Profit Pregame

How Water Could Be the Downfall of Semiconductor Stocks

One Drought Could Affect the Entire World

A lack of rain could potentially halt one of the world’s most important industries.

What’s happening?

A few weeks ago, we discussed the efforts that Congress is undertaking to identify supply chain flaws in semiconductors – the materials which make up the advanced microchips needed in most of today’s electronic devices – and the potential for increased production here in the U.S.

The need for more semiconductors was already a huge focus around the world before reports started to surface this week about a new hindrance that could lead to even greater supply problems.

Taiwan, one of the world’s most important sources of semiconductor chips, is currently going through its worst drought in decades. Taiwan Semiconductor Manufacturing Company (TSM), among other producers, are now being asked to reduce their water use by 7%.

The problem is that microchip production requires huge amounts of water, and reservoirs in Taiwan are running dangerously low.

Experts have estimated that, at current levels, the Taiwanese semiconductor companies have enough water to continue production until May.

Unless something gives soon, there’s going to be a lot of pain in the market.

And not just for semiconductor stocks…

Where’s the money?

To help alleviate some of the pressure from the local reservoirs, TSM and others have begun shipping in water from various wells and groundwater suppliers on the island.

TSM alone needs around 156,000 tons of water per day. So, trucking in water supplies is only a temporary stopgap. Without some help from mother nature soon, we could have a full-blown semiconductor crisis on our hands.

The effects would be wide reaching. Every industry from aerospace, to automobiles, to electronics, and countless others rely on advanced microchips. All would be forced to cut or halt production without them.

That dire threat has pushed the need to fix supply chains and increase semiconductor production in the U.S. to the forefront, and is getting a ton of headlines right now.

TSM’s plans to open a production facility in the U.S. has a lot of investors taking up positions in the stock.

But I would exercise caution here…

How do I get some?

I think that the semiconductor story is not about supply and demand, but all about interest rates.

In the near future, I see a big potential for rates to move higher, which will in turn move semiconductor stocks lower. Nothing in this space matters more than that right now.

I also think an increase of U.S.-based semiconductors will end up being a drag on TSM. Producers in China and other countries will be able to make semiconductors at a lower cost and arguably better quality.

All in all, I recommend that you don’t buy TSM.

Instead, here’s another investment that I’m really excited about…

There’s a Massive Profit Opportunity Brewing…

Unless you’ve been hiding under a rock for a few months now, you know that heavily shorted stocks are all the rage right now. Retail investors have taken aim at the massive short positions of hedge funds and Wall Street institutions – and they’re making money hand-over-fist doing it.

So I’ve taken the incredible tracking power of my S.C.A.N. system and fine-tuned it to help me identify the trade opportunities with some of the biggest profit potential on the market’s most heavily shorted stocks.

One name that’s been near the top of my list for a while now is Editas Medicine, Inc. (EDIT). This healthcare stock has more than 11 million shorted shares and is a great candidate for a short squeeze.

And when the time comes, I’m going to show subscribers of my Super Squeeze Profits research service the exact trade that could help them maximize their profits.

It’s not too late to get in on this and other potentially huge money-makers. Click here to learn how you can take part.

In the Spotlight: Another Surge for the King of Short Squeezes

GameStop Corp. (GME), the stock that ignited the short squeeze mania, is on another roller coaster ride.

The stock has climbed back up to over $344 at its high this week, despite short interest on the stock dropping significantly.

That tells me one thing…

The buying power of the retail investors that are hunting short positions is still incredibly strong, and there are plenty of opportunities yet to come. You can be sure that I’ll let you know where the biggest profits are as we go along – so stay tuned.

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