July 23, 2021

In this video we will talk about Biden's new $52 billion bill to boost the pharmaceutical and semiconductor industries.

If you are in the graphics card market or trying to buy a machine to mine Bitcoin, you will notice that there is a shortage of graphics cards or in general semiconductors.

Many companies have had to halt production such as EV companies in China and even Tesla due to these chip shortages.

Why is there such a shortage, and why can't we simply just produce more?

90% correct transcript

So welcome back to my channel. And in this video, we're going to talk about the latest spill that has passed by Biden and how that affects the pharmaceutical and also the semiconductor industry. So my name is Eric and I'm a CPA, so let's get started. So this is the article that we want to talk about today. Biden [inaudible] supply chain plan to boost medicine, chip outputs. So it was actually posted on Bloomberg as of June 8th, 2021. And basically it is to compete against China because there is right now a technology war between the two countries. So let's dive into this article a little bit more.


When you're looking at this bill Bloomberg is saying that there can be some potential Parris that will be imposed on imports, uh, which will obviously increase the tension between the two countries. And basically the administration will also establish a supply chain, disruption, task force to address near-term bottlenecks that can affect the economic recovery of the United States. And in this case, I do think it is quite difficult to address the supply chain, uh, bottlenecks, because mostly supply chain is distributed around the globe. So even though there is a taskforce, it might be able to address some problems, but some of the international problems will be difficult to address. So let's continue on.

Now, the supply disruption in those industry have caused price increase and extended delivery times. So in this case, they're really referring to the semiconductor industry. And if you have been in the graphics card market, trying to buy a machine to mine, Bitcoin or trust, trying to build a new computer, you'll realize there's actually a shortage of graphics card or in general semiconductors. And in this case, you actually find a lot of companies they're running out of chips. So they're not actually able to produce. And one of the interesting events is that some of the automotive companies in China or around the globe have stopped production temporarily due to chip shortage. Now, one of the companies was Tesla, where they focus on designing their own chip and manufacturing their own ship, I believe. And their disruption is lot less compared to other automotive companies like Neo, uh, which you probably have heard of if you're familiar with EBV. Now that screw on ahead.

So basically the inquiry would be done under section 2, 3, 2. Uh, so we'll just skip that, which allows for terrorists without a photo by Congress, if imports are deemed to be a national security threat. And I think in this case, they're really referring to any medical or semiconductor related imports because in order for us to maintain a strategic advantage over, let's say China semiconductor and will be an important technology that China is desperately trying to get a headstart or not even getting a headstart, just playing catch up in this game. Now, if we scroll on ahead, then you'll find the us department of agriculture on Tuesday announced plans to spend 4 billion to poster weakness in food supply chain that showed strain with shortage during the pandemic. This is really because some factories are temporarily close or delayed, uh, due to COVID. And basically USDA is trying to address a shortage of meat processing facilities in the country and encourage regional infrastructure to support smaller processing plants.

Uh, this is actually quite interesting because one of the investments we have gone through in investing a celebrator is Tyson food. And before this news article came out, we actually invested and is from Tyson food. So I think we made over 50% gain on that investment alone. Now, before we dive further into the semiconductor shortage and how to think about it's between China and us, I just want to celebrate another three successful case studies where Andy made 53% from Sienna and two months Simon made 32% from CNN two months and fruit made 30% from Sienna and 35 days. And Annie made 45% from Sienna in 35 days as well. So congratulations to you all as part of investing accelerator. So back to the topic of the day, if we continue to scroll down for this article, then here, you will find the white house also recommends Congress to approximate, at least 50 billion in funding for semiconductor research and production in the United States.

Now, this is very important because the last thing you want is to have semiconductor to be produced outside of the United States, because that's where you get to potential leakage in technology. And if there's any war, not saying there is any yet, uh, between countries or sovereign issues, then that technology can end up in the opposing countries hands. So that's why it is so important for semiconductor industry to remain within us because it is a national security. Now just a quick update. After that Senator ready, passes the bill to help us compete with China. And when you're thinking at a national level, a strategic level, it is so crucial that us passes this bill and basically help the technology sector to compete with China. Because within China, there's a lot of states funding, which has government funding. There's a lot of basically different incentives for the technology companies to succeed.

So for example, when you're looking at Alibaba, when you're looking at 10 cent, they are basically the equivalent of Google, Facebook and Amazon in the United States. And what China did was essentially creating a wall. So then the local technology companies can thrive in that environment without the competitors from the outside. And that's why when you're in China, you can't really use the Google search engine. You can't really use Facebook, Twitter, and so on. Everything has a China version to it. And if us is always playing in this kind of uneven playing field compared to China, then over time, it is going to be lagging behind. And obviously the China firewall has been set up for many years. And now I guess us is feeling that urgency to catch up. And when you're thinking about the China's investment in various technologies, they really think many years ahead.

So the plans that they put in place will not necessarily come to fruition five, 10, or even 15 years from now. So that's something important to keep in mind. Now, if we read this article a little bit more than here, you'll find the Senate overwhelmingly passed an expensive bill to invest almost 250 billion into U S manufacturing technology to meet the economic and strategic challenge from China. So obviously to Senate and the government is feeling that pressure from China. And I would say a lot of the technologies that China is being developed right now is almost on par or very close to catching up to the United States. So for example, the other day I was on the Taobao store within China. And that was basically the Amazon in China and they're promoting a new product and that product was actually a robotic arm. So you can imagine it is just an arm that will sit on your table and you can program that arm to do whatever you want.

So normally this is something you'll see in a YouTube video, in a manufacturing plants, whether, you know, you can use the arm to kind of pick up some goods and so on and so forth. But on tall ball, this arm only costs around a hundred to 200 bucks, USD, some arms cost a little bit more, maybe up to 500 USD, but this is really a consumer grade level robotics for everyday use. And if China is already at the mass production of automation and robotics for everyday use, and when I'm looking at the Amazon store in the United States, and I don't actually see that kind of products, then you can see how events China is. And the thing is because there is that China wall, you will not know what's happening in the China markets, unless you're kind of on the ground because a lot of the news articles or events that are happening are blocked off by the firewall. So China can be making a lot of advances without the rest of the world, Western world, knowing, and this will lead to a giant basically leapfrog state, uh, when you're compared between China and the Western world. Okay. So the good news is that they did pass to vote, which is fantastic. And we'll keep moving on.

So this includes a 52 billion emergency outlay to help domestic manufacturers of semiconductor to expand production. So this is important because from a us perspective, the production of semiconductor, nice to stay within us locally. So from a stock investing perspective, what you're trying to think about here is really well. What are some of the companies that have us manufacturing plants for chips? So that's what I looked up for you. And here you will find a Wikipedia article, which anyone can access on semiconductor, fabrication, plants in the world. So here you will find I have sorted it based on country. And the first one obviously is United States. And I've highlighted a couple of companies that you can potentially look at now, obviously you'll need to do a lot more research on it like micron. They have manufacturing plants in the United States, Texas instruments. And these are some of the companies where you want to dive deeper, do a little bit more research, learn how to time to market, because just because there is a bill that is being passed, it doesn't mean the company is a good investment.

You definitely want to do more research, Owen, semiconductors, Intel, and so on. So when you're looking at these, uh, investments, um, within investing a celebrator, we have actually invested in dumped before. So for example, Intel was actually a recent investment within the community as well. And I think personally for Intel, I have made over a hundred percent in the recent increase, uh, for the last couple of months, uh, using stock options. So those are some of the opportunities we would look at in investing in a celebrator. And when you're looking at us from a strategic perspective, these are the companies that will benefit from this bill. So that's how you would think about it. And when you're going through this list, one of the interesting things you'll find is actually you don't find AMD. And that's really because for AMD, they focus on designing the chip and the chip manufacturing process is actually offshored to other companies like Taiwan, semiconductor manufacturing company, which is TSMC.

So here I've highlighted a TSMC here and basically all of their manufacturing plants are in Taiwan. And one of the reasons why there is a semiconductor shortage is right now, there is a water shortage in Taiwan. So that's actually a problem. Uh, and until that drought is resolved in Taiwan, I think there's going to be continuous shortage in semiconductor. So the prices for computers and automobile will go up because there isn't enough semiconductors to go around. Now as a final point that I want to cover. I think we want to take a look at the Chinese investment in semiconductor. So from a Chinese perspective, this is also a national security issue and reliance on us for semiconductor long-term will be very problematic for Chinese. So that's why they are putting Ashley a lot of money in semiconductor to try to catch up to us technology today.

And when you think about the more expensive semiconductor equipment, it is not being sold to China. So what they have to do is to first develop that process, developed a machine and develop the chip as well. So it's quite difficult for China to catch up, but nevertheless, that is something they will have to do unless they want to continue to have that reliance on us for our semiconductor. So if you scroll down here, then you'll see in 2020 China's IC integrated circuit output rose nearly 30%. And for April, it increased another 30% as well. So this is April, 2021. So they're really growing rapidly. And over time they should be able to create more chips that are more events, smaller and faster as well. So that is pretty much it for this article. Basically they are putting a lot of money into building manufacturing, plants for semiconductors, and if they're catching up to us fast, so they need to, uh, so us needs to respond quickly as well. So if you want to learn more about investing and how to use these kind of knowledge to invest in the markets and target 30%, then you can go to the link below and wash the free case study. And this month I'm looking to help 20 people to master investing, and you don't need to have a financial background, but you do need to be motivated and passionate about investing and potentially retiring earlier as well. So I'll see you in the next video.

About the author 

Eric Seto

Eric Seto is an investor with over 10 years of experience. He travelled around the world to help with auditing, accounting, purchase and sale of companies.

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