crypto miners, which have a significant demand to mine digital currencies. However, the primary catalyst for the drastic shortage was Corona. Supply chains were ripped apart and the auto industry canceled orders, with drastic consequences.
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ISIN: KYG9830T1067 , CA78029U2056 , US0079031078
"[...] We expect the first three wells to be drilled, cased, completed and tested by the second week of March [...]" Andrew Davidson, CEO, Royal Helium Limited
AMD - Sales explode
Due to the interim elimination of the automotive industry as a customer, chip manufacturers swung to customers such as Apple or Sony last year. If one goes on the experts' statements, the chip shortage will continue into next year. Accordingly, the automotive industry is particularly affected. The consequence is short-time work and a noticeable production stop. Daimler has already had to put thousands of employees on short-time work at its Rastatt and Bremen plants. The situation is similar at VW and even at the Korean carmaker Hyundai.
One beneficiary of the current dilemma is Advanced Micro Devices, developer of computer chips, microprocessors, chipsets, graphics processors and system-on-a-chip solutions. The Company from Santa Clara in California was able to increase its sales by a whopping 93% compared to the previous year. Mainly due to the chips for game consoles, sales increased to more than USD 3.4 billion. Compared to the already strong fourth quarter of 2020, revenues grew by another 6%. Excluding special items, the net income result of USD 555 million was the best in many years. As a result of the increased revenues, operating income also grew significantly to now USD 662 million. Compared to the first quarter of 2020, all business units at AMD grew significantly.
AMD CEO Lisa Su cited robust market demand and the best product portfolio in history as reasons for the strong performance. The full-year forecast calls for a 50% increase in revenue to USD 14.6 billion, unprecedented in the US company's history. AMD's stock reacted positively to the better-than-expected numbers, posting a gain of more than 3.5%.
Xiaomi - Enormous target group
Further increased demand for chips is likely to be registered by smartphone manufacturer Xiaomi. The Chinese Company is planning a revolution in the billion-dollar gaming market and released a new gaming edition, the Redmi K series, at the beginning of the week. Equipped with the MediaTek Dimensity 1200 gaming platform, the Redmi K40 smartphone features a space-age liquid cooling system, a flat display with a 120Hz refresh rate and a 5,065mAh battery with 67W fast charging. The collaboration here was with Elliptic Labs, a global AI software Company and world leader in virtual intelligent sensors. The Xiaomi share is currently forming a bottom in the area of the support line at EUR 14. A sustainable breakout above the EUR 15 mark would generate a buy signal with an initial price target of EUR 17.50.
Royal Helium - High demand
Due to the enormous demand resulting from the mechanization of our society, raw materials are becoming increasingly scarce. Besides lithium, rare earth metals or copper, helium is also a strategically important raw material. Increasing demand for helium is needed in the healthcare sector, in particle accelerators and in the production of quantum computers. According to expert forecasts, demand in the rapidly growing space business is likely to explode in the next few years thanks to companies like SpaceX. NASA is already the largest customer in the global market.
In contrast, there is a very tight supply. Royal Helium is one of the few pure helium companies on the stock market. Being the second-largest helium landholder in North America, it has access to about 400,000 hectares of prospective helium land in southern Saskatchewan, Canada. The projects have the perfect infrastructure and are located close to highways, roads, towns and existing oil and gas infrastructure. With a completed CAD 6.16 million private placement, the Climax project was launched earlier this year with three wells. Now came the first results identifying several significant zones of up to 30 meters of elevated helium in all three holes.
Unlike the production of precious metals, with helium, it is possible to go into production immediately with a drilled hole. This circumstance allows Royal Helium to produce immediate cash flow. As a result, further drilling programs are expected to be paid for from production in the future. For 2021, the Company's stated goal is to scale and bring significantly more wells into production. The market capitalization for the long-term promising Company is just under EUR 26.0 million. The share price is EUR 0.38.