Asianometry

At the start of the 21st century, China's solar cell industry found itself far behind those in Japan, Germany, and the United States. As late as 2003, Chinese market share of the solar cell industry was about 3%. 

In less than ten years, the Chinese solar industry absorbed foreign technical expertise, created their own indigenous capacity, and outcompeted its western incumbents. By 2013, China accounted for 60% of global solar cell production. It retains strong market share today, though a lot of production has migrated to the Southeast Asian countries due to cheaper labor costs. Europe’s share is negligible and its former national champion Q-Cells sold to a Korean company. 

ASML is a critical supplier of semiconductor lithography machinery for foundries like Intel and TSMC. In my video discussing TSMC's $28 billion capital expenditure, I briefly discussed their situation. Their CEO said in an earnings call that they can make 50 high-end EUV lithography machines a year. That's it. Without those machines, the foundries cannot churn out more 5nm chips. 

So why not make more of these machines? ASML itself has thousands of suppliers making parts that end up into its machines. Coordinating and integrating all of these parts together into a single smooth-running machine is immensely challenging.

It is December 2020 and the Bank of Japan is now the single biggest shareholder of Japanese stocks. Over the span of a decade, the central bank bought hundreds of billions of dollars in Tokyo-listed stock ETFs as part of its monetary easing programs, sitting on a handsome $130 billion profit. 

You might be forgiven for wondering if it is normal for a central bank to buy "stonks". It has never been done before in this way. Yet as Japan threatened to enter another era of economic stagnation and deflation, the bank decided to go where no bank has gone before in an effort to fight the future. 

In this video, I want to dive into a controversial, groundbreaking program and the market-distorting effects that it has wrought on the world's third largest economy.