Bottle necks and volatility

Semiconductors and AI are very common terms in today's financial markets. Companies of the likes of Nvidia (NVDA), AMD(AMD), and Intel (INTC) are some of the industry leaders in this space with NVDA hitting a 5 trillion market cap in recent moves showing the true power and strength in numbers for the industry leader and AMD sitting at 402 billion market cap. NVDA and AMD have many bullish traits and own a lot of market equity and rated a buy from many analysts so what is there to worry about? Well not much as long as one company in a foreign country can hold up enter Taiwan Semiconductor Manufacturing Co. (TSM) and now you are probably wondering why I should worry about this Taiwanese company. TSM is the company that actually makes these chips, Yes make as in physically making them and many AI bulls are not aware of NVDA 's actual business model as it consists of the "Design" of chips whilst they send these designs to Taiwan for TSM to make and same with AMD. TSM possess a very sleek manufacturing process and surely majority of chips are not being made and produced in Taiwan instead of the US which is the current AI race leader. Sadly, this is the current state of the chip market causing a massive bottle neck in the chip market. Bottle necks consist of limiting factor(s) that determines how fast or how much the whole system can produce and handle with its current demand. TSM being the bottle neck in this chip economy can really slow things down with huge risk coming from increased China tensions and systematic risk. 90 percent of the world's best chips are made here and if this percentage is not enough to show you the risk in the AI race right now let's look at implied options movements on the stock TSM. Near term movement is bearish showing a potential downside of 268(-6%) coming in from current ATM and OTM option implied volatilities (IV). Markets are bracing for a potential drawback it seems. TSM near term has around a 68% chance to stay with a 6% range of its current spot of 286. Currently trade is a very touchy subject and is causing mass market moves which can impact these figures in the model. Short term is definitely important but most value investors really care about is that long term value and sadly TSM has the same bearish options implied volatility even in the long term. Options currently price in a potential movement to 161.21(-43%) and I know this is a crazy pullback but what that number means is at the current options market using a slightly above percentage for our OTM wing strikes (10%) these options show there is potential for a massive drawback. Direction is the most important factor when using options implied movements as it is extremely hard to guess an exact price or else we would all be rich but knowing where the market thinks the stock is heading is a good start. TSM is a very solid company with promising revenue growth year over year (YOY) and a very healthy EPS growth YOY which is definitely bullish but as stated earlier this company is the reason the whole market has a bottle neck. None of this is financial advice and I am not saying sell TSM but be aware of the heavy risk present for the chip market as this booming firm in TSM carries a lot of weight and one China invasion or big mistake can cause that implied 43% pullback. One bottle neck is scary but let's take a look at the bottle neck inside of another bottle neck being TSM. TSM makes these chips which requires heavy machinery that they buy from one main firm ASML(ASML) which makes the machines required to produce these high-level chips and sell them to TSM. ASML is the only company able to produce these machines and they are located in the Netherlands which adds another layer to this deep bottle neck. Cascading risk is huge here as a normal NVDA investor is also relying on TSM and ASML to produce at a high demand and navigate through high tensions being located outside of the US. Variables keep stacking up and will definitely not stop here as the chip market is in high demand but for the retail investor, I think it is important to really pull back the curtain and look. Bottle necks can be very dangerous to this market not only for investments but for future innovation and we are trying to bring chip production to the US but even that will not be able to produce these high-level chips right away. Chip manufacturing and design stocks can be a very solid investment and I am not Burry so I am bullish on this stock but I am aware of the underlying risk present. The Green Candle is not here to give buy/sell recs but to rather inform the retail investor of things not shown in mainstream media that can really bleed that beautiful portfolio of yours.