- Tightening the Chip Supply Noose
Daily Updates: Red, Blue, and Patriotic Potato Chips
Stricter regulations are contemplated to limit chip supplies to Chinese clients from renowned producers like Taiwan Semiconductor Manufacturing Company Ltd. (TSMC 2.66%), Intel Corporation (INTC 2.71%), and other stakeholders. The move is a direct response to reports suggesting that some of TSMC's chips have been diverted to Huawei, currently on the U.S. government's blacklist.
- Expert Quote: "We continue to observe extremely robust AI-related demand" - Taiwan Semi management
- Small is Sophisticated: All semiconductor chips with a threshold of 14 nanometers (nm) or below will require a government license to sell in China.
- Core CPI in the Spotlight
The December Consumer Price Index (CPI) is set to capture our attention Wednesday, with analysts anticipating a year-over-year figure of 2.9%. The core CPI, excluding volatile costs like food and fuel, is expected to hold steady at 3.3% year-over-year, propelled by higher housing, medical care, and other service costs.
- Bank of America's Cautious Optimism: Bank of America economists are hopeful after Tuesday's Producer Price Index (PPI) update showed a 0.2% monthly increase, lower than the anticipated 0.4%.
- Quantum Stocks Recover
Quantum computing stocks recorded a rebound yesterday, following B. Riley Securities' raised price targets on Rigetti Computing (RGTI 22.23%) and D-Wave Quantum (QBTS 22.41%). Analyst Craig Ellis believes advancing quantum technology provides a confident perspective on scalable technology outperforming traditional processors.
S&P 5005,843 (+0.11%)
- Revised Price Targets: The broker raised Rigetti's price target from $4 to $8.50 and D-Wave's from $4.50 to $9.
- JPMorgan Leads the Banking Pack
JPMorgan Chase & Co. (JPM 1.97%) will commence the bank reporting season on Wednesday, forecast to post record annual profits, with the stock having climbed 47% over the past 12 months. Despite analysts predicting a slight dip in Q4 earnings, Q4 revenues of $43.74 billion surpassed the $43.3 billion reported in the third quarter.
Nasdaq19,044 (-0.23%)
- Key takes: Net interest income and credit write-offs remain crucial considerations.
- Foolish Fun
If JPMorgan CEO Jamie Dimon had the power to eliminate a competitor, who would it be and why? (Answer reserved for members)
Dow42,518 (+0.52%)
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Enrichment Insights:
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- Targeted Chips: The regulations focus on chips manufactured on 14nm or 16nm process technologies or more, with 30 billion or more transistors.
- Export licensing: U.S., Taiwan, and allied nations can apply for export licenses if selling to approved customers.
- Exceptions: Companies like AMD, Apple, Intel, MediaTek, Silicon Motion, and Phison are not subject to these restrictions.
- Impact: Regulations could impact companies like AMD and Nvidia, for whom mainstream GPUs to Chinese entities may now require export licenses.
- Context: These measures are part of a broader purpose to limit Chinese access to high-end chips and chipmaking equipment in response to national security concerns.
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In light of these regulations, investors might need to consider alternative financing options for companies like AMD and Nvidia, as their mainstream GPUs may now require export licenses to sell to Chinese entities. The stricter regulations on chip supplies could also impact the investing strategies of those interested in these companies.
