| PROSPERITY PUB MARKET TALK
Chip Boom: Big Investments Aim To Bring Chip-Making Back
Remember how amazed we were by the first smart phones?
Today's technology is even more incredible, thanks to the tiny chips that are the brains behind everything from smartphones and laptops to cars and medical devices.
But did you know that the U.S. used to be a leader in making these chips, and now most of the advanced ones are made elsewhere?
The good news is, the U.S. government is making a big push to bring chip making back home.
Why are chips so important?
Think of chips as the engines that power our technology. The more advanced the chip, the faster and more powerful the device.
These cutting-edge chips are essential for everything from keeping our phones connected to running complex medical equipment.
There are several reasons why the U.S. wants to be a bigger player in the chip-making game:
| | • | | Jobs: Building and using these advanced chips creates high-tech jobs for engineers, factory workers, and many others.
| | | • | | Security: Having a strong domestic chip industry makes the U.S. less reliant on other countries for critical technology.
| | | • | | Innovation: When more companies are involved in making chips, it fuels competition that leads to even better chip development! |
Big Investment for a Chip Powerhouse
The U.S. government is offering financial aid to companies that build chip-making factories here.
A major player getting a big chunk of this investment is Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's leading chip makers.
They're using this money to build a new factory in Arizona, creating thousands of jobs in the process. This is a significant development because it brings advanced chip-making technology back to the US.
The Rise and Fall (and Rise Again) of U.S. Chip Making
It might surprise you to learn that the U.S. used to be a leader in chip making.
In fact, back in 1990, the U.S. produced a whopping 37% of the world's chips!
But, over time, that number has shrunk to just 12%.
While the decline is due to several factors, the good news is the U.S. is taking bold steps to reclaim its position as a chip-making leader.
Possible Chip-Related Trade Ideas
In light of the recent development with TSM, we tapped two of our top traders to find out if they see any high-probability trades in chips.
Geof Smith suggested a bull call debit spread on Micron Technology (MU), a leading manufacturer of various computer memory and data storage chips, including memory modules.
Geof’s trade idea: Buy the 17 May 125/135 Call Spread
Meanwhile, Jeffry Turnmire advises that he doesn't see any clear-cut trade ideas in chip stocks right now.
This doesn't mean he's bearish on chips entirely, but that he's waiting for a high-probability trade idea to develop.
Instead, Jeffry has identified a trade idea in another important sector of the economy: oil.
Back in November, Jeffry alerted us to a possible bullish move in ProShares Ultra Bloomberg Crude Oil (UCO).
And while it’s taken a while for the move to fully develop, we’ve just passed the conservative entry point.
Full details including targets and stop loss available on Jeffry’s Chart of the Week from November 14.
As with all our trade ideas, be sure to do your own research and have an exit strategy in place before placing a trade.
— The Prosperity Pub Team | | | | |
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