AI Chokepoint Monopolies
Tal Morgenstern@talmorgenstern
−14.2%
since Oct 1
The idea
I believe AI turns compute into a strategic asset, and geopolitical fragmentation forces the West to rebuild the physical supply chain beneath the model layer. So I own the chokepoints: lithography and fab tools, packaging and memory bottlenecks, the power equipment that gates data center buildout, and critical materials like rare earths and tungsten. It's spread across five layers rather than one bet, with the largest, most dominant names carrying the most weight and smaller specialists sized as asymmetric positions.
What it owns
- The machines that make leading-edge chips come from a handful of firms no fab can route around. · ASML HoldingIt is the only company on earth that makes EUV lithography machines, and no leading-edge chip gets built without one., Taiwan Semiconductor ManufacturingIt makes nearly all of the world's most advanced chips and nobody else can do it at the same yield., KLA CorporationIt dominates the inspection and measurement tools that determine whether chips are coming out right, and yield gets harder at every node., Lam ResearchIt is one of two companies that can do the etch and deposition steps advanced chips and high-bandwidth memory require., Applied MaterialsIt sells the widest range of fab equipment, so it collects a toll on almost every new fab regardless of which chip wins., Nova LtdIt owns narrow measurement niches in chipmaking where it is effectively the only practical supplier.36%
- Advanced packaging and high-bandwidth memory are the tightest physical constraints on shipping AI accelerators. · Micron TechnologyIt is one of only three companies in the world making the high-bandwidth memory AI chips are stacked with., Amkor TechnologyIt is building the advanced chip-packaging capacity the United States currently lacks, including a plant in Arizona., Coherent CorpIt makes the optical parts that move data between AI chips inside data centers, and demand is outrunning supply., Onto InnovationIt measures and inspects the advanced packaging steps behind AI chips, sitting in a narrow duopoly-like spot in the market., Camtek LtdIt is one of two companies that inspect advanced chip packages, the step that decides whether stacked AI chips actually work.20%
- Turbines, transformers, and switchgear from a tight oligopoly set the pace at which AI data centers can be energized. · GE VernovaIt is one of three companies making the large gas turbines data centers now buy to get power years faster than the grid can deliver., Vertiv HoldingsIt makes the power distribution and cooling gear inside AI data centers where liquid cooling for dense racks is becoming mandatory., Eaton CorporationIt sells the transformers and switchgear every data center and grid hookup needs, with lead times stretching out for years.19%
- Rare earths, tungsten, and ultra-pure materials handling are the raw chokepoints China can weaponize and the West must rebuild. · MP MaterialsIt is the only integrated rare earth producer in the United States, operating from mine to magnets., EntegrisIt makes the ultra-pure containers, filters, and chemicals that chips cannot be manufactured without., Almonty IndustriesIt operates one of the very few tungsten mines outside China, set to be a major non-Chinese source of a metal supply chains cannot skip., USA Rare EarthIt is a pre-revenue bet on domestic heavy rare earths and magnet-making, the part of the chain where the West has essentially zero capacity.17%
- Cash8%