Chip Production Chokepoints
James FD@jamesfoxdavies
−14.1%
since Sep 30
The idea
I believe compute stays scarce for years because the real bottleneck isn't chip design, it's the machinery and capacity needed to make them, and that takes years to build regardless of how much money shows up. So this basket owns the choke points: heaviest in advanced packaging, lithography, and process control, with HBM memory, deposition and etch tools, and materials as steadier ballast. No single name dominates, and I'm holding cash on the side while I let this play out over years, not quarters.
What it owns
- Stitching chips together is currently the bottleneck for AI processors, with packaging capacity sold out years in advance. · Taiwan Semiconductor ManufacturingIt owns the CoWoS advanced packaging capacity that AI chips are currently rationed by, making it the single biggest gate in the supply chain., Amkor TechnologyIt is the biggest US-listed outsourced packager, catching advanced packaging work that overflows from capacity constraints., ASE Technology HoldingIt is the largest outsourced assembly and test company globally, so tight packaging capacity drives utilization and pricing., Camtek Ltd.It makes inspection tools that advanced packaging lines cannot run without, with each new line buying more equipment., Onto InnovationIt sells the measurement gear for advanced packaging, the exact capacity constraint driving the take.23%
- The machines that print and inspect chips have multi-year lead times, making them the hardest capacity to add in a chip shortage. · ASML HoldingIt is the only maker of EUV lithography machines that advanced chips require, with each taking years to build and ship., KLA CorporationIt dominates the inspection gear that catches defects as chips get harder to make, with every new fab needing more inspection capacity., Nova Ltd.It sells measurement tools that let fabs run the most advanced processes, a small but irreplaceable piece of every new line.19%
- Every new fab needs these tools in volume, so equipment makers benefit across the entire buildout. · Lam ResearchIt makes the etch and deposition tools at the core of every fab expansion, so capacity constraints drive consistent demand., Applied MaterialsIt touches nearly every step of chipmaking as a broad toolmaker, benefiting from strong equipment spending through the multi-year buildout., Axcelis TechnologiesIt owns ion implantation, a step every fab needs with few suppliers, so demand tracks total capacity added across the industry., Veeco InstrumentsIt sells specialized process tools that fill gaps others do not cover, benefiting from years-long broad equipment spending.19%
- High-bandwidth memory is the genuinely rationed part of AI chips, with few suppliers able to make it. · Micron TechnologyIt is the American maker of HBM stacked memory that every AI accelerator needs and that stays sold out because capacity takes years to add., RambusIt collects royalties on interface technology for fast memory, earning revenue without building capacity as HBM demand climbs.11%
- Every advanced chip must be tested and bonded, and that equipment is scarce in the same way as lithography tools. · TeradyneIt is one of two suppliers of chip test equipment, and test capacity is a gate that takes years to add., FormFactorIt leads in probe cards, the consumable-like hardware that every chip must touch before shipping, with demand tied to advanced chip volumes., Kulicke & SoffaIt makes bonding equipment used to assemble chips, including newer advanced packaging steps that get built out alongside capacity.10%
- Ultrapure chemicals and tool subsystems are essential supplies that every fab expansion must purchase. · EntegrisIt sells ultra-pure materials and handling gear that every running fab consumes daily, earning revenue on production volume and new capacity., MKS InstrumentsIt supplies subsystems inside the toolmakers' machines, riding the same equipment buildout one layer down the supply chain.8%
- Cash10%