Chips Are the New Oil
nazih@lol
−10.7%
since Oct 1
The idea
I think chips are the new oil, strategic, scarce, and essential to everything, so I built exposure across the whole supply chain instead of betting on one layer. Right now I am tilted toward the tightest part of this upcycle, equipment makers and the top AI chip designers, with foundry and memory as a solid core. Materials, design software, and packaging sit smaller as ballast, and I keep some cash on hand to add if this volatile group sells off. This is a multi-year view, not a quick trade.
What it owns
- Only a handful of companies build the machines every fab needs, and their order books are the chokepoint. · ASML HoldingIt is the sole manufacturer of lithography machines needed for advanced chip production, holding an unmatched monopoly on this essential equipment., Applied MaterialsIt supplies the widest range of chipmaking equipment and benefits whenever fabs expand, riding record order books across the industry., Lam ResearchIt makes the etch and deposition tools that every advanced fab requires, with demand running at elevated levels this cycle., KLA CorporationIts inspection tools help fabs catch defects, and more complex chips demand higher inspection intensity to protect yields.26%
- The companies designing the AI and compute chips that are driving this upcycle's demand. · NVIDIAIts AI accelerators are the scarcest and most demanded layer of the supply chain, with demand consistently outrunning production capacity., BroadcomIt builds custom AI chips for major cloud companies, offering a second path into the same supply chain scarcity., Advanced Micro DevicesIt is the main challenger in AI accelerators and is actively expanding its position in the artificial intelligence chip market., QualcommIt designs chips for phones and edge devices, capturing demand from the part of the supply chain closest to consumers.23%
- The plants that actually make the chips, where scarcity shows up as pricing power. · Taiwan SemiconductorIt is the only foundry capable of manufacturing leading-edge chips at scale, making it the tightest point in the entire supply chain., Micron TechnologyIt produces the high-bandwidth memory that AI chips require, with supply sold out well in advance and capacity severely constrained., GlobalFoundriesIt is a US-based foundry positioned to benefit from government efforts to reshore chip production for national security., SK IncIt is the parent of SK Hynix, the current leader in high-bandwidth memory and one of the tightest suppliers in the chain.21%
- The wafers, chemicals, and design tools every chip depends on, steadier businesses that ride the same wave. · Cadence Design SystemsIt is the other half of the design software duopoly alongside Synopsys, collecting fees from growing chip design activity., EntegrisIt supplies the ultra-pure materials and handling systems that fabs consume daily, a steadier component less dependent on any single winner., SynopsysIt provides the design software used to create the chips in this take, collecting a toll from the entire supply chain., LindeIt supplies the industrial gases that fabs depend on, a calm way to own the supply chain regardless of which chip wins.13%
- The step where AI chips get assembled and checked, currently one of the tightest bottlenecks in the chain. · Amkor TechnologyIt specializes in advanced packaging, one of the tightest bottlenecks in the chain since AI chips cannot ship without this step., TeradyneIt manufactures the machines that test chips before they ship, benefiting from higher chip volumes across the industry., CamtekIt provides inspection for advanced packaging, riding the same supply constraint as the packaging companies themselves.10%
- Cash7%