Technology thesis · Semiconductors & Chips
high conviction matureSemiconductors
ASML's EUV monopoly and TSMC's leading-edge lead stay unbreakable through 2027; the AI accelerator and HBM4 supercycle sets the cycle, while China stays a generation behind at the leading edge.
Position maintained continuously · last reviewed Jun 24, 2026
The thesis
State of the art (2026)
As of mid-2026 the industry is in a record AI-led supercycle: global sales hit $791.7bn in 2025 (+25.6%, per the SIA) and are tracking towards $1tn in 2026. TSMC's N2 (2nm) entered volume production in Q4 2025, with N2P following in H2 2026; Intel's 18A reached high-volume manufacturing in October 2025 on Panther Lake, though yields stay below profitable levels. SK hynix leads HBM4, taking roughly 70% of Nvidia's Vera Rubin allocation, with mass production slated for Q3 2026. ASML's EUV monopoly is intact and High-NA is ramping. Washington enacted a 25% Section 232 chip tariff in January 2026 alongside a US-Taiwan trade deal tied to $250bn of pledged US investment.
Core thesis
The semiconductor industry is bifurcating into US/allied and China-centric ecosystems. TSMC alone holds 90%+ of leading-edge capacity (roughly 95% of AI accelerators). Export controls have slowed but not stopped China – SMIC now produces 5nm-class (N+3) chips via DUV multi-patterning without EUV, at low yields and a cost premium. The AI demand surge sustains a structural deficit in 2nm-class logic, advanced packaging (CoWoS booked into 2028) and HBM4 through 2027. ASML’s EUV monopoly is the single most important chokepoint. Intel Ohio is pushed to 2030. The hardest constraints have shifted from chip design to electricity, advanced-packaging capacity, HBM and critical gases.
Materials crisis emerging
The Middle East escalation of early 2026 exposed how fragile the materials chain is. Strikes on Qatar’s Ras Laffan complex (28 Feb 2026) plus disruption around the Strait of Hormuz removed an estimated 30% of global semiconductor-grade helium within weeks, with spot prices roughly doubling; Ras Laffan repairs are flagged as multi-year. Bromine is similarly concentrated – Israel’s ICL holds roughly a third of global capacity and Jordan Bromine around a sixth – leaving etch and flame-retardant supply exposed to the same conflict zone. China’s controls on tungsten, gallium and germanium continue to raise costs for CMP, cutting tools and compound semis. The materials supply chain is as fragile as the equipment supply chain.
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Signal stack
Evidence stacked leading → lagging
Technology-native KPIs
Metrics that predict trajectory, tracked over time
Landscape map
Who builds what — and who depends on whom
Catalyst calendar
Dated events that will move the position
Technology roadmap
Milestones on the path to maturity
Watchlists
Companies, people and papers — each with a remove-by condition
Decision frameworks
The same call, framed for your desk
Thesis changelog
When our view changed, and why
Change our mind
3 disconfirming conditions
Comparable wave
The historical analogue on the S-curve
Common mistakes
What the market gets wrong right now
The rest is inside
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