Dear Reader,
Today, I’d like to tell readers about a very interesting event happening tonight.
It’s called Freedom 2021, and it’s being hosted by my friend and colleague Teeka Tiwari.
Longtime readers of financial publications will probably recognize Teeka’s name. Like me, he’s deeply involved in the cryptocurrency and digital assets space. And some of his cryptocurrency recommendations are showing returns in the tens of thousands of percent in his model portfolio.
But more than the gains, I’ve always admired Teeka’s commitment to risk management and rational position sizing for his readers. Understanding how to size each investment based on its risk profile is one of the most important lessons to learn as an investor. He’s been a great guide through a typically volatile market.
Now, Teeka is sharing a new idea during his Freedom 2021 event. He’s found a private technology investment opportunity – not related to cryptocurrencies – that he believes could deliver financial freedom to investors in the years ahead. And yes, this opportunity is open to non-accredited investors as well.
I reviewed Teeka’s analysis of the company, and I was impressed. This is a great early stage technology company operating in a fast-growing market. It would make a great addition to any private investment portfolio.
If readers are at all interested, then I’d encourage you to hear what Teeka has to say. You can reserve your spot by going right here.
Now let’s turn to today’s insights…
Moore’s Law has been kept alive for decades due to the semiconductor industry’s incessant drive to pack more transistors into smaller and smaller spaces. For newer readers, Moore’s Law says that the number of transistors in semiconductor-integrated circuits doubles every 18–24 months.
The industry achieves this by advancing its manufacturing technology to smaller process nodes measured in nanometers.
While many tech companies are innovating their semiconductor designs at a rapid pace, Intel is still struggling to launch semiconductor production on 10 nanometer (nm) nodes. A few years back, 10 nm nodes were on the bleeding edge of semiconductor manufacturing.
Today, semiconductors manufactured using 7 nm technology are the most common for advanced digital semiconductors.
And last year we saw the industry migrate to 5 nm semiconductors, which are now on the bleeding edge. As an example, we talked about Apple’s impressive new M1 chip back in November. This is the 5 nm semiconductor that will power Apple’s new laptops. And Apple’s iPhone 12 product lines all use its A series semiconductors made at 5 nm as well.
And every time we migrate to a smaller process like this, we get meaningful improvements in both performance and power efficiency. Smaller chips allow for smaller and thinner devices. That’s why there is always a race to develop the next manufacturing technology.
And we’re already seeing some important developments…
The world’s largest semiconductor maker, Taiwan Semiconductor Manufacturing (known as TSMC in the industry), announced that it is already building out its 3 nm process this year. This will put TSMC three generations ahead of Intel.
To make it happen, TSMC will allocate $25-28 billion in capital expenditures (CapEx) this year. And at least $15 billion of that – over half of its total CapEx budget – will be spent exclusively to advance the 3 nm process.
TSMC is on track to start “risk production” in the second half of this year. We can think of this as a trial run of sorts. Risk production is typically low yield and a necessary step to optimize the manufacturing process to prepare for large-scale production.
Looking forward, TSMC expects to begin volume production in the second half of 2022. That’s when it will start cranking out semiconductors manufactured on the 3 nm node extensively.
Several years ago, all the naysayers were saying that Moore’s Law was dead. They claimed that 7 nm was the smallest manufacturing process we could achieve.
They couldn’t have been more wrong.
Here we are getting to 3 nm. That means Moore’s Law is alive and well. Compared to 5 nm semiconductors, 3 nm technology will confer about a 15% performance improvement and an impressive 25% improvement in energy efficiency.
And this story gets even more interesting…
Apple has preordered all of TSMC’s 3 nm production. Essentially, Apple guaranteed that it will buy every 3 nm chip that TSMC can produce.
Why would it do this so early in the process?
If we look at TSMC’s timeline, it will start volume production just in time for Apple’s big fall announcement next year. Could it be that Apple has something big up its sleeve?
We’ll find out soon enough.
Amazon made a big announcement at the Consumer Electronics Show (CES) earlier this month. It announced that it will license out its Alexa artificial intelligence (AI) to third parties through a comprehensive new platform called Alexa Custom Assistant.
This is a power move.
It will allow other companies to enable the Alexa virtual assistant on their own devices. That will propagate Alexa far and wide. And Amazon announced that Fiat Chrysler will be its first automotive customer. The carmaker will integrate Alexa directly into the software system of future cars.
To me, this makes perfect sense.
We shouldn’t be doing anything other than talking (or singing) while we are driving a car. Texting is way too dangerous. Yet many people spend time fiddling with the radio or their smartphone when behind the wheel.
Alexa solves this problem.
With Alexa installed, drivers can have Alexa assist them while driving. Alexa could set the radio, make phone calls, and send text messages – precisely all the things that distract people from safe driving today.
And, of course, Amazon also has a much bigger picture in play.
How many times do we remember an item we need from the store while driving? How many times do we think about what we need to pick up from the grocery store? And how often do we remember that we need to schedule an appointment?
Alexa could do all these things for us. That would drive revenue for Amazon, and it would make the services that it offers that much more invaluable.
And this is part of a larger trend at play…
Tech giants are focusing heavily on the auto industry right now. Tesla has made incredible progress with its self-driving artificial intelligence (AI) and its battery tech for electric vehicles. Google’s Waymo division has been aggressively working on an operating system for cars. And Apple recently revealed its ambitions in the industry with Project Titan, which we talked about last month.
Now Amazon is entering the fray.
This shows us that these companies expect life to return to “normal” soon.
Prior to the COVID-19 pandemic, the average American commuted just under an hour round-trip every day. The tech giants realize that the commuter is a “captive audience” during this time if they can get their products and services into the car.
That’s what this is all about. These companies are scrambling to get their technology into cars so that they have access to consumers during their commute. Obviously, they must think those commuters will be coming back.
So it is a battle royale of sorts to gain access to the auto industry.
And it is a “game” only for those companies that can endure high levels of research and development costs and very long sales cycles to win a design. And then typically, there is a three- or four-year wait before revenues begin to flow. The upside, however, is that once a technology provider is “in,” it is one heck of a moat. And that’s when the revenues are highly predictable.
We’ll wrap up today with some seemingly obscure research that was published just after Christmas. It came from the Dana-Farber Cancer Institute, which is a cancer treatment and research institution affiliated with Harvard Medical School.
The research details a new AI called CellBox. CellBox uses machine learning and recurring neural networks (RNN) to predict how cancer cells will respond to “combination therapies.” It literally has the ability to predict what happens inside of a cell when it is exposed to a drug or combination of drugs.
And the research shows that CellBox is incredibly accurate. It can reliably predict whether a given combination of drugs will produce a desirable therapeutic effect in cancer cells.
This is groundbreaking.
Up to this point, the only way to test combination therapies in the U.S. has been to conduct extensive preclinical and clinical studies per the Food and Drug Administration’s (FDA) regulatory requirements. That’s an incredibly expensive and time-consuming process.
But with CellBox, any combination of drugs could be analyzed before engaging the FDA’s clinical trial process. That way, the industry can only advance combination therapies that the AI has determined to be effective. There will be no more wasting time and money on unsuccessful combination trials going forward.
And what’s remarkable is that CellBox can make these accurate predictions without any knowledge of prior clinical or preclinical research. It learns on the fly.
That means it doesn’t need to spend weeks combing through existing databases. Instead, it can do its work in hours and sometimes minutes.
So this is a perfect example of the cross section between AI and biotechnology that we are following closely here at Brownstone Research.
I don’t think anyone outside the industry realizes this yet, but this confluence of technologies will lead to an explosion of new treatments for cancer and the other diseases that plague humanity. The future is bright.
In the interim, I can’t wait to see what Dana-Farber does with this technology. Will it license the tech out to biotech companies to assist in development? Or will it spin out a new company to deploy this AI?
I will be watching this closely going forward. Any company using this technology will instantly become a strong investment target.
Regards,
Jeff Brown
Editor, The Bleeding Edge
Like what you’re reading? Send your thoughts to feedback@brownstoneresearch.com.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
