Semiconductor Supply Crunch Creates Great Opportunity for This Chipmaker

Shah Gilani Jan 03, 2022

To start the New Year off, I’m focusing on two technology companies that have been on everyone’s radar for a while now.

First up is a biotech company that shook 2021 with a breakthrough Alzheimer’s drug.

And the next is one chipmaker still feeling the pinch from a global shortage. Shares are trading at a premium right now, and it’s a great time to jump in.

Either of these two trades has a chance of doubling your money, so let’s get started.

First up, I’m watching Biogen Inc. (BIIB). On Wednesday, a story broke in The Korea Economic Daily that Samsung Group is in discussions to purchase Biogen at a potential price of more than 50 trillion Korean won ($42 billion).

The news sent BIIB shares soaring 12.52% in Wednesday’s trading. By Thursday morning, though, shares dropped more than 6% after Samsung Biologics called a media report it was about to buy the U.S. company “not true.”

I don’t know what’s happening regarding the Samsung news. What I do know is that the recent volatility is creating an interesting trade setup.

After pulling back as much as 52.98% from June 7, 2021 to December 3, 2021, shares of BIIB looked like they were finally forming a base between $230 and $240 before Wednesday’s news.

If additional news stories lend credibility to Wednesday’s Samsung acquisition rumor, shares of BIIB will likely jump back up to $260.00 or more. If that doesn’t happen, the stock was already forming a base, and we could see a move higher, anyway.

If shares of BIIB pull back to $230.00 by January 14, 2022, I like buying the BIIB April 14, 2022 $230/$235 Call Spread for $2.25 or less. Plan on exiting the BIIB April 14, 2022 $230/$235 Call Spread for a 100% profit or of shares of BIIB close below $220.00.

Next up, I’m watching Micron Technology, Inc. (MU). On Thursday morning, shares of the Boise, Idaho-based semiconductor manufacturer lost nearly 3% in early trading after the company warned a day earlier that strict Covid-19 curbs in the Chinese city of Xi’an could disrupt its chip manufacturing unit in the area.

In a statement, the company said it is working with local government officials to identify solutions that will enable it to minimize the impact of the situation, and that it is tapping its global supply chain, “including our subcontractor partners, to help service our customers for these DRAM products.”

At the end of the day, disruptions in the global supply chain have meant demand for the company’s DRAM chips is very high. Any slowdown in production will likely only increase demand.

In the long run, that’s good news for MU, and it’s creating a good trade set up.

If shares of MU pull back to $91.00 by January 14, 2022, I like buying the MU April 14, 2022 $92.5/$95 Call Spread for $1.10 or less. Plan on exiting the MU April 14, 2022 $92.5/$95 Call Spread for a 100% profit or of shares of MU close below $87.35.

Cheers,

Shah Gilani

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