The chip on everyone’s shoulders
The culprit of semiconductor underperformance in 2022 has been supply chain constraints. Notable manufacturers in the U.S. and worldwide have experienced difficulty scaling up production to meet demand, leading to shortfalls for downstream users in the computing, auto, and even appliance industries. On the other hand, Korean manufacturers like Samsung Electronics (SMSN) are reportedly sitting on a stockpile of unsold chips as manufacturing surpasses demand.
This comes despite numerous government incentives investments in semiconductor manufacturing capabilities. The largest chipmaker in the world, Taiwan Semiconductor Manufacturing (TSMC) is slated to increase its capital expenditure in new manufacturing plants and equipment to $44 billion in 2022. Across the equator, U.S. regulators are poised to allocate nearly $50 billion in subsidies, incentives, and rebates for semiconductor manufacturers.
Recessionary fears continue to loom over the semiconductor industry. As a sub-sector of the technology sector, semiconductor stocks tend to be high-beta equities, with a strong degree of market sensitivity. Despite chipmakers recording strong sales revenues and positive earnings, the industry has been hard-hit recently by the broad tech sector and growth stock sell-off.
The issue here appears to be one of differentiation. Looming rate increases and drops in consumer demand due to inflation have apparently led to a glut of chips used in electronics like smartphones and laptops. On the other hand, chips used in automobiles remain in short supply, with many customers waiting months for new vehicles to arrive on backorder from assembly lines.
Should recessionary fears manifest in the form of two consecutive quarters of depressed GDP and employment figures, consumer and enterprise demand for electronics is likely to drop further, which would severely impact revenues, cashflow, and earnings for semiconductor companies. As a result, investor sentiment remains fairly negative.</p.
Trading semiconductor stocks
Traders interested in playing the semiconductor industry can opt for two forms of exposure: via single equities or via an exchange-traded product (ETP) that tracks a basket of semiconductor stocks. Both approaches are sensible for long-term buy-and-holds.
The difficulty arises when traders seek magnified or short exposure. This often requires the use of options or a margin account, which exposes traders to a slew of risks. For the former, advanced knowledge of options mechanics is needed. For the latter, the risk of margin calls is ever-present.
The use of leveraged ETPs can solve many of these issues. Like regular ETPs and stocks, leveraged ETPs can be bought and sold on most exchanges in your local currency without the use of a margin account. These ETPs are physically backed, meaning that they are collateralized with the actual underlying shares they offer exposure to, thus negating the need for derivatives.
Leverage Share’s suite of semiconductor ETPs come in both single-stock and index format, with various levels of built-in leverage offering 1x, 2x, 3x, or even inverse (short) exposure.
Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.
Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.
Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.
Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.
Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.
Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.
Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.
Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.
For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.
Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.
He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.
Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.
Terms and Conditions
If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
By clicking you agree to the Terms and Conditions displayed.