Semiconductor industry reshoring in the US
Yesterday we saw this clip from the Wall Street Journal titled “What Samsung’s Return to U.S. Chip Manufacturing Means For the Economy”.
The key takeaways for us was the following:
- Samsung’s US$17 billion facility is not the only one being built in the US.
- Taiwan Semiconductor Manufacturing Company (TSMC) is investing US$12 billion on a new facility in the US.
- Intel is investing US$20 billion on new facilities in the US.
All three of these facilities are a part of the US government's call to try and reshore the manufacturing of semiconductors so as to ensure domestic supplies and avoid shortages like the ones we have been seeing over the last two years.
The tie back to our Portfolio, all of this US domestic production will mean there is increased demand for the raw materials that go into producing these semiconductors.
One of those raw materials is helium. Helium is a key component in semiconductor manufacturing because it’s an inert gas with a high thermal conductivity AND cooling properties.
Multiple billions of dollars in investment flowing into US semiconductor manufacturing facilities and our 2021 Catalyst Hunter Pick of The Year Grand Gulf Energy (ASX: GGE) is currently drilling at its helium project in Utah, USA.
GGE put out an update today, that the drilling had reached a depth of 3095 feet, or around one-third of the targeted total depth.
With an offtake agreement already in place and a strategic alliance signed with the offtake partner, GGE could be on the cusp of going from helium explorer to producer, depending on the results of the drilling program.
Drilling of the well started on 24 April and the drilling program is expected to take ~30 days to reach the total depth of ~8,500 feet. Ideally we hope to see some initial results less than one week after the drilling is completed with the detailed results including any flow testing to take another two to three weeks after this.
Effectively, within two months we will know whether or not GGE has made a commercial discovery at its project.
We set our expectations for what we wanted to see from the drilling program in our last note for GGE: GGE’s Maiden Helium Drilling Event has Begun - Here’s what we are looking for next.
The drilling program is key objective #1 of our 2022 GGE Investment Memo and we will get to know how the company did versus our expectations in around two months’ time.
To check out all of the objectives we set for GGE, the reasons we hold GGE in our portfolio, and the key risks to our investment thesis, check out our 2022 Investment Memo here.
