Australian (ASX) Stock Market Forum

Inflation

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Well the question to ask is are we even going to enter a recession? Perhaps Biden and Powell were right and they did pull off a soft landing, what then?

Just trying to reconcile recent market action with what the data has been saying o_Oo_O
 
waterbottle said:
Well the question to ask is are we even going to enter a recession? Perhaps Biden and Powell were right and they did pull off a soft landing, what then?

Just trying to reconcile recent market action with what the data has been saying o_Oo_O
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not by definition ... ROFL

there was , many years ago a popular song about ' the times they are a-changing '

now in modern times definitions change in an attempt to be politically correct
 
waterbottle said:
Australian consumer confidence now almost as low as the 2020 covid pandemic period... WTF is going on... Have markets really already priced this in?

View attachment 145129
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maybe

remember economies and currencies rely on trust

and after '14 days to flatten the curve ' that trust has probably almost vanished

and when various 'trusted entities ' change definitions for political expediency ( despite having already rigged the data ) what would you expect

now the more important question for members is , have the Australian public reacted like Sri Lanka , Nederlands and Germany , or just calmly tuned out the government rhetoric ( since only 35% voted for them anyway )
 
divs4ever said:
maybe

remember economies and currencies rely on trust

and after '14 days to flatten the curve ' that trust has probably almost vanished

and when various 'trusted entities ' change definitions for political expediency ( despite having already rigged the data ) what would you expect

now the more important question for members is , have the Australian public reacted like Sri Lanka , Nederlands and Germany , or just calmly tuned out the government rhetoric ( since only 35% voted for them anyway )
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I don't think the market is going to be fooled by a definition change. Either the market thinks we're in a recession or not, and either they've priced it in or they haven't.

Interestingly, meme stocks are making a come back which may be a sign of risk re-entering the market, HKD & BBBY being the latest favorites.

Oil fell faster than I think anyone would have thought it could, some players think that it's all a conspiracy related to fake data. Who knows. The European winter hasn't even started, although there have been efforts to reduce reliance on Russian gas by 50%! The US is dumping oil from their SPR. China is in rolling lockdowns and demand is in the pits. Goldman Sachs now readjusting their projections to $110/bl (I remember someone mentioned there was a price target of $200/bl LOL!).

All this could feasibly point to a lower CPI print come Wednesday, and the Fed to begin cutting rates in September (as some commentators believe).
 
waterbottle said:
I don't think the market is going to be fooled by a definition change. Either the market thinks we're in a recession or not, and either they've priced it in or they haven't.

Interestingly, meme stocks are making a come back which may be a sign of risk re-entering the market, HKD & BBBY being the latest favorites.

Oil fell faster than I think anyone would have thought it could, some players think that it's all a conspiracy related to fake data. Who knows. The European winter hasn't even started, although there have been efforts to reduce reliance on Russian gas by 50%! The US is dumping oil from their SPR. China is in rolling lockdowns and demand is in the pits. Goldman Sachs now readjusting their projections to $110/bl (I remember someone mentioned there was a price target of $200/bl LOL!).

All this could feasibly point to a lower CPI print come Wednesday, and the Fed to begin cutting rates in September (as some commentators believe).
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well for a start the trading volume of oil ( trading in US dollars ) is markedly lower , so is more likely just as fake as the gold/silver markets now

Europe can cut purchases by as much as it likes , Russia has already decided almost anyone else is a more reliable trading partner ( except Ukraine which is just a dead-beat grifter )

BTW what time of year is it ??

( wouldn't be the time for the annual strategic reserves refresh would it ... where they sell existing reserves and replace it with fresh oil )

remember if oil deliveries are not a factor the oil trading price can be anything ( except negative ) if oil deliveries are a factor negative IS possible ( as we had a while back )
 
over9k said:
Nah it's going to be the opposite waterbottle - china's lockdowns actually slaughtered demand. Once they're lifted, energy demand will only increase rapidly again, hence my posts a few days back showing how much of a beautiful dip this was. Chinese good manufacturing will only INCREASE inflation as the energy demand increase will far outweigh the export supply increase as china obviously has a huge internal market that demands its stuff (and therefore production of it) as well.

The russian pipeline network is now a ticking time bomb reference either crumbling from lack of maintenance or partisans blowing it to bits. There's MORE russian oil to be cut off non-deliberately yet, and there won't be anyone to fix the wells freezing over, lines bursting etc as all the western companies have left.

Then we have seasonality to contend with heading later into the year as well as everything gets frozen over/wrecked by the cold. Remember what happened to heating oil, gas prices etc back at the start of the year?

I'm as bullish as it gets on energy moving forward. I threw another 10k into the dip I pointed out before (made my main play for it back at the start of the year as soon as the invasion became apparent) and am honestly only kicking myself I didn't put more in on the 25th.

I'm hoping we'll get a little dip over the next few days or week that I can add a bit more to.
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And so it begins...

European coal embargo begins tomorrow too. Very ugly stuff brewing.
 
This reduction of oil supply and coal embargo, along with nvidia reporting shite earnings, has dumped quite a bit off SOX/SOXL. Nvidia said "slow year for gaming" but it's absolute shite, the reason why nvidia's earnings have missed estimates is because the estimates were made by idiots.

Fact is that with crypto falling off a cliff an absolute mountain of gpu's have been dumped into the 2nd hand market which has A: obliterated new sales and B: dropped new prices significantly.

You can see how the ethereum hashrate here:

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Drops off from the start of may and then really plummets at the start of june.

Just like the actual ethereum price, here:

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To state the bleeding obvious, this isn't a coincidence. All those decommissioned gpu's have had to go somewhere and that somewhere is to people that would have otherwise bought new ones.

Nvidia's new generation of gpu's are due out later this year and it is at that point that I think the whole "slow year for gaming" thing WILL come into play as it has actually been a slow year for gaming and with ethereum mining profitability falling off a cliff they're back to having to sell gpu's to gamers and gamers do actually have comparatively (to previous years) little reason to buy them.

And, this is before we even think about the ethereum merge, due in september, which is speculated (and accurately in my opinion) to obliterate gpu mining profitability ENTIRELY. This article outlines how/why:


Will GPU mining end after the Merge (formerly called ETH 2.0)?

Here we are in 2022, and the merge is still 3-6 months away. Just like it has been for the past 4 years. It’s practically a punchline at this point. But despite the countless delays – we really are approaching the finish line. The beacon chain has been running for years. Millions of ETH have been staked. Testnets have been successfully merged. I know we’ve all been hearing this for years. But our team has been following Ethereum development closely, and they are legitimately very close.

What’s the big deal anyway? Miners will just mine something else. It’s not the first time a coin has been lost to GPU miners, and everything turned out just fine before, right? There are lots of other choices, and the mining calculators show that profitability for ETC and RVN is still pretty good.

Sure, you will technically be able to mine something else. But it won’t matter. When Ethereum turns off the lights, there are going to be no good options left. This isn’t mere speculation – this is math. And the math isn’t pretty.

So, without further ado, let’s do the math.

Right now, in mid-2022, things are a little tight. But most GPU miners are in the green regardless of what they mine. And there are lots of good choices. A 6X RTX 3070 rig will pull about $8.60/day on ETH, and $6.25/day on ETC. If all anyone was facing was a 28% cut in profitability in profits post-merge, it would be rough, but it would be survivable. But that’s not what’s going to happen. For anyone. To understand why you must look at the big picture. All mining income is based on a simple formula:

Price per coin x Block Reward x Daily Blocks = Total Daily Income.

The block reward is the number of coins rewarded for finding a block. The block time is the amount of time between each block, and from this, we can determine the number of blocks produced per day.

Taking ETH as an example:

$1,975 per ETH x 2.01 block reward x 5760 daily blocks = $22,865,760.

That’s the total amount of income all ETH miners share, every single day.

Now let’s do the same for ETC. It’s the second biggest coin, and if it puts out a comparable total income as ETH, there will still be plenty to go around post-merge. Cue drumroll…

$24.14 x 3.1 x 6000 = $449,004.

Ugh. Not even close. We’re not even in the same galaxy as ETH. We’re two whole orders of magnitude off here. But… there are lots of other coins, so if the total aggregate income between them adds up to a nice healthy number, things will be fine! Let’s survey the landscape of GPU mineable altcoins:

Things are NOT fine. Every other altcoin combined doesn’t even add up to the income of ETC, which was itself a tiny sliver of the income of ETH. Yes, I did the math correctly. This is all publicly available data. Check it yourself. Even if I was off by 50%, it’s still game over. It’s like the Titanic is sinking, and there’s only one rickety old lifeboat to share. There is no universe where almost everyone doesn’t drown.

This is why I hate mining calculators with the burning passion of a thousand suns. If they’re your primary way to predict the future, things don’t seem so bad. But mining calculators are not showing you the relative hashpower and income of the various coins when they show you all these alternatives to ETH. They lull you into a false sense of security. Without ETH, GPU miners are screwed. The total amount of income available to ALL GPU miners is going to drop by 97%.

History is not a useful guide for what comes next, because nothing like this has ever happened before. In the past, when GPU miners lost LTC, ZEC or XMR to ASICs, they were just one small part of a very big pie. This situation is completely different. This is like the whole pie vanishing overnight, and miners will have to fight for the leftover crumbs. It is essential to understand this – this is an unprecedented and catastrophic reduction in income for GPU miners.

To put this into perspective, let’s walk through a few potential scenarios of how this actually plays out. We still must make some assumptions and approximations first. Rough calculations based on total hashpower suggest roughly 10-15 million GPUs are mining. Using the 10 million number, that puts the average income per GPU at $2.36/day – this suggests the average GPU is a RTX 3080, so this is being VERY conservative. Certainly, some amount of that hashpower is ETH ASICs, but given that they can mine ETC as well, and all the other coins add up to practically nothing – we can ignore that factor. Unfortunately, in this case, ASICs get to share the lifeboat.

A warning – the numbers are going to be so shocking you will probably think to yourself that they must be wrong in some way. They are not.

#1 – The Base Case

In this oversimplified base-case scenario, nothing changes between now and the merge. All crypto prices, total hashpower and block rewards stay the same. On merge day, all GPUs divert to other coins. 10 million GPUs are now left to split approximately $775,000. Average income per GPU? $0.0775.

You read that correctly. Income has dropped from $2.36 per day to 7 cents per day. And that “average” GPU is burning at least 25c in electricity per day at an average 10c/kwh. In other words, you need 3c/kwh electricity just to break even. And even if you have free electricity, your total takeaway per day is 7 measly cents.

But of course, it’s more complicated than that. Most miners know the merge is coming and many will turn off before then. And crypto prices fluctuate wildly every day. So, let’s play with the numbers and look at some other scenarios.

#2 – The Plausible Best-Case Scenario

Let’s assume that prior to the merge, half the GPUs shut off, and suddenly, the price of all crypto doubles. Pre-merge, the average GPU is making $9.44/day. Awesome! Enjoy that while it lasts, because post-merge, 5 million GPUs are splitting $1.549 million/day. The “average” GPU is now making 31 cents per day. After electricity, the average GPU is still effectively losing money. And that’s the plausible best-case scenario? WTF even has to happen to get us back to the status quo?

#3 – The Drunk on Hopium Best-Case Scenario

Things are already tight at current returns, so what needs to happen to maintain the $2.36 average? We’d need the price of crypto to 6X and at the same time, for 80% of GPUs shut off. 2 million GPUs are then splitting $4.65 million/day. Average per GPU is $2.32. Can you imagine a world where crypto goes 6X in the next few months and 80% of miners still shut off? I can’t. This isn’t happening.

#4 – The Plausible Worst-Case Scenario

Let’s take as a plausible worst-case scenario that pre-merge, the price of crypto drops another 25%, and despite that, only 25% of miners shut off. Average income per GPU? 7c, just like our base case. The takeaway here is that even though the base case was a contrived and oversimplified example, there are very realistic scenarios where that number still plays out.

#5 – The Minerdämmerung

Miner Twilight aka worst-case scenario

Just for fun, let’s imagine how bad things could really get. The price of crypto drops another 50%, and despite that, hashpower never declined. The average per GPU post-merge is 3.5c. That’s 50% less than the base case but if we’re being honest, it hardly even matters – half of effectively zero is still zero.

The takeaway here should be clear – realistically, there’s no good outcome here for miners on merge day. A miracle needs to happen just to keep things the way they were. Winter is coming.

So where do we go from here?

The long term picture for GPU mining:

These scenarios are only what happens immediately after merge day. Mining has always been a self-correcting system. So what needs to happen to get us back to a point where GPU mining isn’t a complete waste of time – let’s say, $1.50/day revenue for the average GPU? We’d need crypto prices to stay stable and 95% of GPUs to shut off. If we’re heading into a crypto bear market and prices drop by 50%, we need 97.5% of GPUs to shut off. If you actually need to pay for electricity, realistically 99% of other GPUs need to shut off. No exaggeration. That’s really what needs to happen. The average miner won’t survive this. Even the most dedicated 1% of miners will just barely scrape by, losing money every day until we get to this point.

Miners won’t be able to just mine something else, near term
By now it should be very, very clear that the average miner won’t be able to “just mine something else.” And make no mistake – this must happen. This WILL happen. The math insists on it. The choice every miner will need to make is how long they can stand to lose money before they throw in the towel. Even if you turn your rigs off, GPUs are going to lose tremendous amounts of resale value every single day – so even if you’re not mining, you’re STILL losing money indirectly.

How long will it take for 95-99% of GPUs to peel off? Hard to say, but I think there will probably be a very steep decline upfront and then a slow bleed of miners giving up one by one when they’re fed up with losing money for weeks or months on end. This isn’t like proof of stake where you can just hold on to your coins and pray that the price recovers. Miners need to pay to play, and all of the altcoins combined simply can’t afford to pay.

This is going to have significant real-world consequences. I’ve been really taken aback by the prevalence of the sentiment that miners can just “mine something else.” That’s not going to happen. Businesses that were profitable the day before will be wrecked overnight. Lives will be ruined. Personally, I saw this coming a mile away and sold all my GPUs last year. But I’m still very sympathetic to the pain this will cause.

GPU mining here to stay? Still hopeful…long term
Years from now, it’s possible that GPU mining has a renaissance, and we do this all over again. It’s not out of the question that within a few years, the aggregate income for GPU miners increases by 6X from the post-merge baseline without ETH, after 80% of miners have already shut down. I’m not sure I’d bet on that happening anytime soon, but I can at least entertain the possibility. Or it’s possible that this catastrophe salts the earth and GPU mining is effectively dead from a profitability perspective and remains a niche hobby for the rest of our lives.

Where’s the GPU miner resistance?

Time will tell. Before I conclude, allow me to step onto my soapbox for one last moment here. A year ago, I was certain that miners would come together, in the end, to fight the merge using every dirty trick in the book. There are literally billions of dollars at stake here! Billion-dollar industries typically don’t just vanish overnight. I figured a coalition of large ETH miners, and maybe even Nvidia or AMD themselves would step up to the plate and defend their livelihood. And small miners all around the world would rally behind this effort, and it would make the bitcoin block size war look like a walk in the park. Because this wouldn’t just be a fight for the path forward, it would literally be a fight for survival. And here we are, on the eve of the apocalypse. And there’s just…crickets. All that most miners seem to care about is surviving another day mining ETH and then dreaming of a future where they’ll just “mine something else” at just a bit less income, completely ignorant of how dire the post-merge situation will be.

I think the reality of the situation is that despite what PoS advocates want everyone to believe, GPU miners are so legitimately decentralized that getting them to do anything together is like herding cats. Even the largest ETH miner, accounting for, let’s say conservatively 5% of the hashrate, is a small fish in a huge sea. GPU miners never stood a chance against the concentrated wealth of the highly coordinated whales that desperately want PoS to happen so they can pump their bags with virtually zero effort. I hope that magnificently blows up in their face because they created something truly beautiful here before they threw it under the bus. I think 5 years from now we’ll look back at a much lower-priced ETH and be able to clearly point to the merge as where things went off the rails in retrospect. The irony that the coin that created the most successfully decentralized PoW network is the same one that kicked it to the curb is almost too much to bear. It’s straight out of the twilight zone. They practically achieved the impossible, and it’s so, so disappointing to see that almost no one with the means, motive, and opportunity cared enough to fight for it.

Delay the merge years, avoid the worst-case scenarios?

Realistically, the only path forward where GPU miners don’t get obliterated by the merge is if it doesn’t happen for another few years, and the price of ETH gradually falls to the point where miners can gracefully lay down their GPUs and walk away without too much carnage. I think that’s extremely unlikely at this point, but admittedly, the chances are non-zero. It’s certainly not too late for miners to come together and fight for their right to mine and prove to the world that Ethereum isn’t just another centralized shitcoin. Or at the very least, to come together and create something new worth fighting for before it’s too late. I just thought we’d be well down that path by now. In aggregate, GPU miners are going down in flames, there’s no two ways about it. But from an individual miner’s perspective, it’s not too late to cut your losses. If you’re daring, you can even work this to your advantage. Even if you don’t realize it, all GPU miners have been losing money since the start of 2022. Every single one of you. Here’s why.

At this point, we are 100% focused on assisting miners in their exit from GPU mining, temporarily or permanently. No matter the size or location of your farm, we can make a buyout offer and, in most cases, pay and pick up in person for an easy, no-risk transaction. Our offers will be realistic and market-based – for better or worse. Even if you’re still on the fence, we can assist with up-to-date market valuations so you can time your exit appropriately. I’m sincerely upset with the way things are turning out. I didn’t think it would end this way, and I still hold that tiny sliver of hope that it still doesn’t. This article isn’t some wild prediction designed to scare you into selling your GPUs to us so we can mine with them ourselves. We’re going to sell them back to gamers as fast as we can because no one can escape the brutality of the math. We’d prefer that GPU mining remains healthy, and people sell their hardware to us when they want to, not when they have to. But make no mistake – this is still an extremely challenging period for our business as well. For those of you with larger farms, we’re still trying to figure out how to make this work at scale when the price of GPUs is falling so fast that not even the biggest GPU reseller in the world can move them into the hands of gamers before they’re worth less than we paid for them. As long as you’re realistic about what we’re all up against here, we’ll figure out a way to make it work.

bitproit.com

GPU Mining Profitability Post-Merge

Analysis of GPU mining returns after the Ethereum merge, the transition to Proof of Stake. GPU miners face an unprecedented situation. 97% of revenue from GPU mining comes from Ethereum
bitproit.com bitproit.com


This is in stark contrast to the rest of the semiconductor/microchip industry as a whole however, but because nvidia's taken it (and will continue to take it) in the proverbial and probably will for another several months, simple contagion means that SOX/SOXL takes a hit.

Once the market figures out that there's a lot more to the semiconductor industry than gpu's/nvidia, I expect SOX/SOXL to have a hard run again.

When this will be is hard to say but I don't see a few buys on some particularly red days over the next couple of quarters to be a bad move at all. Let's not kid ourselves here, when, since they were invented, has there ever been an even medium term reduction in the demand for microchips, like ever?

The hard part is working out when the market is going to figure all of this out. In the meantime, IMHO, some wonderful buying opportunities are going to present themselves, I just don't know when.



BUT this is all just the economics of it all. It's effectively just the demand side of the equation. I haven't even touched on the geopolitical side of things with china/taiwan, i.e the supply side. I'll cover that in another post shortly.
 
The economics of the taiwanese supply side:


TSMC's revenue this year is going to set an all-time record for the company, thanks to high demand for chips as well as increased prices that its customers are willing to pay for its services. While the company admits that demand for chips aimed at consumer devices is slowing, demand for 5G, AI, HPC, and automotive chips remains steady. In fact, TSMC's main problem at present is getting more fab equipment, as ASML and other tool firms and reporting that demand for semiconductor production tools significantly exceeds supply.

Last week TSMC posted its financial results for the second quarter of 2022. The company's revenue hit a record $18.2 billion, which was a year-over-year increase of 43.5%. The company revealed that while its sales were up 55% and 65.3% in April and May (respectively), its revenue in June was 'only' up 18.5% YoY, which indicates a slowdown in sales growth.

HOWEVER:

"Due to the softening device momentum in smartphone, PC and consumer end market segments, we observe the supply chain is already taking action and expect inventory level to reduce throughout the second half 2022," said C.C. Wei, chief executive of TSMC, at the company's earnings conference call.

tsmc-revenue-by-platform-q2-2022_575px.png

While we can only speculate on this, it looks like some of TSMC's customers reduced their orders for client-oriented chips after Russia started a full-scale war against Ukraine in late February. TSMC charges/recognizes revenue when it delivers chips/wafers to a client.

Production cycle for chips on modern process technologies is well over 60 days depending on complexity and the number of layers: N16 is ~60 days, N7 is 90+ days, N5 is probably well over 100 days. These nodes account for 65% of TSMC's revenue. So, if clients started to wind down orders in March and April as they anticipated increasing inflation and uncertainty among the end user, the effect will be seen in June, which is what can be observed in TSMC's reports.

TSMC admits that demand for client-oriented chips is softening, but demand for chips designed to support 5G, AI, and HPC applications still exceeds the company's abilities to supply.

"While we observe softness in consumer end market segments, other end market segments such as data center and automotive-related remain steady," said Wei. "We are able to reallocate our capacity to support these areas. Despite the ongoing inventory correction, our customers' demand continues to exceed our ability to supply. We expect our capacity to remain tight throughout 2022 and our full year growth to be mid-30% in U.S. dollar terms."


Over half of TSMC's revenue (51%) comes from chips made using its advanced fabrication technologies (N7 and thinner nodes), which is not particularly surprising as TSMC is one of the only two contract foundries that offer such sophisticated manufacturing processes to clients:

tsmc-revenue-by-node-q2-2022_575px.png


These technologies will be among TSMC's main growth drivers in the coming years, especially as more customers adopt N7 and more advanced technologies. But more N7/N6 and N5/N4 orders mean that TSMC will need to build more capacity for these nodes, as well as more capacity for N3 and subsequent nodes, which is why the company estimated that its CapEx this year would reach $40 billion – $44 billion.

"With the successful ramp of N5, N4P, N4X, and the upcoming ramp-up of N3, we will expand our customer product portfolio and increase our addressable market," said the head of TSMC. "The macroeconomic uncertainty may persist into 2023, our technology leadership will continue to advance and support our growth. […] We believe the fundamental structural growth trajectory in the long-term semiconductor demand remains firmly in place. "

The world's No. 1 contract maker of semiconductors also urges customers to migrate from older nodes to 28nm and specialty technologies as this will ensure capacity availability (as TSMC plans to expand capacity for 28 nm and specialty nodes by 50% by 2025) and denser designs potentially with more features.

Building additional leading-edge, 28 nm, and specialty capacities not only requires massive investments, but TSMC needs to procure additional semiconductor production tools. Whether TSMC is building capacities for its brand-new N3 node or 28nm/specialty technologies, it should be noted that the company needs all kinds of lithography machines for them. An N3-capable fab needs dry litho tools, immersion litho scanners, and EUV-capable equipment. Without required number of dry and immersion scanners, etching, deposition, resist removal, inspection and many other tools (that do not necessarily come from ASML), an advanced EUV machine on its own will be useless. Meanwhile, lithography tools are not the only machinery that a fab needs.

Apparently, demand for fab equipment is so high that TSMC will not be able to spend its CapEx budget this year, and some purchases related to advanced (N7 and thinner) and mature nodes will be delayed into 2023. As a result, TSMC's CapEx this year will be at a lower end of the company's prediction (around $40 billion) not because it does not want to invest, but because it cannot invest in tools that are not available.

"Our suppliers have been facing greater challenges in their supply chains, which are extending tool delivery lead times for both advanced and mature nodes," said Wei. "As a result, we expect some of our CapEx this year to be pushed out into 2023."


Meanwhile, ASML, the world's largest producer of lithography tools, this week posted its Q2 2022 revenue of €5.431 billion, a 53% increase year-over-year. During the second quarter, the company supplied (recognized revenue) a total of 91 new lithography systems (up from 59 in Q2 2021), with 12 of those being EUV systems (up from 3 in Q2 2021):


asml-sales-q2-2021_575px.png

What is perhaps more important is that ASML's net bookings for new systems totaled €8.461 billion during the quarter, so the company's bookings are higher than its quarterly sales. Meanwhile, ASML's backlog now totals €33 billion and spans multiple years to come, which essentially is a yet another confirmation that it is extremely hard for companies like TSMC to get new tools.

The backlog for DUV machines is now at around 600 units and product order lead time for a new DUV scanner is now about two years. The backlog for EUV tools is well over 100 machines. Meanwhile, ASML says that PO lead time metrics is not exactly relevant since it faces supply chain and own production capacity issues, which means that its partners have to build additional capacity and ASML has to build additional capacity (which takes time) and only then it will be able to supply the tools ordered recently.

For the whole year 2022, ASML expects to ship 55 extreme ultraviolet (EUV) lithography scanners, but recognize revenue of 40 EUV systems valued at €6.40 billion (€160/$140 million per machine) because 15 EUV machines will be so-called fast shipments — a shipment process that skips some of the testing at ASML's factory and then final testing and formal acceptance are performed at the customer site (which is why revenue acceptance gets deferred). The company also intends to supply 240 deep ultraviolet (DUV) litho tools this year. ASML expects its production capacity to total 60 EUV scanners and 375+ DUV tools in 2023.

Summary:

While demand for chips aimed at client/consumer devices is getting softer due to rising inflation and geopolitical uncertainty, the global megatrends like 5G, AI, HPC, and autonomous vehicles are still there and these require loads of advanced system-on-chips, specialty processors, and not-so-advanced things like sensors. Therefore, TSMC is confident of strong demand for chips in the coming years.

But there is a problem with meeting that demand as TSMC is not the only company that is expanding its manufacturing capacity. ASML's backlog now includes over 100 EUV scanners and around 600 DUV scanners — it will take years for the company to ship these machines. As a result, TSMC has problems with obtaining tools it needs to build additional capacity it needs. It is unclear whether the company has enough capacity to meet all of the potential demand from its largest customers on N3, N4, N5 nodes (Apple, MediaTek, AMD, NVIDIA, etc.), but, ultimately, tool shortages will affect all of its process technologies.


https://www.anandtech.com/show/1750...-remains-strong-but-getting-fab-tools-is-hard
 
over9k said:
IMHO, some wonderful buying opportunities are going to present themselves, I just don't know when.
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Today's looking like it might be one of them:

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-12.5% as of this posting and still dropping. I've made a small buy.
 
The soft power being wielded on the supply side:



Today, biden signed the "CHIPS" act (Creating Helpful Incentives to Produce Semiconductors for America Act) into law:

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The chips act is essentially a financial both carrot and stick package designed to bring production of the only thing that the united states is actually reliant on any part of the rest of the world for, back onto american shores. Take note of the fact that the act falls under the umbrella of "national defense" because the fact is that at a strategic level, it is.



The carrot:

In order to support the rapid implementation of the semiconductor provisions included in the Fiscal Year (“FY”) 2021 National Defense Authorization Act (“NDAA”), this division would provide $52.7 billion in emergency supplemental appropriations.

$50.0 billion allocated over 5 years for a CHIPS for America Fund. Funding must be used to implement the Commerce Department semiconductor incentive—to develop domestic manufacturing capability and research and development (“R&D”) and workforce development programs authorized by the FY21 NDAA (Sec. 9902 & 9906).

Incentive Program:

$39 billion allocated over 5 years to implement the programs authorized in Sec. 9902, of which $2 billion is explicitly provided to focus solely on legacy chip production to advance economic and national security interests. These chips are essential to the auto industry, the military, and other critical industries. Within the incentive program, up to $6 billion may be used for the cost of direct loans and loan guarantees.

Timeline: $19 billion in FY22, including the $2 billion legacy chip production funding, then $5 billion each year, FY23 through FY26

Commerce R&D and workforce development programs:

$11 billion appropriated over 5 years to implement programs authorized in Sec. 9906, including the National Semiconductor Technology Center (“NSTC”), the National Advanced Packaging Manufacturing Program, and other R&D and workforce development programs authorized in Sec. 9906.

$2 billion for a CHIPS for America Defense Fund: Funding would be appropriated for the Microelectronics Commons, a national network for onshore, university-based prototyping, lab-to-fab transition of semiconductor technologies—including Department of Defense-unique applications—and semiconductor workforce training.


It also creates a 25 percent investment tax credit for investments in semiconductor manufacturing and includes incentives for the manufacturing of semiconductors, as well as for the manufacturing of the specializ ed tooling equipment required in the semiconductor manufacturing process. Taxpayers may elect to treat the credit as a payment against tax (“direct pay”). The credit is provided for property that is placed in service after December 31, 2022, and for which construction begins before January 1, 2027.

So basically, 2 billion for legacy chip production, 37 for current tech, 11 for R&D, and a 25% tax credit for any of your own money you add on top.



The stick:

Prohibits the recipients of Federal incentive funds from expanding or building new manufacturing capacity for certain advanced semiconductors in specific countries that present a national security threat to the United States. To ensure that these restrictions remain current with the status of semiconductor technology and with U.S. export control regulations, the Secretary of Commerce, in coordination with the Secretary of Defense and the Director of National Intelligence, would be required to regularly reconsider, with industry input, which technologies and countries are subject to this prohibition.

In short, companies are banned from providing strategic adversaries of the united states (currently China and Russia) with advanced chips if they are awarded subsidies under the act, and the government reserves the right to change which chips can be banned from which countries at any time. This enables the united states' government to control a significant portion of the world's microchip supply in the same way that it now controls a significant portion of the world's oil supply (the U.S president already has the power to block in part or entirely, all u.s oil exports).


Note: This act does not mean that the united states will not/would not get involved in a war between china & taiwan. Its purpose is to ensure that the united states does not HAVE to get involved in said war (defend taiwan) in order to secure its chip supply.

I will cover the military side of the china/taiwan tensions/conflict in the next post.
 
Another kick in the guts,
Ukraine has forced the closure yesterday of its southern oioeline providing only source of energy to 3 landlocked EU countries
Ex Tchecoslovàkia and Hungary i think, which are all key subcontractors to german and italian industry.
The EU economy is dead in 2 months..september will start the collapse there with fully broken supply chains and i guess inflation resurgence due to lack of supply?
China and US popping Champagne
 
Pretty soon, I think a good judge of inflation will be the length of the queue going out the door down the street from the cheap 7-11 coffee machine on Eddy Street near Chinatown. Plastic and coin in the mix here. CPU, internet all make coins obsolete, hopefully inflation to follow.
 
redsmartie said:
Pretty soon, I think a good judge of inflation will be the length of the queue going out the door down the street from the cheap 7-11 coffee machine on Eddy Street near Chinatown. Plastic and coin in the mix here. CPU, internet all make coins obsolete, hopefully inflation to follow.
Click to expand...
not so , but it will be very hard to guesstimate the real economy ( and you can't trust the regime to tell you the truth on most things )

the inflation ( taxation ) will be simply hidden from view .
 

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