Short Semiconductors on Falling Demand

2023年11月15日

The semiconductor ETF SMH is currently trading at an all time high because of the belief that there will be increased demand for semiconductors arising from the applications of generative AI. However, on a fundamental level, semiconductor revenue has been dropping for the past five consecutive quarters (Omdia). In fact, in the first quarter of 2023 alone, semiconductor revenue dropped 9% from the previous quarter (Omdia).

As I see it right now, here are some
positive points for semiconductor companies:

• Generative AI has increased demand for semiconductors
  
• Cryptocurrency prices are high, increasing demand for semiconductors
  

and some negative points for semiconductor companies:

• Overextended from Moving Average 300
  
• Generally declining demand
  
• Decreased consumer demand for gaming PCs as Economy heads into recession (since gaming PCs are a luxury good)
  
• US Semiconductor Equipment is being used in China, increasing supply and therefore decreasing price for semiconductors.
  
• Burry entered a large put position on SOXL, and NVDA put premium is currently extremely high
  

Overall, I am bearish on semiconductors because I think the AI argument is priced in excessively considering the previously dropping demand, and have purchased puts to profit off a potential fall in the value of semiconductor companies.

12月2日

交易结束：到达止损

This was incredibly wrong, almost comically so, I underestimated the demand big tech had for GPUs