✨ Value Investing Substack: 1) US Macro webinar with InvestingNote + 2) Smartkarma + 3) Telegram group chat open to trial subscribers
Join my US Macro webinar next Tuesday (12 Apr)... plus trial subscribers gain a new freebie!
US Macro webinar with InvestingNote
Hi y’all! I’ve recently been invited by the investing social media platform InvestingNote to share my thoughts on recent developments in US Macro. Some of the questions that we will be exploring in this webinar include:
How will US inflation develop? What are the possible distribution of outcomes for the US economy? Is hyperinflation a real risk?
What might be going through Fed Chair Powell’s head right now - and how is he likely to react to the evolving macroeconomic situation?
What are my thoughts about the recent 2-10 UST yield curve inversion - and why have LT yields remained depressed in the face of inflationary expectations? How is the BOJ related to all this?
Should we worry about Deflation instead?
While I may identify as a value investor… that doesn’t mean that value investors can’t speak macro! Although I don’t think that macro is actionable in isolation (due to the excessive number of moving parts involved), I do actually thoroughly enjoy the intellectual exercise of unbundling what is going on in global markets - monetary & fiscal policy, foreign exchange, geopolitics, etc. Recall that Buffett acquired the bond-heavy General Reinsurance in 1998 right before the Dot-Com Bubble burst… could he also be seeing the same signs with his recent acquisition of the similarly bond-heavy Alleghany? Let’s explore all this together - and more!
If nothing else, do sign up and attend just to see how having a healthy approach to macro can complement the value investing process. I guarantee you that it’ll be a blast!
Click the link below to sign up for this webinar:
Time: Tuesday, 8PM (GMT+8) // Tuesday, 8AM (EST)
Registration Link:
https://us02web.zoom.us/webinar/register/9316485378676/WN_qbZObVndTHiAuZ3pIryNmA
If you’d like to catch an early glimpse of what this webinar has to offer, feel free to check out some of my previous Macro articles linked below:
SmartKarma
At around the same time, I was also recently invited to contribute on the globally-recognized investing research platform Smartkarma. While this part is still very much a work-in-progress, do click the image below and then the ‘Follow’ button there to keep up with my progress. Every little bit of support helps!
Telegram group chat now open to trial subscribers
A few months ago, I launched our Telegram group chat in order to provide more timely updates to my paid subscribers - but at the time, I mentioned that it was still a project in beta. Things have progressed smoothly since then - and I’m ready to “(un)beta” this project and make it an official release.
Where previously trial subscribers were not able to join the Telegram group chat, I’m now making it available to all paid subscribers - trial subscription notwithstanding. Of course, if your trial subscription runs out and you decide not to continue, then you will no longer be a paid subscriber and have to drop out - but at least this way, even trial subscribers will have the chance to see more of what this blog can offer.
For a glimpse of the quality of the discussions that we have in the Telegram group chat, here’s one of my responses when a subscriber sought clarification over Intel’s past decade of underperformance (in the context of my recent AEM Holdings stock reports):
(…) As all of you are familiar with, Intel has been underperforming its peers both the likes of AMD (in the fabless space) and TSMC (in the fab space). Let’s talk about the fabless space first. As I’ve described in my article, the subsector involved here is the Chip Design subsector. So what they do is they only design the chip, and then outsource manufacturing to the fabs like TSMC.
What AMD did prior to 2016 when their share price began skyrocketing was introduce what is known as “chiplet” technology at commercial scale. This idea was introduced by the relatively recently appointed CEO, Lisa Su, who joined AMD in 2014. Basically, the idea behind chiplets is to make “normal” chips modular – i.e. rather than having all CPU functions on one die, you divide the CPU functions into separate dies and mix-and-match them as necessary. This gives you 1) yield advantages as they are smaller (dies per wafer) and also 2) allowed different arrangements of chiplets vs one monolithic die, which enabled higher performance. This culminated in the Zen architecture, which was miles ahead of Intel’s approach at the time. If you want to know more, I highly recommend reading this phenomenal article which paints AMD’s history from beginning to the recent past: https://www.techspot.com/article/2043-amd-rise-fall-revival-history/
Intel had fallen behind because it was stuck on the Broadwell architecture. If you might recall, there was a period of about 4-5 years in the mid-2010’s where Intel’s CPUs did not increase their clock speed (e.g. 2 Ghz dual-core). This was mainly because 1) they were still relying on the old monolithic die approach (i.e. non-chiplet), and 2) they were hitting issues on the Fabrication side with achieving smaller process node (e.g. 10nm). We’ve already covered the 1st issue, so let’s discuss the 2nd one.
As you might know, TSMC only really begin using EUV technology for manufacturing chips at scale around 2018. Prior to that, the main approach was called lithography, which is basically using a regular laser as compared to EUV light. The main difference here is that lithography techniques rely on laser at 193 nm wavelength, while EUV rays have 13 nm wavelength – so lithography is basically a lot fatter than EUV, and therefore can’t etch higher transistor designs. The way Intel tried to overcome this was through a process called “multi-patterning”. As the name implies, multi-patterning involves etching transistor designs onto the semiconductor wafer multiple times – with each pass being “in between” the first pass to simulate a laser of smaller wavelengths. So you might etch half of the transistor design one time on a semiconductor wafer, then etch the second half of it in between the gaps of the first half. As you can imagine, this was relatively inefficient (i.e. lower yields) due to the extra time requirement; and also involved higher complexity and thus higher chance for errors.
So why didn’t Intel use EUV earlier to solve this stumbling block? Recall that TSMC (who AMD outsources manufacturing to) started using EUV at scale around 2018, while Intel only started using it several process cycles later around 2020-2021 – which is an eternity in the semiconductor world. The main reason for this is because EUV was still highly experimental at the time AMD started leapfrogging Intel in the mid-2010’s, and Intel didn’t want to take the risk of an experimental approach, and decided instead to continue relying on multi-patterning. In contrast, TSMC made a huge bet on EUV and funded ASML’s research into the technology in the face of high levels of uncertainty whether they would even complete the R&D according to expected timelines. This was mainly because ASML’s engineers were having trouble discovering the current process of creating EUV rays – by pulsing two lasers at a falling drop of tin to output a sufficiently strong EUV ray. They were actually quite lucky to have discovered it at the time that they did; because otherwise the process node increase would have to be delayed yet again, and the industry would have to fallback to multi-patterning.
Recall also that at the time, the readiness timeline for EUV at commercial scale had already been delayed and pushed back several times – so Intel’s decision not to bet the horse on EUV was actually quite rational. TSMC took a risk, and because it was generously funding ASML’s research, they got first dibs on orders. Since ASML only makes about 30 machines per year, Intel had to wait in line in order to get their hands on them.
Okay, so this is the history of why Intel paled in comparison to AMD and TSMC, and underperformed both the fabless and fab side of the industry over the past half-decade. Now the question becomes, can Intel overcome these hurdles going forward in light of its past failures?
Fortunately, the answer is a very affirmative yes. Firstly, on the technology side, Intel is already well on the way to catching up with TSMC, as it now has similar access to ASML’s EUV equipment. If you’ve read my article, you’ll also know that the US Govt has a huge vested interest to see Intel succeed at its IFS enterprise – so you can only imagine how much lobbying is going on right now to accelerate that timeline. Intel has also already copied most of AMD’s current design processes (e.g. chiplets with Foveros, vertical stacking, etc), so it shouldn’t be too far behind AMD right now. The only real threat on the horizon is Apple, which is a totally separate topic as long as this one.
Secondly, on the culture side, Intel’s new CEO Pat Gelsinger is somewhat of a legend in the sector – he’s literally been called the “Steve Jobs of the semiconductor industry”. With his stature he brings a lot of credibility to Intel’s revival, and has already been successful at poaching several star figures in the sector from rivals since he joined last year (where previously the reverse was true). I won’t go into the details, but imagine if Steve Jobs joined Dell – that’s kinda the analogy we’re drawing here. Or another analogy is Nadella’s joining Microsoft - where previously Microsoft’s corporate culture was characterized as fiefdoms protecting their own turfs under Ballmer, Nadella apparently has managed to harmonize them into one focused group. And Microsoft’s share price since Nadella became CEO in 2015 reflects that cultural turnaround success – something I’m expecting Gelsinger to do at Intel in the coming years as well. If you’d like more granular detail on the cultural revolution at Intel thus far, here’s a very good piece which discusses it at length: https://semianalysis.com/intel-is-throwing-the-kitchen-sink-but-is-the-turn-around-plan-reasonable-deep-dive-on-tower-semiconductor-fabs-and-ip-intel-culture-shift-future-product-and-roadmap-competitiveness-by-business/
Where I think this Telegram group chat really adds value - is that it provides me with an avenue to supply more timely responses to specific concerns that paid subscribers might have. For instance, it would have been difficult for me to slot the above response into my already-completed stock reports (even if it provides additional pertinent information) - since I would first have to edit the response, and then find a suitable spot to place it in the report.
However, a more informal setting like this Telegram group chat allows me to supply that exact same information to you without first having to spend time editing it - therefore making it far more accessible to everyone involved. I’ve also discussed other benefits that you might enjoy in my Telegram invite article - so feel free to head over there to see how I can add further value to you as a paid subscriber.
In any case, do consider signing up as a trial subscriber if you’d like to see what we have already discussed in the group chat so far. All historical chats can be viewed by new subscribers - so there’s already a ton of existing information (like the above Intel discussion) for you to sift through (use the “Search” function).
Click the button below to sign up for a 30-day trial - and then click the box below to join our Telegram group chat!
Anyway, I hope to see all of you in next Tuesday’s webinar! Trust me… it’ll be fun!
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