Wafer cannibalization favors strong supply chains
The guest argued that the diversion of semiconductor manufacturing to high-margin AI chips will cause scarcity in lower-margin consumer and enterprise chips, favoring companies with robust supply chains.
The argument
As foundries prioritize lucrative data center silicon, production lines for PCs, laptops, and autos are being cannibalized. This shifts the investment opportunity to downstream hardware companies with the pricing power to pass these rising component costs onto end consumers.
The thesis, stress-tested
✓ What validates it
- ✓HPQ or Lenovo reporting strong gross margins despite rising component costs
- ✓Rising average selling prices (ASPs) for consumer laptops and enterprise hardware
▸ Risks discussed
- ▸Consumer demand could weaken in response to price hikes
- ▸Foundry capacity constraints could ease faster than expected
Hear it yourself
"Why do you say that this steeper yield curve is by design? So to begin with, I perfectly agree with you that this is another u-turn from the administration, one u-turn out of many. But having said that, a steep yield curve is necessary when the yield curve steepens outside of The US. So take this the example of the Japanese yield curve. The Japanese yield curve has steepened a lot. And if you're a Japanese life and pension fund, you suddenly have a very different domestic yield curve to deal with in your bond decision making. When thirty year bond yields are close to 4% in Japan, You obviously need higher long end bond yields in The US for US treasuries to remain attractive for these investors in Japan."
11:30
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE