Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

You Won’t Believe Where They’re Building 80% of the World’s PC Chips

Companies / Tech Stocks Jan 17, 2015 - 10:38 AM GMT

By: Money_Morning

Companies

Michael A. Robinson writes: This year, 80% of the chips for new PCs will be produced in Silicon ValleyTaiwanChina‘s Shenzhen ProvinceSouth Korea

Wrong on all counts.

More and more of today’s chipmakers locating their manufacturing facilities a bit off the beaten path these days – in one of the world’s fastest-growing economies… and a nation that some of you may find controversial.


But my job is to take you wherever the biggest innovations are being made so that we can find the biggest opportunities. So, today I’m going to show you exactly where so many of world’s top tech companies are headed.

And then I’m going to share with you a U.S. tech leader whose operations there are a key reason why its stock is crushing the market’s returns…

Intel Inside… Vietnam

Many investors might be tempted to steer clear of Vietnam because of the way the U.S. conflict ended there and the political upheaval it caused back home.

As someone who’s kept an eye on this controversial nation for more than 40 years, I believe that’s a lot of noise. And you know what Rule No. 2 says about that – “separate the signal from the noise.”

Vietnam is an economy that boasts impressive economic growth, and that offers tech investors many hefty and growing opportunities.

Gross domestic product in 2014′s third quarter grew 6.19% from a year earlier. And for the first nine months of last year, industrial output grew 6.7%, and exports rose 14.1% from a year earlier to $109.6 billion.

Many of those exports are the microchips that we so often invest in here at Strategic Tech Investor.

As I said above, 80% of this year’s central processing units (CPU) for PCs will be made not just in Vietnam, but in a single location – Saigon Hi-Tech Park.The sprawling facility sits just off Hanoi Highway less than 10 miles from Ho Chi Minh City, the nation’s capital.

The plant that will produce all these chips is owned by Silicon Valley legend Intel Corp. (Nasdaq: INTC), the company I want to tell you about today.

Intel is not only the world’s leading PC chipmaker, with its flagship Haswell CPU product. It’s also long been a leader in Vietnamese tech production. Intel Vietnam‘sCPU line is the latest addition to a major testing and production plant that broke ground back in 2006.

The plant is rapidly ramping up production. In early 2014, Intel opened a new line for another of its signature products, the system-on-a-chip (SoC). That unit is making chips for smartphones and tablets and was on pace to make roughly 40 million SoCs last year.

When Intel started up its Vietnam operations back in 2006 with an investment of $300 million. The company more than tripled that amount to $1 billion just one year later.

Locating in Vietnam was a good strategic move for Intel – one that is really starting to pay off.

Roughly the size of six football fields, Intel Vietnam began production in only 2010. And in 2014, it already accounted for a stunning $1.8 billion in exports.

Intel is taking advantage of Vietnam’s production and labor costs, much lower than those in South Korea and China.

Vietnamese labor costs are about one-third those of China. And Vietnam borders China, giving Intel and other global tech firms with operations there easy access to the world’s largest market.

No wonder that as of the middle of 2014, the latest period for which there are statistics, Vietnam boasted some 16,300 foreign direct investment projects worth a combined $238 billion.

The investors come from 100 countries in all, and several are big Asian tech firms following Intel’s lead. These include:

  • Samsung Electronics Co. Ltd. (OTC: SSNLF): The South Korean giant recently announced plans for a new $3 billion smartphone operation. It joins a $2 billion Samsung plant already located there and employing 16,000 people.
  • LG Electronics: As part of a $1.5 billion investment, the South Korean company is building a 4.3 million-square-foot assembly plant to make televisions, appliances and smartphones.
  • Panasonic Corp. (OTC ADR: PCRFY): The Japanese electronics giant and lithium-ion battery manufacturer is opening a new unit to expand production of wiring devices and circuit breakers.

Why Intel Rules

While those three Asian companies are interesting, Intel is the best way to invest in Vietnam’s growth and burgeoning tech sector.

The Santa Clara, Calif.-based remains a dominant global supplier of semiconductors, with facilities in China, Israel, Ireland and Malaysia.

Moreover, Vietnam’s low-cost structure boosts Intel’s bottom line at a time when PC sales have stabilized. Gartner notes PC sales will hit a two-year breakeven point at the end of 2015, when the forecasting firm is projecting global shipments of 316.7 million PCs.

Yesterday, Intel reported revenue of $14.7 billion for the fourth quarter, meeting its own guidance. The company’s gross profit margins came in better than expected. While not spectacular, it was a solid report.

And don’t forget: Intel is revamping operations to focus on the high-growth sectors of mobile and wearable tech.

In mobile, Intel is particularly focused on low-power, high-performance chips for tablets. The company wants to sell 40 million a year, four times what it sold in 2013.

With wearable tech, a market growing by more than 70% a year, Intel has unveiled two devices. One is a pair of earbuds for fitness tracking and the other is a “smart” headset that works as a voice-controlled digital assistant.

With a market cap of $181 billion, the stock trades at $37.55 a share. It has operating margins of 27% and a return on equity of 19%. Last year, it generated more than $8 billion in free cash flow.

This helps explain why Intel shares gained 46% over the past year. That’s more than three times the Standard & Poor’s 500 Index‘s 13.4% gains in the period.

Longtime readers of Strategic Tech Investor have done very well with Intel. Since we first recommended it in July 2013, you’ve made 50% gains on your shares.

Thus, with Intel we get the best of both worlds. As I’ve been saying, this is a savvy play on fast-growing Vietnam and its budding tech industry.

But it’s also a rock-solid investment in an iconic American company that is benefitting from long-term demand for semiconductors in PCs, tablets and smartphones.

Add it all up and you have the makings of an excellent foundational play.

With so many factors pushing it forward, Intel is a great stock to hold for the long haul.

Source : http://strategictechinvestor.com/2015/01/you-wont-believe-where-theyre-building-80-of-the-worlds-pc-chips/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in