we’re so back

Memory players got a few sell-side upgrades this week; bears being converted slowly.

I think market is still undervaluing how important memory/storage will be, especially when considering how much of a supply glut there is for HBM and NAND (partly because most capacity got diverted to building HBM).

$SNDK $MU

Nice moves from these two companies on the first day of China’s open after Golden Week. $600089 is up 21% since entry, while $600869 is up 3%.

While the idea of gaining exposure to power grid expansion isn’t new (see the 1-year performance of U.S. power stocks), we are specifically choosing to bet on China’s power grid expansion because I believe it’s one of the edges — and potential ways — that China can catch up to the U.S. in terms of compute power. If you notice, there has been a gradual separation of AI supply chains between the Eastern and Western hemispheres. Nvidia’s AI chip exports to China has been subjected to heavy scrutiny from the Trump administration, while China itself has “banned” its corporations from buying Nvidia chips.

Why did China do that, despite knowing that its chips are currently far behind U.S.-designed ones? Obviously, there are national security and strategic reasons at play (some say it’s also for negotiation leverage). But are they really going to willingly fall behind in the AI race just to promote self-reliance? I don’t think so. I believe they’re going to try and brute-force compute power.

China’s industrial power rates are roughly 2–3× cheaper than that in the U.S. That means even if their domestic chips have poorer performance per watt (PPW), considering cheaper power and total cost of ownership (TCO), they may actually not be that far behind the U.S. in terms of compute power. Under this theory, power becomes the key factor until their domestic chips achieve near parity PPW. Power must hence remain abundant, cheap, and widely accessible.

Cut this @ $584 for -3%

Think I’m better off just buying spot $BTC rather than DATs tbh for exposure to loose fiscal policies.

Fully exited $APLD @ $28.03, +87% from entry

Made enough on the name, and want to allocate more to other areas of the portfolio. Also don't want to take the print risk on a small cap after such a rally.

Will see post-earnings reaction to determine if I re-enter.

Somewhere in the recent months, Sama has developed an unwavering conviction in the capabilities of future models and the economic value they’ll create.

Hence, they’re now scaling the infras ahead of time to support that model — the infras decision is not based on today’s model requirements, but that of tomorrow’s model.

All these headlines with mind-blowing numbers being thrown around every few days. Everyone was laughing last year when Sama was trying to raise a trillion dollars. Now, it’s like just a trillion.. really..?

At the scale that OpenAI plans to build at:
1) they’re going to force all of the tech giants into an AI race — if AGI really is the end-all be-all, it probably at best would be a duopoly. Who will be the 2 players?

2) they won’t just use some suppliers within an industry, rather they’ll need WHOLE industries to support their infras buildout. Can you imagine several industries running at full capacity for extended years? You can already see it happening in power, memory, and fabs.

It’s a career-defining move; even if capital allocators think that AI is a bubble that will one day burst, can they really afford to stay sidelined now?

Would highly recommend watching the full video

https://x.com/a16z/status/1975976064464892120?s=46

$INTC embargo from ITT 2025 is lifted today.. will be interesting. Lots of unverified rumours (both good and bad) circulating already; tbh I have no idea what’s going to be released, but will be keeping an eye out on deets mentioned above.

Not much news about Panther Lake clock speed, but seems like 18A yields are improving and on track. Not a bad sign for 18AP and 14A as well.

I view today more as a clearing event more so than the merit of the metrics itself.

$INTC

Added fresh $UAMY long @ $10.51

As the separation of the U.S./China value chain continues, rare earth/strategic minerals will become more important. I can see the US govt taking more stakes in US rare earth producers beyond $MP.

Antimony is used for munition and other military applications, and China produces ~80% of it. UAMY is the only significant pure-play and vertically integrated antimony company.

Spent some time digesting the $INTC news today. As expected, performance gains were announced for Panther Lake versus prior-gen chips, driven by 18A’s GAA and BSPDN technology. This was already anticipated, so while it’s welcomed, it’s not exactly material.

The most incremental takeaway, in my view, is that Fab 52 is now fully operational and set to enter HVM in Q4’25, with broad availability in January 2026.

This helps derisk some of the concerns about potential 18A production delays into 2026, which is materially incremental imo. It also means Intel is now producing the most advanced leading-edge node fully manufactured in the U.S. TSMC Arizona currently produces N4, while 18A is already competitive with N3. Obviously, that carries strong political value (maybe Trump even congratulates Intel with a tweet — who knows).

There wasn’t much concrete detail on yields, so it’s hard to analyze further. Realistically, while there’s some positive progress, the road ahead in catching up to TSMC’s technology remains very tough. It will require perfect execution, a deep cultural transformation, taking calculated but necessary leaps of faith that pays off (e.g., moving first to high-NA), and of course, industry and USG support.

TSMC’s moat extends well beyond lithography expertise. It is also deeply rooted in their design enablement and co-optimization capabilities with customers. Intel, on the other hand, has never served external customers at scale, which underscores the magnitude of the cultural shift required to make IFS succeed.

That said, revival is not impossible. Incremental datapoints and news over the coming months will reveal how likely IFS’s revival is.

Over the course of this week, there’s been a subtle escalation in U.S.-China hostility, especially from China’s side. Rare earth export bans, enforcing stricter checks on NVDA chip imports, implementing special port fees on U.S. ships.. I’m guessing trade talks are not going fantastic atm and the Chinese want some leverage.

If it worsens, $BABA might chop around for a short while.. I view $UAMY and $INTC as indirect hedges to escalating tensions.

Lol, called it. Should have derisked. $UAMY is reacting positively to the escalating tensions as expected. $INTC also holding in there, for now.

And totally forgot about our $FIVE short also being an indirect hedge.

What a sell-off. I’m de-risking low-conviction ideas for the weekend and keeping some ammo for next week. If you want to panic, be the first one out the door.

Tho, I don’t think markets will crater that badly over the next few months, unlike April, now that markets know about TACO Trump. Could be famous last words, idk.

Besides the derisking of some positions, I also added some $BABA @ $159.9.

TBH, why is $BABA down 8%? Seems like an overreaction when they don’t export to USA, and US chips import/export bans might even be bullish for them given that they’re coming up with their own China-based chips.

Anyway, I also view BABA as a hedge to my US-China tension hedges, in case trump changes his mind over the weekend again. 😂

Lastly also added to $INTC ~$37. Nothing much else to say about this, you probably already get it.

Have a great weekend!

https://x.com/brad_setser/status/1976691234103058664?s=46

Aligned w our theory

Changed my mind, exited $UAMY @ $12.2-$12.35 and re-added some positions that were derisked earlier back.

Reasoning is if the Chinese were trying to find maximum leverage for trade negotiations, they’d first try to push DT to the point where he has no more tolerance.

This would explain why they were trickling in subtle yet escalatory news over the past week. Now DT losing it on Truth Social today is probably near that point.

The Chinese know that if they continue pushing, DT will not back down and they risk potential backfire. I believe both parties have very strong incentives to not let the trade war blow out of control again, like per April.

Hence, if the Chinese have found their maximum pressure point, the next logical step is to soften their hold in exchange for trade benefits (maybe xx% tariffs reliefs instead of full reliefs)

All just my speculation. Not sure, am also trying to avoid over pontificating about macro and the thought processes of megalomaniacs.

China's clarification on rare earth controls; no retaliation to USA 100% tariffs, more of a "we're not banning rare earth, but just reviewing controls" tone set. Imo, at best a softening of stance, at least, not escalatory. Seems like an outreach to DT for him to deescalate graciously. Will need to see how DT perceives it though.

"Going forward, the Chinese government will conduct reviews in accordance with laws and regulations, grant licenses to eligible applications, as well as actively considering the applicability of facilitation measures such as general licenses and license exemptions to effectively promote legitimate trade. I want to emphasize that China’s export controls are not export bans. All applications of compliant export for civil use can get approval, so that relevant businesses have no need to worry. The Chinese government will work with all countries as always, to firmly safeguard world peace and stability in neighboring regions, and jointly maintain the stability of global industrial and supply chains."

"Willful threats of high tariffs are not the right way to get along with China. China’s position on the trade war is consistent: we do not want it, but we are not afraid of it. China urges the U.S. to promptly correct its wrong practices, adhere to the important consensuses of the phone calls between the two heads of state, protect the hard-won outcomes of consultations, continue to use the China-U.S. economic and trade consultation mechanism, and address respective concerns and properly manage differences through dialogues and on the basis of mutual respect and equal-footed consultation, so as to ensure the stable, sound and sustainable development of the China-U.S. economic and trade relationship. If the U.S. insists on going the wrong way, China will surely take resolute measures to protect its legitimate rights and interests."

https://x.com/MOFCOM_China/status/1977193939729104997

Just in — so far, so good. Fingers crossed though, still some time till market opens.

https://x.com/zerohedge/status/1977385782030557621?s=46

Thank you for your attention to the matter!!