🏭 Intel’s chip-quisition

Wednesday, February 16, 2022 by Robinhood Snacks |
When you’ve memorized all the Squarespace ads [Emilija Manevska/Moment via Getty Images]

When you’ve memorized all the Squarespace ads [Emilija Manevska/Moment via Getty Images]

[SOPA Images / Getty Images]

[SOPA Images / Getty Images]

Yesterday’s Market Moves
Dow Jones
34,989 (+1.22%)
S&P 500
4,471 (+1.58%)
Nasdaq
14,140 (+2.53%)
Bitcoin
$44,197 (+3.88%)

Hey Snackers,

After visiting space last year on a SpaceX flight, payments billionaire Jared Isaacman has ponied up for three more trips — including a mission that could take him farther into space than anyone has gone in more than a half century. And we’re still trying to plan Disneyland…

Stocks snapped a three-day losing streak on reports that Russia has pulled back some of its troops from Ukraine’s border — even as President Biden warned that Russia’s still in a “threatening position.” All the uncertainty is driving gas prices to their highest levels in years.

Chipper

Cashing in all the chips… As demand for semiconductor chips used in everything from Teslas to PlayStations has boomed amid pandemic shortages, sales and profits rose for chipmakers like AMD, Nvidia, and Intel despite those supply bottlenecks. This week Intel said it’s buying Israeli chip maker Tower for $5.4B in cash to expand its specialized chip-making capacity.

  • Intel is the world’s biggest semiconductor company by sales, but it outsources much of its actual manufacturing to Taiwan-based TSMC, which makes more than half of global chips.
  • This Tower deal is a small part of Intel’s push to increase its manufacturing muscle at home and abroad.

The American Chip-aissance… The Great Chip Shortage exposed how much US companies rely on foreign chip makers and pushed Intel into a spending spree to better compete with Asian manufacturers. Intel’s spending $20B on two plants in Arizona and possibly up to $100B on a new factory in Ohio that could become the world’s largest. Intel’s money moves are among several of its recent investments in US manufacturing:

  • Automakers from GM to Lucid plan to spend $24B building EV and battery factories in the US. Since 2021 companies have announced plans to invest a total of $200B in American plants.
  • Manufacturing has accounted for a steady amount of US GDP since the 1940s, but has been declining for decades. The US lost its title as the world’s biggest manufacturer in 2010… to China.
THE TAKEAWAY

Tiny chips are key to Biden’s big China plans… The president used Intel’s Ohio investment to drum up support for his China competition bill, which passed in the House two weeks ago after getting Senate approval in June. The America Competes Act is designed to bulk up the US’s manufacturing sector: it includes $52B for chip-making factories, $45B for supply-chain improvements, and $160B for R&D. In the next few weeks, Congress is expected to finalize a version of the bill.

Podspace

"Sponsored by Squarespace"... said every pod ever. Squarespace has helped 4M+ non-coders design sleek websites with ready-made templates and easy-to-use features. Think: sites for personal trainers, cooking blogs, online shops, and Zendaya's fake seashell company (Super Bowl ad). Americans are starting more businesses as the WFH life and the Great Resignation inspire entrepreneurship.

  • Applications for new businesses were up 53% last year from pre-pandemic levels. That means new biz sites created with Squarespace, Wix, GoDaddy, and others.
  • Squarespace IPO’d in May after raising $300M at a $10B valuation. Now it's worth less than half that, but the stock is up 12% this year while the techy Nasdaq is down 11%.
  • Squarespace brought in $576M in revenue from January through September (the first time it revealed #s) — but it lost $241M. Must've been all that pod spend…

“There aren’t enough pods”... said only Squarespace. Six years after Squarespace launched in 2003, the biz was losing $$$. Then, founder Anthony Casalena splurged on a big bet: a $20K ad on a tech pod. The result: a third of Squarespace's new subs came from that ad. After that, Squarespace went all in on pods, seeing huge growth from promos. By 2015, Squarespace was the biggest pod advertiser, buying 2.5X as many ads as its next competitor and indulged in 400+ pods/month, from niche shows to big names like Joe Rogan.

THE TAKEAWAY

Trust leads to conversion… And conversion has never been more important for Squarespace. Pod fans spend hours/day listening to their fave hosts — that’s loyalty. When pod hosts ad-libbed Squarespace spots with tailored promo codes, conversion was huge. When Rogan did it, the return was “almost unbelievable.” Ads placed on Meta and Google saw only a fraction of the returns. Plus, Squarespace users aren’t likely to go elsewhere after paying an annual fee and building sites.

What else we’re Snackin’

  • Fired: Former President Trump’s longtime accounting firm, Mazars, cut ties with his family biz, saying it could no longer vouch for a decade’s worth of financial statements it helped prepare.
  • Give: Elon Musk donated nearly $6B in Tesla shares to an unnamed charity last year, the second-biggest US donation of 2021 (behind a $15B gift from Bill and Melinda Gates to their foundation).
  • Charged: GM will start making the electric Chevy Bolt again in April, eight months after it recalled 140K cars over a risk of battery fires.
  • Settlement: Sandy Hook families reached a $73M settlement with Remington, the maker of the AR-15-style rifle used to massacre 20 children and 6 adults in 2012.
  • Bux: Roblox shares fell 13% after missing earnings targets, though revenue jumped 84% from a year earlier, to $770M. The kid-focused gaming platform has 49M daily users.

Snack Fact of the Day

DJ Steve Aoki says he made more money last year on NFTs than he made in the past decade from music royalties

Wednesday

  • Earnings expected from: Roblox, Nvidia, Cisco, Shopify, Kraft Heinz, and Hilton

Authors of this Snacks own shares of Roblox, GM, Ford, Tesla, Nvidia, and Shopify

Correction: In the Snacks newsletter published on February 15, 2022, we misstated that BlockFi planned to close its interest-earning accounts in the US. The company said existing customers of its BlockFi Interest Accounts would be able to maintain their accounts and receive interest as they always have, but cannot add to their positions as of February 14, 2022. BlockFi also said US customers would not be able to open new BIAs. The company added that it planned to register a new product under SEC rules. We’ve updated the online version of the newsletter, and we regret the error.

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