The Next Big Theme: May 2023

May 18, 2023


Internet of Things

Global Semiconductor Wars Take Shape

The National Institute of Standards and Technology (NIST), which is part of the U.S. Department of Commerce, published a paper detailing its plans for a National Semiconductor Technology Center (NSTC).1 The center is a critical element of the CHIPS and Science Act’s research and development (R&D) program. The NSTC aims to enhance U.S. leadership in semiconductor R&D, engineering, and advanced manufacturing. The main objectives include strengthening U.S. competitiveness, making the process from design idea to its commercialization more time and cost efficient, and establishing a semiconductor workforce development ecosystem.2 Meanwhile, in China, the government wants to counter growing U.S. sanctions that target advanced chip-making. In 2022, Beijing distributed over 12.1 billion yuan (US$1.75 billion) in subsidies to 190 domestically listed semiconductor companies.3 The top 10 recipients of the subsidies received 45% of the total payout, equivalent to 5.46 billion yuan.4 Semiconductor Manufacturing International Corp (SMIC) was the largest beneficiary, receiving 1.95 billion yuan for the year.5


Consumers Shift Online, Retailers Diversify

Major e-commerce players are diversifying their revenue streams. A prime example is Amazon, which uses third-party sellers and subscription-based business segments to generate income.6 In addition, Amazon’s strides in advertising revenue now make it the third-largest digital advertising company globally, behind Google and Facebook. Last year, Amazon sold almost $40 billion worth of advertising, which is more than the revenue it generates from Amazon Prime.7, 8 In the broader retail industry, Bed Bath & Beyond’s closure is expected to trigger additional retail store closures. According to one estimate, 50,000 physical stores in the United States could close by 2027, excluding gas and food service stations.9 In many cases, the costs of operating retail stores are no longer worth the return, especially in the clothing, accessories, and electronics sectors.10 Other factors, such as increasing e-commerce penetration, a slowdown in consumer spending, and reduced credit availability, are also major headwinds for brick-and-mortar stores.


Supply is Growing, Demand is Surging

In 2023, global lithium supply is expected to exceed 1 million tonnes for the first time.11 By year-end, the world’s lithium supply is expected to be more than double the output from 2021 and exceed total production between 2015 and 2018.12 The expansion in recent years is mainly attributable to projects in Chile and Australia. New projects in Australia, Brazil, and Quebec are expected to boost supply further. According to projections, lithium supply will need to double again to 2 million tonnes by 2027 to keep up with demand.13 Lithium producer Livent reported strong appetite for lithium outside of China, especially in Japan and South Korea, two of the world’s largest cathode producers.14 Similarly, leading producer Albemarle anticipates continued demand and plans to invest over $1 billion to build two new production lines at its Kemerton plant in Western Australia by 2026. This investment will double the company’s lithium hydroxide processing capacity.15

Telemedicine & Artificial Intelligence

AI Assistants Facilitate Patient Interactions

A recent study compared the responses of physicians and ChatGPT to real-world health questions, providing insight into the potential role of artificial intelligence (AI) assistants in medicine.16 To obtain a diverse sample, the study used a Reddit thread where millions of patients post medical questions and doctors respond. Licensed healthcare professionals preferred ChatGPT’s responses 79% of the time, rating them as higher quality and more empathetic.17 Another example of generative AI’s integration into healthcare is Urban Health Plan (UHP), a Federally Qualified Health Center (FQHC) based in New York. UHP increased its show rate for patients most likely to miss their appointments by 154% with targeted interventions using a prediction algorithm.18 Meanwhile, at UC San Diego Health, UW Health, and Stanford Health Care, physicians are testing a tool that automatically drafts responses to patients’ inquiries about their symptoms, medications, and other medical concerns.19

Robotics & Artificial Intelligence

Robots Enter New Workforces

As COVID-19 pandemic conditions improve and a normalized cadence of healthcare procedures resumes, the use of robotic surgeries is surging. Use of Intuitive Surgical’s da Vinci robot in procedures increased 26% year-over-year (YoY) in Q1 2023.20 Installations of new da Vinci systems increased 12% YoY to 312 for the quarter, which brought their global installed base to nearly 7,800 robots.21 The growing demand for general surgery in the United States may also contribute to increased use of the company’s robots. Also, the adoption of emerging AI applications in the robotics industry is on the rise. ABB Robotics launched its Robotic Item Picker, a new vision-based solution that accurately detects and picks items in warehouses and fulfillment centers.22 Boston Dynamics partnered with AI-software company Levatas to integrate OpenAI’s ChatGPT into Boston Dynamics’ robo-dog, Spot.23 With ChatGPT and Google Assistant’s voice technology, Spot can understand and converse with humans.

Autonomous & Electric Vehicles

EV Adoption Intensifies Around the World

Tesla intends to produce enough battery-grade lithium at its refinery outside Corpus Christi, Texas to support the production of 1 million electric cars annually.24 To achieve this goal, Tesla plans to invest $365 million in the lithium plant, with construction slated for completion in 2024 and production commencing in 2025.25 BYD announced plans to manufacture EVs in Vietnam and that it expects support from the country’s government. In addition, BYD intends to establish a local supply chain.26 While China, Europe, and the U.S. are established hubs for electric car sales, India lags far behind. However, the International Energy Agency (IEA) reported a positive shift in India, with battery EV sales reaching almost 50,000 in 2022, four times greater than in 2021.27 This number pales in comparison to China’s EV sales of 4.4 million. However, Thierry Koskas, CEO of Stellantis, believes India’s early stage EV sector offers great promise because urban and suburban car usage is high in India, making it ideal for EVs.28

GM Cruise Picks Up the Pace

In January 2022, General Motors’ autonomous vehicle Cruise launched fully driverless service in its robotaxis to the public in San Francisco.29 By the end of April 2023, the service was 24/7 throughout the city.30 The company plans to commence supervised testing, which involves a safety driver in the car, in Houston this month and to Dallas soon.31 Cruise’s autonomous vehicles achieved a major milestone in February 2023 when they collectively drove 1 million driverless miles. The company expects driverless miles to double by mid-2023.32


The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs.


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