• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

Jim Cramer: We're Hungry for Chips, but China Also Wants a Bite

Semiconductors are used in cars, computers and even high-tech grills. The problem is China's appetite is also insatiable -- and Taiwan is stuck in the middle.
By JIM CRAMER Aug 05, 2021 | 01:35 PM EDT
Stocks quotes in this article: WEBR, NVDA, AMD, INTL, GM, TSM, ASML

You want to know why we have a semiconductor shortage? I will tell you. It's because of "doneness."

Don't know doneness? That's the word people use at Weber (WEBR) , the grill maker that came public today, when they are describing if your steak's done or undercooked. It's all part of the new portfolio of products that go with Weber grills, which now use Wi-Fi and Bluetooth to keep you from burning your steak and ruining the party.

I gleaned this information and so much more when I met with the management team of the iconic grill company, when it rang the opening bell for its successful offering, one that was reduced in size rather dramatically because of the IPO fatigue that we have been describing of late. And while the information is terrific when you are picking a grill, it is even more informative when you think how the world has changed and how we are in an endless race to catch up with chip demand. New devices like a grill that stops a steak from burning to a crisp requires a ton of semis to work. Weber's got to keep bird-dog of the suppliers to be sure there are enough chips to meet the demand of what I think will be a big hit of a product.

Weber's just the latest company I have seen in an endless parade of new devices that need full function chips, ones that aren't for hyper performance computing, the kind you need in the data center. Many of the best semiconductor companies, like Advanced Micro Devices (AMD) and Nvidia (NVDA) , are chasing much more dynamic, fast, and expensive specialized chips that are at the cutting edge of technology.

You don't need those kinds of chips to measure doneness.

You also don't need that many of these for many other uses, either. Sure Nvidia and Intel's (INTL) Mobileye are in a battle for autonomous driving supremacy, but most of the technology that goes into an electronic vehicle is more of the full-functioned variety. I cringed today when I heard about President Joe Biden meeting with the big automakers about going more electric vehicle in a faster fashion. That's going to require a level of semiconductor manufacturing that's well beyond what we can make. It's bad enough that on Wednesday the stock of GM (GM) got clobbered because it couldn't meet demand for some of its best-selling models, because they use chips from Malaysia and there's been an outbreak of COVID that's shutting down production. Forget 50% of cars going EV. What happens when electric cars make up 4% from the current 2%? I think it can't happen because of the chip shortage.

It's actually even worse than I am making it out to be. If we are going to be able to provide enough chips to make these devices, we are going to have to have every big foundry company, like Global, Samsung and, most important Taiwan Semi (TSM) . Our major semiconductor companies rely heavily on Taiwan Semi.

The Chinese know this. They want to make foundries that can match Taiwan Semi. But they need powerful semiconductor manufacturing equipment to do so, especially $150 million ultra violet lithography machines made by ASML (ASML) , a Dutch company, that is currently being pressured by the U.S. not to sell them to the Chinese.

The more we ratchet up the pressure against the Chinese with actions like this, the more the Chinese may get desperate enough to squeeze the Taiwanese.

As long as there are issues throughout the semiconductor supply chain, many companies -- even our whole country -- are vulnerable to outside forces that are beyond our ken.

Innovations that need semis are not going to stop. Weber's CEO Chris Scherzinger pointed out to me that the next big innovation will be something that's going to save a lot of marriages -- a device that tells you whether your grill is about to run out of propane. That's worth its weight in gold. Or, going forward, perhaps we should say, worth its weight in semis. That's how precious and priceless they've become to both our country, and, more important the People's Republic of China, which may not tolerate our squeezing their semiconductor companies for long before they feel compelled to take action against us.

(NVDA and AMD are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

NVDA and AMD are holdings in Jim Cramer's Action Alerts PLUS member club.

TAGS: Investing | Stocks | China |

More from Stocks

I'm Tasting 3 More Wine Stocks, Though None Pair Well With My Portfolio

Jonathan Heller
Aug 19, 2022 11:30 AM EDT

These three publicly traded wine companies have been seeing their shares languish, one for a long time.

3 Reasons Stocks Soon Could Head Back Downhill

Bret Jensen
Aug 19, 2022 11:00 AM EDT

This trio of factors involves the Fed, the economies of Europe and the American consumer.

Were Deere & Co's Results Strong Enough? Here's How to Trade it

Stephen Guilfoyle
Aug 19, 2022 10:30 AM EDT

So far, it appears that demand is not an issue.

High-Volume Resistance on Major Index Charts Could Stall Rally in Equities

Guy Ortmann
Aug 19, 2022 9:47 AM EDT

While the near-term charts and market breadth remain positive and lack sell signals, some clouds are starting to appear.

Bed Bath & Beyond Ridiculous

Ed Ponsi
Aug 19, 2022 9:00 AM EDT

Traders knew on Thursday morning that Chewy co-founder Ryan Cohen no longer believed in the stock, so why would they wait until after Thursday's close to sell?

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login