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Technology, Integrated Circuitry, and The Global Opportunity

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There’s no doubt that technology plays a big part in our lives. It keeps us connected, helps us stay informed, and entertains us. But did you know that it also has a hand in the economy? The Microchip shortage is a perfect example of how technology can have an indirect impact on our everyday lives. Microchips are a vital component in many electronic devices, from smartphones to laptops to cars.

Microchip makers are struggling to keep up with demand as more and more companies adopt new technologies that require these tiny chips. This newfound demand for the, now unobtainable, microchip has brought attention to not only the major chipmakers but also smaller players, in the integrated circuitry industry, that sometimes get overlooked. While Silicon valley in the United States contains some of the largest chip-making conglomerations. Our new age of technology has a global impact that could uncover some diamonds in the industry outside of the American border.

Microchips are tiny components that play a big role in our electronic devices.

They’re responsible for processing information, storing data, and carrying out complex tasks. Microchips are found in just about everything that has the “smart” adjective appended to its name. smart tv’s, smart appliances, smart cars, and the list goes on and on. As we continue to adopt new technologies, the demand for microchips has increased dramatically. This shortage has affected both consumers and businesses alike. Many companies have had to halt production due to the lack of these vital components. This, in turn, has led to higher prices for devices that require microchips. It has also created an insatiable appetite for this handy piece of technology worldwide.

The Microchip shortage started in 2018, when Microchip makers began struggling to keep up with the demand for Microchips. The problem was exacerbated by the COVID-19 pandemic, as Microchip factories were forced to close or operate at reduced capacity. This has led to a shortage of Microchips, which has affected everything from smartphone production to the development of autonomous vehicles.

Integrated circuitry stocks have been on the rise in recent years, as the demand for Microchips continues to grow.

If you’re looking for an investment opportunity, Microchip stocks may be a good option. Microchip makers are also working on new technologies that could lead to even more demand for Microchips in the future. With this high demand for integrated circuitry, many manufacturers will be willing to get backordered microprocessing cards from whichever supplier can get them the items the fastest or first, for their production line to keep moving. And now the doors open to alternative suppliers in different regions of the world, and to smaller companies in America that can help meet this never-ending demand.

The demand for microchips has been skyrocketing, but the supply has not been able to keep up.

This is bad news for many industries that rely on microchips, but it could be good news for investors. Microchip makers outside of America are performing well, and there may be opportunities for investment in these companies, and smaller companies within America that produce integrated circuitry.

Nvidia Corporation NVDA always tops my list. Although their recent negotiations to merge with ARM, a chip designer based in the UK, hit a snag, their willingness to spend $40 billion to make the deal happen shows how serious their interest is in being a global force in the circuitry supply chain.

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Taiwan Semiconductor Manufacturing Company Limited TSM is the largest producer of semiconductors in the world, which most likely means they have the largest number of backorders to fill. TSM is located in Taiwan. In the heart of Asia’s Silicon Valley. A company that is at the forefront of microchip manufacturing and it plays a vital role in the global supply chain for microchips. Investors have been closely watching TSMC as the company looks to boost capacity and meet the demand. The company is well-positioned to benefit from the growing demand for microchips.

TSM
TSM

Chart courtesy of Yahoo

TSMC is an exciting investment opportunity in the microchip space. With strong fundamentals and a leadership position in the industry.

Then there’s a little guy I came across researching this opportunity named Hana Microelectronics Public Company Limited, located in Thailand. This stock followed the trend and doubled in price. It also retreated when the big boys fell. It seems it follows the same trend parameters as the leading semiconductor manufacturers. One thing I found appealing about this stock is its price, 47.5 Thai Baht is equal to about $1.39 at the time of this writing. A less expensive option for those willing to test this investment opportunity from an Asian base.

HANA Prices in Thai Baht
HANA

Chart courtesy of Yahoo

The big boys and the smaller players in the integrated circuitry arena all tend to follow the same price fluctuations. With the bearish market presently in play, many of these multi-billion dollar chip makers as well as the multi-thousand dollar chip producer’s stock prices may be at attractive levels for buying in. Advanced Micro Devices, Inc. (AMD) and Marvell Technology, Inc. (MRVL) are two names of smaller but substantial chip makers within the United States that we should also give our attention to. We’ll talk more about them in future articles.

New to finwars? read more about Microchips here

Economic News

More Than 400 Industry Organizations Ask Congress To Stop Rail Strike

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strike

The leaders of Congress are being urged by more than four hundred different business organizations to be ready to avoid a freight train strike that could begin wreaking havoc on the economy as early as the following week.

In a statement sent on Monday, industry groups sponsored by the Chamber of Commerce wrote to House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer, House Minority Leader Kevin McCarthy, and Senate Minority Leader Mitch McConnell that “No one wins when the railroads stop operating.” In accordance with the Railway Labor Act of 1926, the Congress has the authority to impose a contract on both parties or to extend a “cooling-off period” for discussion in order to keep the railroads operating and prevent interruptions to interstate commerce. The laws governing employees’ time off are at the center of the disagreement between the railroad companies and their workforce.

The 449 different business associations, which range from the Aluminum Association and the Beer Institute to the US Apple Association and the Window & Door Manufacturers Association, have all stated that this is a matter of “grave urgency” due to the fact that even a temporary stoppage of work would result in a significant amount of issues. They stated that a consensual agreement between the freight train unions and the freight railroads would be the greatest possible outcome, but they emphasized that Congress needed to prepare for the worst possible outcome. “Absent a voluntary agreement, we call on you to take immediate steps to prevent a national rail strike and the certain economic destruction that would follow,” the groups wrote, pointing out that Congress has intervened 18 times in labor negotiations since 1926 when interstate commerce was threatened. “Absent a voluntary agreement, we call on you to take immediate steps to prevent a national rail strike and the certain economic destruction that would follow,” the groups wrote.

It is possible that a rail strike will take place as early as December 9, which will result in a lack of goods, an increase in costs, and a stop in the production of goods in factories. According to the estimates provided by the business organizations, this might also result in a disruption of commuter rail services, which could affect up to seven million passengers per day, as well as the transportation of 6,300 carloads of food and farm products every day.
However, the trade groups warn in the letter that the effects of a nationwide well strike will be felt by many firms as early as December 5 in the form of service outages and other impacts. They mentioned that earlier this year, there was a prospective rail strike that caused “severe disruptions” for essential goods and products, such as fertilizer, chlorine, and other things, but the strike was averted with an 11th-hour preliminary arrangement.

According to the letter, “Congress must be prepared to intervene before the end of the current’status quo’ term on December 9 to ensure continuing rail service” in the event that an agreement cannot be reached. “The unpredictability of rail service in the midst of this year’s drawn-out contract negotiation has produced an immense amount of concern.”

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Outside China, Protests Are Grabbing Headlines

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China

In China, the censors are working nonstop. Thousands of protestors have gathered in the streets of more than a dozen Chinese cities in recent days, demanding an end to strict Covid lockdown restrictions and political freedoms in a rare display of rage against the Chinese Communist Party.

For major news outlets around the world, it is one of the top stories, if not the top story. However, the unprecedented challenge to Chairman Xi Jinping has received almost little publicity for the hundreds of millions of Chinese who rely on state-run media for their news.

This is due to the fact that Chinese media have mostly ignored the rebellion, which is thought to be one of the greatest to occur in recent memory, as Xi deploys a variety of iron-fist techniques to stifle coverage and suppress the totalitarian nation’s growing acts of dissent. For instance, the state-run Xinhua News Agency’s webpage lacked any coverage of the demonstrations on Monday. In reality, a scan of its website revealed that the propaganda organization had not used the word “protest” in any digital pieces since the protests started.

Xinhua is a common news source. Attempts are being made by additional state-run media sources to completely ignore the widespread protests, which have started in at least 16 locations. The websites of the People’s Daily and China Daily, two more well-known state-controlled media outlets, did not mention the protests on Monday.

According to Jonathan Yerushalmy of The Guardian, CCTV “spending most of the morning covering the announcement of the planned launch of the Shenzhou-15 spacecraft to China’s space station on Tuesday.”

According to Philip Hsu, director of the Center for China Studies at National Taiwan University and a visiting fellow at Brookings, “the lack of media coverage, due to Xi’s control, restricts the spread of information and helps, to some extent, prevent the protests from proliferating in an unbridled fashion.”

Hsu would not rule out the idea that some coverage choices were made out of self-censorship. But this situation, according to Hsu, “reflects an even more fundamental control by the Party than if there are the directives, because the media has been extensively conditioned on what they can and cannot do without being instructed individually.”

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Young protesters across China held up sheets of white paper as a metaphor for the numerous critical posts, news stories, and vocal social media accounts that were removed from the internet in a symbolic protest against the ever-tightening censorship.

The deliberate attempt by the state-run media to put an end to the demonstrations and spread official messages exposed the depths to which Xi’s mouthpieces will go to quell dissension. Given that the absence of coverage has not been able to quell the escalating protests or conceal the reality from the world that is eluding the authoritarian hold via social media, it also raises concerns about the efficacy of his propaganda machine.

It’s possible that this is the reason why state-run media is currently adopting a slightly different strategy. In some cases, these pieces appear to be intended to quiet the uproar by implying that the government will strive to “refine” its harsh Covid measures. For instance, The People’s Daily’s site included a headline that said, “Precision” is required “as cities roll out optimal COVID response.” In other words, some wiggle room is needed for the rigid Covid limits.

It remains to be seen whether that strategy will be successful. But Hsu asserted that one “important” shift brought about by the protests will be “impossible to roll back,” “no matter what happens.”

Individual citizens now understand that there is a good probability that others may join their resistance, according to Hsu.

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Buy Now Pay Later Revenue Up 78% Despite Unparalleled Inflation

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Inflation

Inflation reached a 40-year high this year, yet it didn’t stop the famous Black Friday. Last Friday’s discount frenzy broke the previous record by selling $9.12 billion in merchandise, outperforming the previous year by 2.3%. However, compared to other years, that sales record’s structure is somewhat different. The growth of credit and buy-now-pay-later (BNPL) services seems to have offset the inflationary pressure.

Beyond All Expectations, Black Friday Week

The data from Adobe Analytics collected on Saturday shows that customers used eCommerce more than ever before. One example is the $3.36 billion in sales that Shopify Merchants achieved on Black Friday, shattering previous records. Buy-now-pay-later (BNPL) programs like Zip, Afterpay, Affirm, and PayPal’s Pay-in-4 have been enthusiastically adopted by consumers.

In the week of Nov. 19–25, point-of-sale loans climbed by 78%, and BNPL income increased by 81% from the previous week. Contrary to October, online sales increased by almost 200% in the following categories: toys accounted for the highest increase at 285%, followed by audio equipment (230%), electronics (221%), smart homes (271%), and fitness equipment (218%).

Gaming consoles, drones, Dyson vacuums, MacBooks, and gaming-related devices are among the most popular products. Overall, the yearly study from the National Retail Federation was accurate in predicting stronger consumer spending than it did before 2020. In addition to record BNPL orders, the Black Friday week saw a boom in mobile shopping, which, according to Salesforce, accounted for a record 48% of total online sales, up from 44% last year. With $5.29 billion and $9.12 billion respectively, Thanksgiving and Black Friday both exceeded forecasts and set records. Online buyers don’t often spend more than $3 billion every day. On Cyber Monday, which Adobe projects will generate $11.2 billion, a YoY rise of 5.1%, this trend is anticipated to continue.

Original Black Friday Created in an Inflationary Environment

After the Thanksgiving holiday and only in the US, Black Friday ushers in the start of the holiday shopping season. Beginning in the early 1950s, the term “Black Friday” referred to employees who called in sick after Thanksgiving, generally to extend the holiday into a 4-day weekend.

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Since then, as consumer power increased, employees have expanded it to include escapades at the mall and clogged roads, particularly in the late 1970s and early 1980s. Black Friday was first acknowledged by The New York Times in 1975, a year after inflation reached 11.05%. Inflation peaked in 1980 at a record 13.55%.

One year later, on November 28, 1981, The Philadelphia Inquirer published the first description of Black Friday as the day when retailers collect their annual profits and turn their accounting books from red (negative) to black (positive). Where Can Customers Find Relief from Prices?

The NRF predicted that consumers will spend 6%–8% more than they did last year in the present macro environment, which is in line with the 7.7% inflation rate. The only significant product category that provided consumer comfort was clothes, with a 0.7% decrease in costs from September to October, except from used vehicle prices, which fell by 2.4%.

Nevertheless, there was a need for inventory clearance due to supply chain disruptions over the previous two years and an excessive number of orders that were carried over. This gave retail establishments plenty of room to get rid of inventory that was no longer in high demand. Clothing, TVs, appliances, and computers were included in that broad category by Adobe Analytics.

NRF estimates that households making under $75k should cut their holiday expenditures by $606 on average. Despite being fewer in number, households making over $150k should make up the difference in spending by increasing their average annual income by $1,304.
Is High Inflation Being Exit by the Economy?

The Consumer Price Index (CPI) for October decreased from 8.2% to 7.7%, yet the percentage still indicates an increase in prices. Having said that, it seems like inflation is gradually slowing down. Crude Oil (WTI) is currently down 3% year over year, which is the biggest drop since the beginning of 2021. Additionally, the Freightos Baltic Index (FBX), which measures global container freight prices, has fallen by roughly -300% from its top of $11,109 in late September to its lowest level since December 2020. Similarly, prices on the home market are dropping at their quickest rate since the Great Recession of 2008. The highest increase in more than 20 years, however, was a 15% YoY increase in credit card debt balances.

The third quarter of 2022 saw a continuation of the rise in credit card, mortgage, and auto loan balances due to both strong consumer demand and increased pricing. Donghoon Lee, a research advisor for economics at the New York Fed, says

It’s interesting to note that as of September, 2.7% of the total amount of outstanding debt still had a very low debt default rate for Q3 2022. This might alter, though, if the jobless rate keeps rising. It is currently 3.7% compared to 3.5% last month.

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