Last March, when COVID-19 hit and countries went into lockdown, they entertained themselves buying PCs and other electronic gadgets. The trade war with China the prior year didn’t help as companies shifted their supply chain around the world.
Well, the automotive industry is feeling the pain now. The big three in American has been forced to cut production due to chip shortages. But the chip shortage is being felt throughout the automotive industry. Honda and Fiat Chrysler said they had to slow production too. And the pain is expected to last for months.
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So today I went long AMD and Micron because we have a supply and demand imbalance.
Advanced Micro Devices, Inc. is a semiconductor company that makes microprocessors the data centers, crypto miners, the gaming industry, etc. AMD is also the processor supplier for both the Xbox One and PlayStation and pricing for gaming GPU should remain high due to crypto mining causing shortages.
Micron Technology Inc., the largest U.S. maker of memory chips used in computers and as storage in mobile devices. Lets take the automotive sector as an example.
Companies are ramping up their autonomous driving efforts, but there is a shortage of flash memory. Self-driving cars have to quickly make massive calculations, then process that information in order to drive themselves. In fact, it is estimated that each autonomous car will generate 1 GB of data per second, which will either be sent to the cloud for processing or be processed in the vehicle. Micron holds the #1 market-share in the automotive sector.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.