🤖Semiconductor Stock Shift Continues

Semiconductors over the course of the past month have had a changing of the guard. For the past couple years the cutting edge chip companies have been the leaders but we are starting to see a shift. Lately money is pouring into the foundries and some of the equipment manufactures. These stocks are starting to outperform AMD(yellow) and NVDA(purple). Over the course of the week we saw inflows into GFS (blue) and TSM(orange)

We are seeing positive developments on the foundry side with AAPL stating some chip development will be moved to Arizona. TSM is opening a facility there and Warren Buffet largest position is AAPL. His 10th largest position is now TSM.. It is extremely rare for Buffet to buy a technology company. Let alone make it a top 10 position in one quarter. It is possible he thinks the floor is in and there might be something to that.

We pulled back to the 10 year base on book value of TSM

Average price to book value over 5 years has been 5.85 with the lowest reading being 3.28. He started accumulating stock around 3.6 Price to book value

“The Taiwanese Semiconductor Manufacturing Company (TSMC) announced back in 2020 that it would be building a $12B chipmaking plant in Arizona. Construction of the main chip facility was completed in August, with production scheduled to begin in 2024. It was subsequently reported that TSMC will build multiple plants in the US state.”- Bloomberg

Also we are seeing several brokerage firms discuss the next chip upcycle starting in 2023. This can not happen with out the foundries and equipment makers. Usually out of a recession foundries lead as production ramps up capacity utilization before the product will be sold to consumers. Think of it like the real estate market. Industrial warehouse space always bottoms first because they need storage for supplies.

I cover the technical analysis of 10 stocks to watch next week. Two of them are GFS and TSM. Click below to watch

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