In 2022, investors John Deere (DE) and Case New Holland (CNH) rushed in, encouraged by the trendy investment theme of food scarcity, made much worse by the war in Ukraine and droughts in the US and Africa. The world would need vast amounts of new agricultural machinery to get us through the coming decades.

The fatal flaw of this statement was that China had already developed a huge industrial sector building cheap, high-quality agricultural machinery that would soon lead to rising global food production and falling prices. As a result, Deere and CNH are now only competitive in the North American and European markets, where trade barriers have been erected to deny Chinese manufacturers entry. Since these recommendations from sell-side Wall Street investment banks, Deere shares have returned to pre-war levels in Ukraine, and CNH shares are below 2014 prices.

The high-end semiconductor industry is attracting even greater interest from investors, who have turned Nvidia into a $3 trillion company. Here again, China's massive capital investments and manpower advantages are already causing serious competitive problems for Nvidia. Huawei's chips are faster, more reliable and even more expensive than Nvidia's, while still being cheaper to produce. Huawei therefore enjoys much higher profit margins than Nvidia in terms of mutual sales.

However, Huawei and other Chinese technology companies are not allowed to sell high-end chips on the US market. As in the case of cars and agricultural equipment, Nvidia seems headed toward a future similar to John Deere's: competitive only in markets where Chinese are cut off, and bankrupt everywhere else.

Sources and links:

Less and faster: global fertility is not just declining, it is collapsing
https://fasterplease.substack.com/p/fewer-and-faster-global-fertility

Barron's, Deere is a buy for 2022. It's the 'Tesla of agriculture.'
https://www.barrons.com/articles/deere-stock-51644767351

Barron's, world hunger is increasing. These companies have solutions.
https://www.barrons.com/articles/companies-solving-world-food-shortage-stocks-51659046305

Mordor Intelligence Industry Survey: Chinese Agricultural Machinery Market Size and Share Analysis – Growth Trends and Forecasts (2024 – 2029)
https://www.mordorintelligence.com/industry-reports/china-agricultural-machinery-market

Huawei is quietly dominating China's semiconductor supply chain
https://merics.org/en/report/huawei-quietly-dominating-chinas-semiconductor-supply-chain

China unveils a 48 billion fund to strengthen the chip industry
https://www.morningstar.com/news/dow-jones/202405271617/china-unveils-48-billion-fund-to-bolster-chip-industry

Zerohedge, Nvidia Cut AI Chip Prices While Huawei Launches China Discount War
https://www.zerohedge.com/markets/nvidia-slashes-ai-chip-prices-huawei-launches-price-war

Exclusive to Reuters: Nvidia cuts prices in China in battle against Huawei chips
https://www.reuters.com/technology/nvidia-cuts-china-prices-huawei-chip-fight-sources-say-2024-05-24/

Deere stock prices are falling after the farm equipment maker cut expectations again
https://www.morningstar.com/news/marketwatch/20240516345/deeres-stock-slides-after-agriculture-equipment-maker-again-lowers-guidance

Reuters, CNH Industrial cuts 2024 profit target as demand for agricultural machinery declines
https://www.reuters.com/business/cnh-industrial-cuts-2024-profit-view-soft-agriculture-demand-bites-2024-05-02/

FINAL TIER 4 ENGINES: A VISUAL GUIDE TO REGULATIONS
https://ckpower.com/visual-guide-to-regulations-for-final-tier-4-engines/

SCMP, Chinese scientists find a way to mass-produce optical chips that the US can't approve
https://www.scmp.com/news/china/science/article/3262355/chinese-scientists-find-way-mass-produce-optical-chips-us-can-not-sanction

Fortune, China is poised to dominate the older chip market, and the US has only itself to blame
https://fortune.com/asia/2024/07/05/china-poised-take-over-legacy-chips-mature-nodes-us-semiconductor-export-controls/

Final scene, Shenzhen, Guangdong

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