Here's an idea. I don't see this ever happening, but I guess that's why it's a "tail" risk. If China was to invade Taiwan, then TSMC would go offline and the only way to manufacture high end logic chips will be via Intel since they are the only Western based manufacturer of any real scale.
Here's an idea. I don't see this ever happening, but I guess that's why it's a "tail" risk. If China was to invade Taiwan, then TSMC would go offline and the only way to manufacture high end logic chips will be via Intel since they are the only Western based manufacturer of any real scale.
I personally have a pair trade on where Intel and TSMC are equal weighted in my portfolio (I view them as a tax/royalty on technology growth and the digital transition). If TSMC goes to zero then Intel will >2X (probably a lot more than that) because they will be the only game in town (Samsung still exists, but they aren't a pure play like Intel and TSMC).
I have a lot of china exposure and have been thinking of using INTC as a hedge. There are two scenarios that I am considering: deglobalization and an invasion of Taiwan. De-globalization I see as a long term trend and not something that requires an immediately hedge. Invasion of Taiwan could be a black swan event but I think we learned a lot from the Ukraine war. It would take a massive buildup of military force that couldn’t be hidden from satellites so there would be a considerable amount to time to exit a position. The more near term threat would be a ban by the U.S. or CAN on foreign ownership of Chinese securities. That is harder to hedge. Not sure how that would affect FXI and other etfs.
Another great post!
Here's an idea. I don't see this ever happening, but I guess that's why it's a "tail" risk. If China was to invade Taiwan, then TSMC would go offline and the only way to manufacture high end logic chips will be via Intel since they are the only Western based manufacturer of any real scale.
I personally have a pair trade on where Intel and TSMC are equal weighted in my portfolio (I view them as a tax/royalty on technology growth and the digital transition). If TSMC goes to zero then Intel will >2X (probably a lot more than that) because they will be the only game in town (Samsung still exists, but they aren't a pure play like Intel and TSMC).
I have a lot of china exposure and have been thinking of using INTC as a hedge. There are two scenarios that I am considering: deglobalization and an invasion of Taiwan. De-globalization I see as a long term trend and not something that requires an immediately hedge. Invasion of Taiwan could be a black swan event but I think we learned a lot from the Ukraine war. It would take a massive buildup of military force that couldn’t be hidden from satellites so there would be a considerable amount to time to exit a position. The more near term threat would be a ban by the U.S. or CAN on foreign ownership of Chinese securities. That is harder to hedge. Not sure how that would affect FXI and other etfs.