Active Insights

The Semiconductor Industry and the Supply Chain with Andrew O’Brien

July 09, 2021 Putnam Investments
Active Insights
The Semiconductor Industry and the Supply Chain with Andrew O’Brien
Show Notes Transcript

In this episode, Chris speaks with Andrew O’Brien, Putnam’s Assistant Director of Equity Research, where he focuses on fundamental analysis and valuation of companies in the semiconductor, hardware, and software industries.  During the conversation, they touch on many topics, including: 

  • The current semiconductor landscape
  • Supply chain issues
  • Geopolitical problems
  • The average semiconductor cycle
  • How to solve the capacity issues
  • Pricing issues
  • Potential long-term winners


This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. This information is not meant as tax or legal advice. Investors should consult a professional advisor before making investment and financial decisions and for more information on tax rules and other laws, which are complex and subject to change.  

The S&P 500 Index is an unmanaged index of common stock performance.

All funds involve risk, including the loss of principal. You can lose money by investing.

To view additional information including performance and holdings, please visit the Putnam Research Fund page found on putnam.com. 

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial representative or call Putnam at 1-800-225-1581. Please read the prospectus carefully before investing.

 

Putnam Retail Management                                                                                       AD1715859 7/21

You should consider the fund’s investment objectives, risks, charges, and expenses carefully before you invest. This and other important information is contained in the fund’s prospectus available on Putnam.com or by calling 1-833-228-5577. Please read carefully before you invest.

Putnam ETFs are distributed by Foreside Fund Services, LLC. Foreside is not affiliated with Putnam Investments.

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Active Insights

Putnam Investments


Episode 4

 

 

Patrick Laffin: Welcome to Putnam Investments Active Insights, a podcast series hosted by Chris Galipeau. Chris is the Senior Market Strategist in the Capital Market Strategies Group at Putnam Investments. Each episode, Chris has an in-depth conversation with a different Putnam portfolio manager to share timely insights on the markets and global economy.

 

Chris Galipeau: Alright. Well, welcome everybody. This is Chis Galipeau, Putnam Senior Market Strategist and we are about to start podcast number four, the Active Insight series, and today our guest is Andy O'Brien. Andy is the Assistant Director of Equity Research at Putnam and he is also Putnam’s semiconductor analyst. So, today, we will cover everything semi-related. So, Andy, thanks for taking some time in joining us.

 

Andy O'Brien: Thank you for having me today, Chris.

 

Chris Galipeau: Appreciate it. So, one of the things that I think is interesting is could you walk us through where you started, where you went to college, how you got interested in the semi business because, for me as a longtime tech analyst, that’s the one part of tech I really didn’t want to follow and so I’d love to hear about your journey till where you are today.

 

Andy O'Brien: Sure, absolutely. So, to provide some background, I became interested in investing at a relatively early age. My first foray into investing was when I saved up money from my job as a busboy at a restaurant in New Hampshire where I grew up and I bought my first few shares of stock and then I ended up, I can still remember, tracking the ticker tape on CNBC and waiting for the stock to come around and seeing how I was doing on any given day, and as a reminder this was before semiconductor innovation put a Smartphone in all of our pockets and made that process a lot easier. So, I ended up studying finance at Babson and I spent a year at the London School of Economics. One of the things I did in college was I participated in the Babson College Fund, which was a fund design to give undergrads an opportunity to manage a portion of the schools endowment and it was ran by a former professional investors, and so this was a great opportunity for me to get an insight into equity research and it’s something that I always recommend to undergrads that I speak with today that are interested in the industry and I recommend taking advantage of these types of opportunities if their schools offer them. So, I started at Putnam out of undergrad about 10 years ago, I joined the equity associate program which started off almost as an apprenticeship model at that time, and I was assigned on the consumer equity team, and that was an opportunity for me to work with and learn from some absolutely phenomenal investors. And so, overtime I ramped up and took on both management and stock coverage responsibilities. I was already working with our technology investment team to cover video game companies about five years into my career and there was an opportunity for me to make that more formal and extend my coverage to semiconductors and software, and so that was a move I made at the time. And it’s been an incredibly exciting coverage, universe. One of the things that I really loved about coming from a different sector and now covering semiconductors is the huge bifurcation that can occur between the big winners and the big losers. And so, one of the ways, I think about the semiconductor industry, is if you’re able to do the work and identify the inflection points in the businesses, there is just this incredible opportunity for alpha generation in the space and so I’m sure we’ll talk more about that today.

 

Chris Galipeau: That’s one of the things that I wonder if our listeners can really appreciate, especially in the semis space, how complex it is, all the different players, how fast it moves right innovation, that’s great. Alright. So, I think, probably the most common question that we get and there’s an awful lot going on here right now, pandemic-related, supply chain-related and many, many more topics. Maybe we can start with just an overview of the space, the different, who the players are, where they’re located, so on and so forth.

 

Andy O'Brien: Sure. One of my favorite questions and I could talk semiconductors all day, so please cut me off if I go too long. I think the first thing I would say, the semiconductor industry plays a prominent role in everyday life. There are both simple and complex chips that are involved in the vast majority of the products that we’re interacting with everyday includes TVs, computers, cars, microwaves, and chips are critical to the functioning of all of these devices. And yet, I think, the technical complexity of the industry, the rapid innovation, and ultimately the cyclical nature of it, make it inherently a difficult industry to understand from an investment standpoint. And so, before we dive into an industry breakdown, I would say, if our listeners take only one thing from today’s conversation, I think it should be that semis are cool again. This hasn’t always been the case, the industry has been around 60 to 70 years and for a long time, it was the industry left for the end of the slide decks with the focus and excitements squarely on the software or the internet sectors. Today, semis have more multi-year growth drivers than ever before. They play an absolutely critical role and enabling the megatrends of 5G, IoT, AI, and electric and autonomous vehicles. We actually think the semi industry has the potential to double over the next decade and when we think about the industry consolidation combine with the growing barriers to entry, it’s really just an incredibly attractive outlook from an investment standpoint. So, you asked about the different segments of the semiconductor industry and the different players, and so we think about it in four main buckets. The first is digital and I cover foundry here as well, but digital is the largest segment of the close to $500 billion in annual semiconductor revenues. Digital can generally be thought of as the chips that are the brain of the devise and that includes CPUs, GPUs, baseband processors among other types of chips. Generally, the largest and most well-known global semiconductor companies tend to be in this bucket and that would be the NVIDIA’s, the Intel’s and AMD’s in the world. And what I would say is the digital semis are notable for their high degree of innovation but also competition in dramatic swings and share gains and losses. In often you’ll see foundries that get lumped in to this bucket and so I’ll cover foundries quickly. Foundries are the companies that work with the semiconductor businesses to handle the manufacturing side and so from a semiconductor perspective, we call this a fabless or fab-lite model and that’s what’s enabled by foundries, and so the largest foundries will include a companies like TSMC, SMIC and GlobalFoundry. The next bucket of companies within the semiconductor industry is memory and so, as the name implies, memory is use to store programs or data for using electronic devices and memory comes in two primary forms; DRAM and NAND. Prices have trended down in memory over the long term as chip makers had become increasingly efficient at producing it. I think the most surprising and interesting thing for me as I studied the memory industry, was that despite the incredible complexity, difficulty, and cost to produce memory chips, the end product is ultimately a commodity where price is dictated by the current supply demand balance and nothing else, and so memory companies include Samsung, SK Hynix, and Micron. The next bucket within semiconductors is analog, and so with analog unlike digital chips that rely on zeroes and ones, analog chips process real world information such as audio, color, pressure and power and the average analog chip sells for under 50 cents while the digital chips I mentioned earlier tend to cost over $100 and can grow well into the thousands of dollars. And so, while the analog chips tend to be less exciting than their digital siblings, they’re no less critical and in fact they can be incredibly difficult to design and manufacture. And so, analog tends to have more diversified end markets than digital and longer product cycles which makes it, I think, an attractive and often overlooked hunting ground for new investment ideas and analog companies include Texas Instruments, NXPI and ADI. And then the last segment within semiconductors is Semiconductor Capital Equipment and these are the companies that make the manufacturing equipment that produces semiconductors. And so, this includes etch, deposition, lithography equipment; that’s not really important though. What matters here is that semiconductors are capital intensive businesses and the semi-cap businesses like AMAT and ASML benefit from the spending on cut capacity expansion in the never-ending pursuit of Moore's Law within semiconductors. And so, the way I like to think of semi-cap is as the picks and shovels of the semiconductor industry, and if I had to pick the single group of companies that are really the enablers of the world’s forward technological progression, it would be the semi-cap equipment companies. And I really don’t think that I overstates it, Chris.

 

Chris Galipeau: That’s a great overview. One of the questions that and I think it’s probable because it’s on TV all the time and we’re reading about it all the time, is the supply chain situation and we’re going to talk about semis today in your space, but of course you’re listening to a Q1 earnings. This is a pervasive issue here at the moment. So, I’d love to get your sense of what’s caused the disruption, how long it’s likely to last, you know Pat Gelsinger was on earlier this week and he seems to be of the mindset that. Sorry, Pat is the CEO of Intel, but he seems to be of the mindset—it’s a multi-year sort of thing to work out, and of course, they just announced a month ago building, I think, a big plan in the US right to expand capacity. So, maybe just a walk through from a high level, what’s really going on here.

 

Andy O'Brien: So, semis have always been a cyclical industry, really going back to the founding of the industry, and this is true across digital, memory, analog, semi-cap, all of the different groups of semiconductors I just outlined. Even though the cycles for the companies in those different buckets can sometimes be disconnected and I think at its core this generally has to do with the chunking nature of capacity expansions where large fabs are brought up in running all at once while demand tends to grow over time which inherently creates periods of over and under supply within the industry. And so, if I look at the current environment in semis, I think it’s important to rewind to the end of 2018. And so, at that time, semis were coming off 11 strong quarters of growth, a really strong upcycle historically and then we hit the US-China trade war which in turn led to a cool down in industrial investment globally and a reduction in auto sales. And so, the uncertainty from that environment led global customers to reduce inventories and it created what was, at the time, a pretty classic semi down cycle. Demand across analog fell by 10% to 15% and bottomed in the second half of 2019. And then with inventory levels at lows in the supply chain, if we started to feel like we were tracking towards a straightforward recovery in 2020 and then COVID happened, and the recovery was completely off the table as industrial and auto companies in particular halted all buying for a period of time in March and April of 2020. And so, what we saw is that semi companies, naturally, they reacted and they went into cost management mode and production lines were shut off, and utilization rates fell. In hindsight, this was the worst time to take those actions. And so, what we ended up seeing was that the recombination of kind of improving consumer and business confidence unprecedented government stimulus in a shift in spending away from experiences and into devices, a strong recovery began to take shape in the second half of 2020 that ended up catching the entire supply chain off guard and creating what was a very tight supply environment at the time. And then, to make matters worse, as we entered 2021 there were a number of exogenous shocks that impacted the semiconductor supply chain, so we had unprecedentedly low temperatures in Texas which limited power consumption at critical manufacturing facilities. There was an earthquake and a fire in Japan that impacted Renesas, one of the leading global supplies of semiconductors into the auto industry, and there were water shortages in Taiwan and many folks don’t know this but TSMC, which is the largest foundry in the world, consumes the equivalent of 60 Olympic-size swimming pools of water per day at its plants. And so, these shocks led to further stress on the semiconductor supply chain and so we’ve actually seen lead times for certain products extend at this point beyond 52 weeks. This is incredible stress. As you can imagine, it is very hard to manage a business when you need to wait a year more to receive the critical parts after you place the orders. And so, I think the severity of the shortages was highlighted when several high profile auto manufacturers and so GM and Ford announced that production lines were going to be shutdown while they attempted to establish semiconductor supply. And really, if you stop and think about it for a minute, it’s astounding to stop a production line on a $30,000 or $35,000 vehicle because you’re short a semiconductor chip that cost less than $1, but that is the reality right now Chris.

 

Chris Galipeau: Alright. So, if we exile 2020 and the lock down, and all of the dominoes that fell to cause us which, frankly, sounds like it started in 2018 as you laid out. Stepping back from that a minute, based on your experience and analysis, can you put a time frame on the average “semi cycle”? Is that something that’s measurable and repeatable? Or is it just too many variables?

 

Andy O'Brien: There are always similarities and differences between the cycles over time, but every cycle has specific nuances that tend to make it different than the prior in the future cycles. And so, if we look back at historical cycles, there are absolute learnings around duration, magnitude and time, but it’s very difficult to pinpoint with specific accuracy, the timeline of any ongoing cycle.

 

Chris Galipeau: Yeah, that’s fair. So, one of the things that we’ve seen come out of this, frankly, from the bigger players is talking about expanding capacity, I referenced Intel earlier. To me, this is a multi-year process to build a plant and all that sort of thing, what is your best guess and it’s an educated guess, right? What’s your best guess as to how long this current issue lasts? And by the time capacity comes on, that’s not going to make a difference here in our present day problems, but maybe just some thoughts around that.

 

Andy O’Brien: Yeah. So, it’s a great question. So, capacity is being added across the segments I mentioned earlier: memory, digital, analog. In some cases, the capacity is being added by foundries that the semiconductor use as third parties for production but we’re also seeing capacity investments being made by the semiconductor companies themselves as well. Now, the critical piece to understand here is that it takes as long as two to three years to go from breaking ground on a new fab to at-scale production and so when we talk about greenfield investments, it’s a really unlikely to impact the current environment. In memory and digital, there tends to be large multibillion-dollar announcements of new fab constructions and that’s something that we track overtime but in analog, it’s a little bit trickier. Analog is highly dependent on foundries and far less capital intensive than digital and so the capacity expansion there tends to be less lumpy but also more difficult for us to track. There are, however, a number of things that are currently being done to increase the capacity as we speak right now of existing facilities. And so, to outline a few of those, often fabs will have white space that previously wasn’t being used and there’s an opportunity to add new production lines to. There are also operational techniques that can be done to increase efficiency in throughput and then, additionally, there’s often an opportunity to re-purpose production lines for products where there’s less demand and shift those products or convert them to areas where the industry has the worst shortages. And so, really, it’s kind of classic managerial accounting-type maneuvers but we’re seeing all of this action right now, which is slowly increasing capacity through existing facilities. I still think there is reasonable uncertainty, both with the investment community as well as with the semiconductor supply chain as to how long this environment last. When we talk to the OEMs and the auto-semi suppliers, they generally talk about a rebalance the second half of this year and yet, in our discussions with the semi-conductor manufacturers, they’re slightly less optimistic and generally are pointing to an early 2022 normalization and if you look at the industries leading foundry, TSMC, they’ve suggested that some capacity constraints could drag all the way into 2023. One thing I found interesting was a recent Bernstein survey of over 80 semiconductor investors found that the majority of respondents expect shortages to last into the first half of 2022.

 

Chris Galipeau: Okay. How much of the shortage issue creates double-ordering on the behalf of customers and/or what are the implications for price?

 

Andy O’Brien: So, as of right now, we’re not particularly concerned about double-ordering because during our discussions with the semiconductor manufactures and the OEMs, there is not an opportunity to be building inventory and all of the chips that are being shipped into a number of the supply-constrained in markets we’ve discussed are almost immediately moving from production to shipping into the end product instead of sitting in a distribution or a warehouse somewhere. But as you can imagine, in the industry right now, across products, pricing is pretty strong and so we try to think about pricing from both a short and a long-term perspective, and so many of the commodity tech companies are currently seeing kind of the biggest benefit through their price-sensitive economic models and you see that in memory, in MLCC and some of the river IC companies. From an investment standpoint, this is a short-term phenomenon and the market understands that and is reticent to capitalize upside from short-term pricing benefits. Production for these businesses will ultimately track in demand and when sufficient inventory levels are reached, prices will normalize and economics will revert back to their previous level. So, that’s not to say we don’t track the cyclical activity, we absolutely do and in many cases, it creates opportunities for Alpha and so for these type of businesses, we’re constantly updating relative valuations, cyclical positioning, and catalyst pass. But perhaps more interestingly, if we look at the digital and the higher complexity analog producers, they are seeing some pricing benefit but it’s less dramatic and often it takes the form of stability instead of the traditional downward pricing or upward pricing that we might talk about. And so, one of the things we started to hear about is customers so eager for supply that they’re agreeing to long-term or multi-year supply agreements with semiconductor companies and so this is really intriguing and could potentially have ramifications on the form of what the inevitable down cycle does look like. If nothing else, Chris, I think it speaks to the increased strategic importance that this environment has put on the semiconductor industry.

 

Chris Galipeau: Yeah. I was just going to ask you why you think that’s important but you answered it before I could asked it, so that’s interesting. Should I think of that or should the listeners think of that almost as, like, a take or pay that happens in the E and C space, is this similar concept?

 

Andy O’Brien: Yes. I think that’s a reasonable way to think about it. I would caution that, ultimately, customer demand will drive what ordering looks like but there is a scenario as we think about what these long-term contracts mean where, one, it provides the semiconductor manufacturers better visibility into the demand that their end customers are actually seeing and it elevates their conversations from potentially speaking previously to a distributor or to a tier one OEM that was then supplying the end customer to now talking to the end customer discussing where they’re seeing demand and ultimately having better visibility into what their customers needs are.

 

Chris Galipeau: It’ll be interesting to see if that spreads right across all the semi-space and you said this, what that does to the boom-bust nature of the cycle, right? If it’s smooth it out at all, takes down the vol, that’s interesting. Alright, I think we want to get to something that I know you’re probably eager to talk about, which is over the long-term, who are the winners in Andy’s opinion but there’s a couple of things I want to say here. We certainly want to grab your opinion on that but for the listeners, Andy and I are talking about—and Andy sharing his opinions here—we are in no way suggesting that you run right out the door or hop on your phone and buy these stocks today. Andy is simply expressing his opinion based on his rigorous fundamental research done today and we only to acknowledge that the landscape can and will change as we look forward. So, having said that, and you did a great job leading off, giving an overview of the different buckets as you call them and who the players are, but undoubtedly you have opinions on who the winners could be in the intermediate term out one year, out five years, out 10 years. And sure the listeners would love to hear that.

 

Andy O'Brien: Absolutely! So, I appreciate that you, kind of, frame with the time horizon and I think one of the most important parts of our process is that we really do try to take a long-term view and find the highest quality through cycle businesses within the semiconductor space, and one of the things that I think is too often overlooked is that the semiconductor industry while cyclical has also outperform the S&P 500 over any extended period of time: 10 years, 15 years, 20 years, and there are number of reasons for that and we've took about the digitalization of the world, the proliferation of semi content. There's also been significant industry consolidation over the last decade and increasing barriers to entry as it turns out semiconductor manufacturing is hard and getting harder and so, to me, the conclusion here is that trading around some of the cyclical dynamics we discuss today can allow for opportunities to take advantage of dislocations, but the long-term winners should be held through the cycle and for long periods of time, and that's how we try to conduct and focus our research. And if I take a step back from the dynamics of the current cycle, I would say clearly we remain very bullish on the semiconductor industry and expected to be a phenomenal sector to invest in over the next decade. So, two names I would highlight today is key beneficiaries of the number of the trends that we've talked about are NVIDIA and AMAT. NVIDIA is the global market share leader in the GPU market. We view their gaining business as the best in the world and well positioned to continue to compound at a double digit growth rate over the next five years, while their data center business has created this incredible moat through the deployment of CUDA software that we think will allow it to maintain a market share leadership position in data center and continue to see significant upside from demand, from the hyperscale data center players. Lastly, they have an auto business where the revenues are relatively modest today, but we think nearing an inflection point as they are absolutely critical in enabling autonomous driving, and so we continue to track very promising partnerships on that front with the auto OEMs. The second name I would highlight is Applied Materials and Applied Materials is the leader in the semi-cap equipment space and what they do is literally rocket science. They enable the innovation, all of this other semiconductor companies that we are talking about today. And so, we expect AMAT to continue to be a beneficiary of the ceaseless pursuit of Moore's Law that I mentioned earlier and also benefit from a number of the shifting geopolitical priorities as it relates to the localization and the domestication of the semiconductor manufacturing. Lastly, we have a close relationship with the Applied Materials management team which we view as one of the best in the industry and are incredibly excited about the opportunity for continued capital allocation. Policies that benefit shareholders on that front.

 

Chris Galipeau: Alright, that's great, Andy. So, when I think about everything that you shared with us today, I'm going to try and wrap this up and you can add anything that you think I miss. So, with the supply chain scenario, we're talking about a situation that probably began in 2018, exacerbated by, not just the pandemic which would normally miss with the supply chain system, you had other ancillary things going on, you referenced a fire for instance in Japan, so on and so forth. It's a little bit unclear how long it takes, how long it will take, may take to recover from this and get back to normal. The automakers have one view, the semi players in the management team seemed to have slightly different view, right? But eventually, and at some point it will kind of wash through and get back to normal. It's likely we see capacity come online here the next three to five years, which obviously doesn't address today, but we’ll probably we see that. You talked about contracts that could potentially smooth out the boom-bust cycle in the space which, I think, would be really interesting. Thanks we've never seen that. And at the end, we wrapped it up with a couple of names that you think have great long-term runways to growth and are major players in NVIDIA and in AMAT. So, anything you would add to that or do you think we missed anything in the chat you want to—.

 

 

Andy O'Brien: I think that's a great summary, Chris. I think the one thing I would add is the geopolitical impact of everything we're seeing, which we didn't spend much time on. And so, what's been very clear to anyone who tracks the industry closely is that governments are absolutely on the move and governments have observed the critical role of the semiconductors and we've now seen the United States, the European Union, and several aging countries including China step up in a number of ways to support domestic semiconductor manufacturing. And so, China, for example, has allocated $1.4 trillion for strategic initiatives in its five-year plan with semiconductors representing a key strategic focus of that plan and there are number of ways they're doing this but one of the key ways is investing in domestic manufacturing, and so we've seen tremendous growth in Chinese companies such us Silergy and SMIC. The US has also unveiled a $50 billion semiconductor support plan designed to improve, again, domestic manufacturing and increase capacity and then the European Union has announced the initiative to bolster Europe's leading edge manufacturing capacity.

Chris Galipeau: Alright. So, I think we covered a lot and I can speak for myself that and our listeners don't know this, but in listening to the morning meeting, every single morning, here for years and years, I think the work that generally—the analyst team does here with the firm and you, certainly in the semi space is phenomenal and so I hope the listeners who took a lot of way from this I know I do, every time I listen to you talk about it. But I want to ask you a couple of other questions away from the semi space and also the listeners can get to know who Andy is a little bit, we have to go out to dinner tonight, where we’re going and what are we eating?

 

Andy O'Brien: So, I really do like trying all sorts of food from around the world. I think one of the things about being a semiconductor analyst is the global nature of the industry, the travel that's required. My wife and I actually lived in Singapore for a period of time in 2018 while I worked out of Putnam's office there. We both actually really fell in love with chicken rice which is the dish that Singapore is well known for and well, we've done our best to recreate it, now that we're living back in the US, I would say we've only had mixed success on that. 

 

 

Chris Galipeau: So, I can say for sure that I've never tried chicken rice, so when you get it perfected, bring some in and let me try it. What about for music what do you like to listen to? 

 

Andy O’Brien: I probably have to go country here at least according to Spotify's AI algorithms, country is my go-to. I listen to it on my walk to work and when we were are able to attend concerts those were always my favorite. I will say if I'm running or working out, I do like hip hop or something with more of a beat but overall, it has to go to country. 

 

Chris Galipeau: So we could hang out, Andy, because that's exactly how I would answer the question. Alright, and I think our listeners would love to know this. If you can narrow where to one or two books, what books have made an impact on you in your career investment-wise?

Andy O'Brien: Sure. So, as part of my role as the assistant director research, I speak with many undergraduates with varying degrees of familiarity about the investment industry. My go-to book recommendation is One Up On Wall Street. This book written by Peter Lynch, a Fidelity fund manager throughout the 80s and I think I find the books investment recommendations to be both timeless and also very approachable for folks that are trying to learn about the industry. The second book I would highlight, I'll sneak a second one in, is The Outsiders by William Thorndike. For this book, I think he does a terrific job detailing how eight CEOs created value over the course of their careers and for me, what it really drove home was the critical importance of balancing strategic thinking, execution and capital allocation that are all necessary for the long term value creation.

Chris Galipeau: So this why I'd like to talk with our investment team. So, I've never read that one. I'll go grab it, but Peter Lynch’s book is great and I think one of the things that will resonate very well with any financial advisor, with the end client for you and I is Lynch with sit in the mall and sit outside Bed Bath & Beyond or you pick the store and see how many people are in, how many people are out, what they’re buying and how that can translate and one of things that I tell people all the time is invest in what you know, right? So, for you, it’s semi space and whatever adjacent areas are in semis but I think that's really good advice. Alright, so will wrap it here, Andy O'Brien, semiconductor analyst at Putnam. Thanks for spending some time with us. That was wonderful. I know the listeners will get a lot out of it. I certainly did.

 

Andy O'Brien: Thanks for having me.
 
 

Chris Galipeau: Alright, listeners, thanks. This is Chris Galipeau signing off. We'll be back with you shortly with another Putnam Portfolio Manager.

 

Patrick Laffin: Thank you for listening to Active Insights. For more information on Putnam, please visit Putnam.com. All opinions expressed by the podcast host or podcast guests are solely their own opinions and do not represent the opinions or views and Putnam Investments or any affiliates. This podcast is not investment advice and is not intended as a recommendation to buy or sell any type of securities. This production is for informational purposes only.

 

Online Title and Description:

The semiconductor industry and the supply chain with Andrew O’Brien

 

In this episode, Chris speaks with Andrew O’Brien, Putnam’s Assistant Director of Equity Research, where he focuses on fundamental analysis and valuation of companies in the semiconductor, hardware, and software industries.  During the conversation, they touch on many topics, including: 

·       The current semiconductor landscape

·       Supply chain issues

·       Geopolitical problems

·       The average semiconductor cycle

·       How to solve the capacity issues

·       Pricing issues

·       Potential long-term winners

 

This material is for informational and educational purposes only. It is not a recommendation of

any specific investment product, strategy, or decision, and is not intended to suggest taking or

refraining from any course of action. It is not intended to address the needs, circumstances, and

objectives of any specific investor. This information is not meant as tax or legal advice. Investors

should consult a professional advisor before making investment and financial decisions and for

more information on tax rules and other laws, which are complex and subject to change.

 

The S&P 500 Index is an unmanaged index of common stock performance.

 

All funds involve risk, including the loss of principal. You can lose money by investing.

 

To view additional information including performance and holdings, please visit the Putnam Research Fund page found on putnam.com. 

 

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund

before investing. For a prospectus, or a summary prospectus if available, containing this and other

information for any Putnam fund or product, call your financial representative or call Putnam at 1-

800-225-1581. Please read the prospectus carefully before investing.

 

Putnam Retail Management                                                                                       AD1715859 7/21