The Next Big Theme: April 2024

Lithium prices return to growth, tech giants prioritise AI investments, and the US grants billions to domestic semiconductor firms. Join us in this month’s “Next Big Theme” as we explore recent news and developments in electric vehicles, artificial intelligence, semiconductors and more.

Lithium & Battery Technology

Lithium Prices Back on an Upswing

Global lithium prices showed signs of stabilising as they entered positive territory for the first time year-to-date (YTD) in early April.1 Notably, in China, lithium carbonate traded around US$15,550 per tonne as of April 10th, up 15% YTD.2 Also positive for prices is that global electric vehicle (EV) sales are projected to increase 27% year-over-year (YoY) to 17.5 million units in 2024.3 A surge of this magnitude could further drive lithium prices, which depend on robust EV demand. On the supply front, the US Department of Energy conditionally agreed to loan US$2.26 billion to Lithium Americas to help develop the company’s Thacker Pass mine in Nevada.4 The loan will largely finance the initial phase of the project, which is now estimated to cost US$2.93 billion.5 Slated to start production in 2027, the company aims for the mine to produce 40,000 tons of battery grade lithium carbonate per year, enough to supply 800,000 electric vehicles (EVs).6 Thacker Pass contains the largest proven lithium reserve in North America and is expected to play a significant role in bolstering the domestic lithium & battery supply chain.

Explore battery tech and lithium with ACDC.

Artificial Intelligence

Tech Heavyweights Intensify AI Investments

Amazon will invest an additional US$2.75 billion in Anthropic, a prominent AI startup and rival to OpenAI, at a valuation of US$18.4 billion.7 Amazon’s total stake in Anthropic is now US$4 billion, representing Amazon’s largest external venture investment.8 The investment comes shortly after Anthropic launched Claude 3, an AI model suite excelling in multimodal capabilities. Claude 3 reportedly surpasses OpenAI’s GPT-4 and Google’s Gemini Ultra in various benchmark tests, including knowledge and reasoning at various educational levels and basic mathematics.9 As part of the agreement, Anthropic will prioritise Amazon Web Service (AWS) for cloud services and use Amazon’s chips for developing and deploying its foundational models.10 The deal continues the trend of escalating AI investments by tech giants, which soared to US$24.6 billion in 2023 from US$4.4 billion in 2022.11 Nvidia’s recent unveiling of its most powerful AI processor yet, the Blackwell GPU Architecture, is another example of the intensifying AI technology race.12

Explore artificial intelligence with GXAI.

Semiconductors

CHIPS Act Funding to Help Build New Semiconductor Facilities

The U.S. Department of Commerce has a non-binding preliminary agreement to allocate US$8.5 billion from the CHIPS Act to Intel for the construction of semiconductor facilities in Arizona, New Mexico, Ohio, and Oregon.13 The four projects, which are expected to support 20,000 construction jobs, are part of Intel’s plan to invest more than US$100 billion to expand its chip production capacity and capabilities in the U.S. over the next five years.14 Additionally, Intel may receive up to US$11 billion in CHIPS Act loans and is eligible for a tax credit covering 25% of specific capital expenditures. All told, the funding for Intel represents the CHIPS Act’s largest allocation to date.15 National Grid announced a US$4 billion investment to upgrade upstate New York’s power grid.16 Seventy projects over six years will enhance the grid’s resilience against extreme weather and support renewable energy. Over 1,000 miles of transmission lines will be overhaled.17 Investments like these will help modernise the country’s aging and disconnected power infrastructure and advance the energy shift.

Explore semiconductors with SEMI.

Genomics and Biotechnology

Genomic Medicine and Biotech Approvals and Deal Activity Surge in Early 2024

The U.S. Food and Drug Administration (FDA) has now approved 26 genomic medicines and notably continues to expand approvals for already marketed drugs.18 Most recently, the FDA expanded Vertex Pharmaceutical and CRISPR Therapeutics’ approval of their gene editing treatment to include beta-thalassemia.19 The expanded approval came over two months ahead of schedule and six weeks after the original approval of Casgevy for sickle cell disease (SCD). Sales of Casgevy are expected to be robust, totalling US$2.7 billion in 2028.20 The FDA also recently approved the first CAR-T cell therapy for solid tumours. Historically, CAR-T treatment approvals have been limited to blood-based cancers, so this approval opens the door to a wider pool of cancer types. Ongoing genomic and biotech innovation has also accelerated mergers and acquisition (M&A) activity, which includes Gilead Science’s recent acquisition of CymaBay Therapeutics for US$4.3 billion to bolster its liver disease portfolio.21

Explore biotechnology with CURE.

Related Funds

ACDC: The Global X Battery Tech & Lithium ETF (ASX: ACDC) invests in global companies developing electro-chemical storage technology and electric vehicles as well as mining companies producing battery-grade lithium.

GXAI: The Global X Artificial Intelligence ETF (ASX: GXAI) invests in global companies involved in AI development, AI-as-a-service, provide AI compute power, or design and manufacture AI hardware.

SEMI: The Global X Semiconductor ETF (ASX: SEMI) invests in leading companies along the semiconductor value chain including designers, technology developers and manufacturers.

CURE: The Global X S&P Biotech ETF (ASX: CURE) invests in companies at the fore of healthcare innovation and genomic science, including those involved in gene editing, genomic sequencing, genetic medicine and therapy, computational genomics, and biotechnology.

 

Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 06/05/2024.

Past performance is not a reliable indicator of future performance.

Diversification does not ensure a profit nor guarantee against a loss. Brokerage commissions will reduce returns. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.