By David Forest, editor, Strategic Trader

David Forest

The global chip shortage is a massive problem.

That’s especially true for the trillion-dollar electric vehicle (EV) business.

And that’s because EVs use twice as many chips as a traditional vehicle. A single electric vehicle can hold up to 2,000 individual chips.

Automakers worldwide took a huge hit on the chip shortage in recent months.

Toyota, Ford, and VW all announced big production cuts because they can’t find enough chips.

Now, it’s getting worse…

A Critical Link in the Chip Chain

Insiders in the chip industry winced when Russia invaded Ukraine last week. That’s because Ukraine is a critical link in chip-making – although few investors realize it.

Ukraine is one of the world’s largest producers of neon gas. You may remember it from the periodic table in elementary school science… but few know that it’s also a specialty chemical.

And it’s key to chip-making. Chip foundries use neon to etch their chips.

Without neon, you can’t finish chips on the assembly line.

The war with Russia will disrupt exports of Ukrainian neon. That’s especially bad news for America. A full 90% of U.S. neon supplies come from the Ukraine.

How bad could it get? Well, history says it could get very bad.

When Russia invaded Crimea in 2014, neon prices shot up 600% in a matter of weeks. It was nearly impossible to get this hard tech.

The shortage could last longer this time around. Russia dug in its heels the last few days and is intent on defying the Western world. If the war drags on for months – or heaven forbid, years – the neon situation will grow dire for chipmakers.

This isn’t great for EV manufacturers. The chip shortage already caused big production cuts. Less neon could mean even fewer chips… and fewer EVs available.

We the People Want EVs

At the same time, the demand for EVs is skyrocketing. We have 10 million EVs today. That will rise to a mind-boggling 145 million EVs on the road in just a few years.

Customers are clamoring. Ford’s F-150 Lightning sold out almost instantly. Ford’s stock enjoyed a phenomenal rise on the back of the F-150 launch. It’s up over 100% during the past year.

No carmaker wants to miss this. EVs are the hottest market on the planet. I visited the Chicago Auto Show a couple of weeks ago – every single car company displayed EV models front and center.

That means several important things.

If carmakers want to keep pumping out EVs, they need chips. With existing supply problems – and now the hard tech shortage in Ukraine – chips are getting more expensive.

But car companies probably won’t care about rising chip prices. The chip cost is a small percentage of the overall cost to make an EV. Carmakers will pay any price to get the few chips available.

Again, this isn’t great for the EV makers. They will see their margins squeezed. They won’t care, of course – the drive to own the EV market means they’ll push on, profits or not.

But that puts EV investors in a tough spot. If you’re buying traditional EV stocks like Tesla, it could be a rough ride. Imagine a string of disappointing earnings reports, as rising costs for chips erode profits.

This might even cause a surprise collapse in EV maker stocks. Smaller margins mean less money… And just like we saw with Facebook this year, a bad earnings announcement could trigger a huge fall.

The Silver Lining

However, there’s a silver lining here. Few investors think about it, but there’s a way to profit from the chip shortage.

Buy the chipmakers.

Companies that make chips will see soaring prices for their products. They’ll be making profits if the chip supply is dragged down.

And established chip companies are the best investments. They already have an inventory of chips to sell. If chips get scarce, their stockpiles become a gold mine.

My team and I studied the best way to play this megatrend. You could buy the biggest chip companies on Earth. Stocks like Taiwan Semiconductor, the largest producer of chips on the planet.

But EV chips are a relatively small part of that giant.

Instead, I’m focusing on smaller chip stocks. They’re not household names… but they’re laser-focused on making chips for the EV industry.

I’ve found one small company that I believe is in the sweet spot for the chip crisis. It’s already producing chips. Some of the world’s biggest EV makers buy this company’s chips… even Tesla.

This could be the biggest opportunity in EV tech for decades.

Remember, we have a megatrend in motion… trillions of dollars flooding in… a chip shortage… and a company that controls the chips everyone needs.

I want to tell you all about it. It’s unbelievably urgent right now… The situation is becoming more dire… and I need to get the word out on what you can do.

I’m hosting a free event, The EV Superboom Summit, on Wednesday, March 2 at 8 p.m. ET to give you all the details. Please join me… You don’t want to miss this one. Sign up right here.

Keep walking the path,

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David Forest
Editor, Strategic Trader