The Gas Shortage That Could Bring Big Tech To Its Knees
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LONDON, July 15, 2021 /PRNewswire/ -- Smart investors are preparing to profit from a supply squeeze in an $18-billion market. So, what's a supply squeeze? Mentioned in today's commentary includes: Intel Corporation (NASDAQ: INTC), Advanced Micro Devices, Inc. (NASDAQ: AMD), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), NVIDIA Corporation (NASDAQ: NVDA), International Business Machines Corporation (NYSE: IBM).
Simple: When the supply of something goes DOWN at the same time demand for it goes UP... A supply squeeze triggers. When that happens, some investors can potentially make more in a short time than you would normally make over a lifetime.
For example, it just happened with lumber. The coronavirus shut down logging. Supply DOWN. At the same time, the coronavirus ramped up home remodeling. Demand UP. So now, early investors are getting in position for a new supply squeeze in a relatively under the radar non-renewable resource -- helium.
Since the First World War, a federal reserve in Amarillo, Texas, has been stockpiling this strategic gas, providing some 40% of the supply.
Most of that has been used up now. Between 2005 and 2018, the Reserve sold off more than $2 billion in these reserves. Now, it's mostly been depleted, and in September, the reserve will be shut down, while the existing price ceiling will disappear.
Longer term, the supply of this non-renewable resource could be heading toward zero. In fact, prices have just broken out of their 19-year trading pattern...Raw helium is now selling for ~$350 per Mcf, while refined helium is selling for a whopping $600-$650 per Mcf, making it a fantastic low volume/high-value commodity.
The Helium Boom Is Coming
Canadian junior explorer Avanti Energy Inc. (AVN.V; ARGYF) is in a prime position to benefit from the emerging helium rush.
On June 14th, Avanti announced its biggest play yet, an intention to acquire the helium license rights a massive ~50,000 acres of highly prospective helium land in Montana. If completed, that will bring its total prospective helium holdings to some 75,000 acres in North America.
In April, Avanti moved to acquire the license to a 12,000-acre land package in Montana that is on-trend with an active, nitrogen-rich helium drilling area in Saskatchewan. And the biggest move yet … on June 14th, Avanti announced its intention to capture ~50,000 more acres of licenses in Montana.
Canaccord Genuity Capital Market says the helium market is "chronically undersupplied".
Cormack Securities says: "The current landscape for new entrants into this emerging industry has never been better. Currently there is a global helium supply shortage that is being multiplied by the growing demand."
Eight Capital says: "Prices have been anywhere from $200 to $400/MCF. As a frame of reference, natural gas trades at about $3/MCF. Base case, we could see helium demand outpace supply at least until 2025."
This is why Beacon Securities Limited has set an initial price target of $3.80 per share on Avanti Energy Inc. (AVN.V; ARGYF), noting: "We believe critical mass has been achieved and Avanti now has a key asset on which its world-class technical team can explore."
Big Tech Is Dependent On Helium
Intel Corporation (INTC) is an American multinational corporation and technology company headquartered in Santa Clara, California. At its core, Intel is a chipmaker. And a big one at that. It's also a leader in the global semiconductor game thanks to its investments in 65nm process, an advanced node used in volume CMOS semiconductor fabrication. Intel is now looking to build a future for semiconductor manufacturing in the United States.
Only a handful of chip manufacturers actually own chip-making facilities, making Taiwan Semiconductor Manufacturing Co. (TSM) a standout in the industry. Indeed, many leading top semiconductor companies are "fabless," meaning they only design the chips but rely on other companies, known as foundries, to actually make the chips.
Taiwan Semiconductor is a key player to watch in both the helium shortage and the semiconductor shortage. As the world's largest chipmaker, it needs helium to survive, especially with its new 1nm chips. And with a semiconductor supply squeeze looming, it could stand to benefit big when Big Tech comes knocking.
Advanced Micro Devices (AMD) is a company that was founded in 1969. The company manufactures semiconductors, which are the building blocks for computers and other devices. AMD's product portfolio includes x86 microprocessors, APUs, SoCs and graphics processors for PCs, game consoles and professional workstations; and embedded processor solutions for industrial/automation, medical imaging applications. It's even on the cutting edge of high performance computing.
AMD's biggest competitor, Nvidia (NVDA) is a company that develops graphics processing units, or GPUs. Nvidia was founded in 1993 and has been making waves in the gaming industry ever since with their innovative products. They are continually releasing new technologies to stay ahead of the competition and have an excellent reputation for quality. The company also manufactures processors that power many other devices such as automobiles, robots, and smartphones.
With more and more demand coming for semiconductors and new chip technology hitting the market, companies like Nvidia, AMD, Taiwan, Samsung and Intel are going to be some of the biggest benefactors. They're already well-known in the industry, and this could just be their time to really shine. But a looming helium shortage could present a number of complications for the booming tech giants.
IBM Corporation (IBM) is a giant in the tech industry, with over 100 years of experience in technological innovation. IBM's long list of inventions throughout its history include; the automated teller machine (ATMs), the floppy disk, the hard drive, and much more. And it's not ignoring new trends, either. In fact, it has quickly emerged as one of the leaders in the growing blockchain space.
IBM's blockchain platform, built on the open-source Hyperledger Fabric platform from the Linux Foundation is helping companies with a wide variety of blockchain solutions including tools for the finance sector, supply chain transparency, and letters of guarantee. IBM's blockchain platform even helps interested parties develop their own blockchain solutions through educational tools and personalized assistance.
By: Richard Sanderson
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FORWARD LOOKING STATEMENTS. This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that prices for helium will significantly increase due to global demand and use in a wide array of industries (including key technology sectors) and that helium will retain its value in future due to the demand increases and overall shortage of supply; that Avanti can pursue exploration of the recently acquired licenses of property in Alberta; that Avanti's licenses in respect of the Alberta property can achieve drilling and mining success for helium; that Avanti will be able to acquire the rights to helium on the 12,000 acres of land in Montana pursuant to its recent letter of intent announced on April 16, 2021, and the helium rights to the ~50,000 acres of land in Montana pursuant to its recent letter of intent announced on June 14, 2021; that the Avanti team will be able to close on the aforementioned Montana helium license acquisitions; that the Avanti team will be able to develop and implement helium exploration models, including their own proprietary models, that may result in successful exploration and development efforts; that historical geological information and estimations will prove to be accurate or at least very indicative of helium; that high helium content targets exist in the Alberta and both Montana projects; and that Avanti will be able to carry out its business plans, including timing for drilling and exploration. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that demand for helium is not as great as expected; that alternative commodities or compounds are used in applications which currently use helium, thus reducing the need for helium in the future; that the Company may not fulfill the requirements under its Alberta licenses for various reasons or otherwise cannot pursue exploration on the project as planned or at all; that the Company may not be able to acquire the helium rights to the Montana lands as contemplated in the letter of intent or at all; that the Avanti team may be unable to develop any helium exploration models, including proprietary models, which allow successful exploration efforts on any of the Company's current or future projects; that Avanti may not be able to finance its intended drilling programs to explore for helium or may otherwise not raise sufficient funds to carry out its business plans; that geological interpretations and technological results based on current data may change with more detailed information, analysis or testing; and that despite promise, there may be no commercially viable helium or other resources on any of Avanti's properties. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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