🍟 USA chips

Wednesday, August 10, 2022 by Robinhood Snacks |
Small but mighty (Saul Loeb/AFP via Getty Images)

Small but mighty (Saul Loeb/AFP via Getty Images)

Small but mighty (Saul Loeb/AFP via Getty Images)

Small but mighty (Saul Loeb/AFP via Getty Images)

Yesterday’s Market Moves
Dow Jones
32,774 (-0.18%)
S&P 500
4,122 (-0.42%)
Nasdaq
12,494 (-1.19%)
Bitcoin
$23,198 (-2.52%)

Hey Snackers,

Here today, gone tomato: Domino’s is closing all its remaining shops in Italy as locals shun the American-style pies. Twitter users were heated that Dom’s ever tried in the first place.

Stocks finished lower yesterday, dragged down by tech (cough, chip stocks). Investors have eager eyes on today’s July inflation report. One encouraging indicator: yesterday, for the first time since March, US gas fell below $4/gallon.

Chipper

Fish and chips... More like fishing for chips. Yesterday, President Biden signed the "CHIPS and Science Act" into law. The bipartisan win comes after nearly two years of negotiations. The $280B package features $52B for boosting US chip manufacturing. Picture: funding for American chip titans like Intel, AMD, and Micron. And chipmakers are already making moves spurred by CHIPS:

  • Micron announced yesterday that it would invest $40B in US chip manufacturing through 2030 with the help of $$ from CHIPS. It also said that its investment would create up to 40K US jobs and that it expects to begin US production in the second half of the decade.
  • Qualcomm committed to spending an extra $4.2B on chips from GlobalFoundries NY plant — and to boosting its US semiconductor manufacturing by 50% over the next five years.

Chips in the fridge… semiconductor chips, that is. Chips are critical to everything from smartphones and cars to military systems and medical equipment. But the US produces only one-tenth of the world’s chips and is heavily reliant on East Asia, which accounts for three-fourths of global chip production. Taiwan’s TSMC alone churns out 90% of the world’s advanced chips, and China’s only growing more dominant in its chip game.

THE TAKEAWAY

Sometimes you need to dangle the carrot… to incentivize change. US chip manufacturers have been offshoring new foundries to Asia for years in exchange for cheaper labor and production. Now this $52B package gives American manufacturers a financial incentive to build at home. Micron said its $40B investment would boost America's global memory-chip market share to 10% from 2%.

Gem

Shine bright like a (lab) diamond… Jewelry legend Signet is shelling out $360M in an all-cash deal to buy direct-to-consumer jewelry brand Blue Nile. Signet is the world’s largest diamond retailer whose portfolio includes Kay Jewelers, Jared, and Zales (you know the jingles). Blue Nile’s modern designs and lower prices have made it one of the largest online diamond retailers and a zillennial go-to. The specs:

  • Digital carat: Blue Nile started as an online-only jewelry brand in 1999 and now has nearly 3M customers and 18 showrooms in hubs like Atlanta and LA.
  • Clear cut: Blue Nile makes most of its $$ from engagement rings, and gained even more popularity after teaming up with lab-grown diamond brand Lightbox in 2020.

Every kiss begins with Kay... but it can only be Jared? US jewelry sales have more than doubled from prepandemic levels as consumers splurged on gold hoops and icy watches. But yesterday Signet cut its sales outlook for next year (and the stock plunged 12%) as econ worries threaten bling spend. Blue Nile’s digital dominance could help keep sales afloat, since more than half of Signet customers start shopping online.

THE TAKEAWAY

Multichannel fits all… Signet is trying to expand its "connected commerce” strategy — a frictionless shopping experience across sales channels (think: browsing in a showroom, then buying online). Since nearly all of Signet’s high-spending customers shop across channels, Blue Nile’s digital prowess could put it closer to its $9B annual sales goal. But the deal isn’t expected to close until next year.

What else we’re Snackin’

  • Bills: Americans aren’t the only ones struggling to pay rising utility bills: a third of Brits are expected to face poverty this winter as energy bills across the pond approach an average of $430/month.
  • Jab: A (not so) slight adjustment: Novavax cut its annual sales forecast in half this week as demand for its Covid vax dipped. Earlier this month Moderna also reported shrinking profits on lower shot demand.
  • Clouded: The US halted Chinese solar-panel imports to enforce a ban on products from Xinjiang because they’re often made with forced labor. As a result, US solar-panel imports could drop by half from last year.
  • Vacay: This calls for room service: luxury hotel chain InterContinental announced a $500M share buyback after its profits quadrupled last quarter from the previous year as travel boomed.
  • COD: While gaming sales slow, mobile gaming co AppLovin surprisingly offered to buy rival Unity Software for nearly $18B. That could mess with Unity’s plans to buy game biz ironSource for $4.4B, but the deal may not close.

Snack Fact of the Day

Serena Williams, who just announced she’s going to retire from tennis, has 23 Grand Slam singles titles and $94M in career winnings

Wednesday

  • July US inflation numbers are released
  • Earnings expected from Roblox, Disney, Nio, Bumble, and Wendy's

Authors of this Snacks own: shares of Moderna, Bumble, Disney, and Twitter

Correction: In the Snacks newsletter published on August 9, 2022, in the introduction we misstated that the consumer price index was dropping on August 9. It was set to drop on August 10. We’ve updated the online version of the newsletter, and we regret the error.

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