A strong investment thesis provides the intellectual framework for investment decisions. This guide helps you develop a coherent gallium investment thesis.
Core Investment Thesis Components
Supply Constraints
Examine supply fundamentals:
- Global production capacity and constraints
- Byproduct nature limiting supply responsiveness
- China's production dominance
- Capacity expansion timeline and feasibility
- Recovery rate improvements potential
Demand Drivers
Evaluate demand fundamentals:
- 5G infrastructure deployment status and timeline
- EV adoption curves and projections
- Renewable energy deployment trends
- Semiconductor industry demand cycles
- Emerging technology adoption
Technology Adoption
Analyze technology trends:
- GaN adoption in power electronics (accelerating)
- GaN market penetration in existing applications
- Emerging applications and addressable market expansion
- Technology substitution risks
- Rate of adoption across customer segments
Geopolitical Factors
Consider geopolitical context:
- China's role in global supply chain
- Export controls and strategic considerations
- Trade tensions and tariff impacts
- Supply chain resilience
- Alternative supply development potential
Valuation Framework
Build valuation perspective:
- Current spot price levels vs. historical averages
- Price-to-supply cost ratios
- Long-term price scenarios
- Entry point timing
- Risk-adjusted return expectations
Thesis Development Worksheet
My gallium investment thesis:
Key supply factors supporting my thesis:
Key demand factors supporting my thesis:
Technology adoption trends supporting my thesis:
Geopolitical factors supporting my thesis:
Risks to my thesis:
Time horizon for thesis: __________ years
Expected return scenario: __________
Testing Your Thesis
Stress test your investment thesis:
- What happens if 5G adoption slows?
- What if Chinese producers increase recovery rates?
- What if GaN adoption faces headwinds?
- What if silicon technology improves unexpectedly?
- What if geopolitical environment stabilizes?
Thesis Evolution
Your investment thesis should evolve with new information:
- Monitor supply announcements
- Track demand data
- Follow technology developments
- Reassess geopolitical landscape
- Review thesis quarterly
Next Steps
With your thesis developed:
- Gallium Investment Thesis Checklist - Validate your thesis
- Gallium Risks - Understand challenges
- How to Invest in Gallium - Execute your thesis