Key Data: Global semiconductor market size (2025) approximately $792 billion · Q1 2026 sales $298.5 billion · 2026 forecast approximately $975 billion · Nvidia 2026 fiscal year revenue $215.9 billion · TSMC Q1 2026 net profit year-on-year growth 58%

1. Why Semiconductors Are More Important Than Ever

Semiconductors form the material foundation of artificial intelligence, cloud computing, smartphones, electric vehicles, and defense systems. Every time an AI model generates a response, chips complete billions of calculations in milliseconds. All of this is built on silicon.

Unlike the past cycles driven by single devices (such as phones or PCs), the current surge is supported by AI infrastructure spending. In 2026, the five major hyperscale cloud providers have committed to invest over $600 billion in AI infrastructure, a year-on-year increase of 36%.

This fundamental shift in demand structure is reflected in: high-value AI chips contributing about half of the industry's revenue, while accounting for less than 0.2% of total shipments. Semiconductors have evolved from components in consumer electronics to strategic assets for giants with a market value exceeding $10 trillion.

Educational note: A modern AI chip contains billions of transistors etched onto a silicon wafer the size of a fingernail. The "nanometer" value of a chip represents the size of these features; smaller nanometer values mean more transistors can be integrated on each chip, leading to greater computing power. The more advanced the node, the more difficult the required manufacturing process.

2. Four Core Tracks: Who Controls the Chip Blueprint?

Investors need to discern four key roles in the supply chain rather than mixing them up:

Designers (Architects): These companies design chips but do not manufacture them themselves. They own intellectual property and hand design blueprints to manufacturers. Because they do not operate factories, their profit margins are the highest in the tech field, usually exceeding 70%. Nvidia, AMD, Qualcomm, Apple, and Broadcom are all fabless companies.

Foundries (Manufacturers): Foundries conduct large-scale chip manufacturing in facilities called fabs, with construction costs for a single plant reaching $20 billion or more. TSMC accounts for approximately 70% to 72% of the overall global foundry market revenue, producing about 90% of the world's most advanced chips at 3nm and below. Every Nvidia Blackwell GPU, every Apple A-series processor, and every advanced AI accelerator from hyperscale cloud providers originates from TSMC's fabs in Taiwan. This concentration means the most critical technology supply chains globally operate within a geographical area comparable to Belgium and only 180 kilometers from mainland China.

Equipment Suppliers (Tool Providers): Without the machines to manufacture chips, chips cannot be made. ASML is the only company in the world capable of producing extreme ultraviolet lithography machines, essential for patterning chips with features at 7nm and below. Without ASML, the entire semiconductor technology roadmap would stall. Applied Materials, Lam Research, and KLA provide other critical tools required for deposition, etching, and inspection processes.

Memory Vendors (Storage Layer): High Bandwidth Memory (HBM) is placed next to GPUs in data center servers, delivering data to chips at speeds unattainable by any traditional memory. A lack of sufficient HBM means that even the fastest GPUs can only idle and wait. SK Hynix, Samsung, and Micron are the three main manufacturers. HBM sales are expected to surpass $30 billion in 2025, and total memory revenue is forecasted to reach approximately $200 billion in 2026.

3. Regional Dynamics: The Game and Reconstruction of Global Supply Chains

The semiconductor industry has become central to global economic security. In the current complex international environment, investors should focus on the deep restructuring of the supply chain and the spillover effects of policies:

Industry Reshoring and Localization: With multiple countries implementing semiconductor incentive bills, the geographical concentration of advanced processes is beginning to moderately disperse. The progress of TSMC's Arizona plant has become a benchmark for measuring "supply chain resilience," while early procurement agreements from giants like Apple signify a global shift from single-region advanced capacity to a multi-polar distribution.

Technology Access and Market Adaptation: Strict export controls are forcing multinational chip giants to reassess their revenue structures. Companies like Nvidia and ASML are maintaining global market share by developing customized products within compliance frameworks. This "compliance-driven innovation" is both a survival strategy for companies and reflects the rigid demand in global markets for high-performance computing power.

Reallocation of Computing Resources: In regions where access to computing power is limited, industry logic is shifting from "pursuing extreme computing power" to "optimizing computing efficiency." Leading domestic manufacturers and model developers are attempting to alleviate structural contradictions of supply and demand for computing power through software optimization, architectural innovations (such as integrating storage and computing), and deploying local substitutes in specific scenarios.

New Forms of Cross-Border Flow: In the inertia of globalization, the cross-border flow of computing resources is taking on more hidden and diversified forms. Policymakers are strengthening regulations by enhancing supply chain transparency and establishing chip traceability mechanisms. For investors, this means compliance risk has become a key dimension in evaluating the premium on semiconductor assets.

4. Key Companies Worth Researching

Nvidia (NVDA)

Nvidia is the most iconic company in the current semiconductor cycle. Its GPUs have become the default hardware for training AI models, and the CUDA software platform has built a software ecosystem moat more enduring than any hardware advantage.

Key Financial Data:

• Total revenue for FY 2026: $215.9 billion, a year-on-year increase of 65% (SEC Form 8-K, February 2026)

• Data center revenue: approximately $193.7 billion to $194 billion, year-on-year increase of 68%

• Q4 FY 2026 revenue: $68.1 billion, year-on-year increase of 73%

• Nvidia accounts for approximately 15.8% of the global semiconductor market revenue

• Forward P/E ratio: approximately 32 times

Core Issues of Interest to Investors:

• The Vera Rubin platform uses TSMC's 3nm process and incorporates 336 billion transistors, reducing inference costs by up to 10 times compared to Blackwell. AWS, Google Cloud, Microsoft Azure, and Oracle Cloud have all committed to deployment. Nvidia has secured most of the HBM4 supply from SK Hynix and Samsung.

• The depth of the CUDA moat exceeds the understanding of most investors. Millions of developers have written AI software based on CUDA; switching to competitor chips means rewriting years of accumulated code, causing significant migration friction.

• The development of internal custom chips by Google, Amazon, and Microsoft to reduce reliance on Nvidia poses the most significant long-term structural risk.

• Export controls to China represent one of the most significant implicit revenue pressures among current tech companies.

TSMC (TSM)

TSMC is both the most critical and geographically concentrated node in the technology supply chain globally.

Key Financial Data:

• 2025 revenue: approximately $122.5 billion to $122.9 billion, a year-on-year increase of about 31% to 36%

• Q1 2026 net profit: year-on-year growth of 58%, marking a historical high for the fourth consecutive quarter

• Q2 2026 revenue guidance: $39 billion to $40.2 billion

• FY 2026 capital expenditure: $52 billion to $56 billion

• In Q1 2026, 74% of wafer revenue came from advanced processes at 7nm and below

• Forward P/E ratio: approximately 24 times

Core Issues of Interest to Investors:

• TSMC is the most direct beneficiary of AI chip spending, regardless of which company benefits, representing an infrastructure investment in the entire AI theme rather than a directional bet on a specific winner.

• Geopolitical risk premiums explain the valuation discount of TSMC relative to Nvidia and Broadcom, despite its revenue growth rate being comparable or even stronger than the two. Investors must actively judge whether the 24 times forward P/E ratio reasonably reflects the risks inherent in a scenario that has never occurred.

• The decentralization layout in Arizona is real but currently limited in scale. The second factory is expected to start 3nm production by the end of 2026, and the chip procurement agreement with Apple provides the first meaningful commercial validation.

ASML (ASML)

ASML is the only company in the world capable of producing EUV lithography machines. Without these machines, 7nm and smaller chips cannot be manufactured; without these chips, there is no advanced AI.

Core Issues of Interest to Investors:

• ASML's monopoly position in EUV is the culmination of decades of expertise in physics, optics, and precision mechanical engineering. No other company is close to developing similar equipment, and this moat cannot be replicated in the short term.

• Every new fab built globally, whether supported by the CHIPS Act, the Japanese semiconductor investment plan, or TSMC's expansion plan, represents demand for ASML's equipment.

• Export restrictions to China have compressed its addressable market, and as long as the current geopolitical environment remains unchanged, these restrictions will persist.

• Long-term order backlogs provide ASML with rare revenue visibility, as customers must place orders several years in advance, which is extremely rare among most tech companies.

AMD (AMD)

AMD is Nvidia's most substantial competitor in AI accelerators, benefiting from the same TSMC foundry relationship and attracting hyperscale cloud providers looking to diversify their supplier dependency.

Key Financial Data:

• MI308 downgraded version (exportable to China with approval) has quarterly sales of $390 million

• Data center GPU revenue guidance: 60% compound annual growth rate over the next five years

Core Issues of Interest to Investors:

• The bullish logic lies in the supply diversification demand of hyperscale cloud providers. No major tech company wants to rely entirely on a single chip supplier, and Nvidia's market dominance has structurally incentivized the introduction of AMD as a second supplier.

• AMD's ROCm software platform is its most crucial challenge. Although it has made significant progress, it still lags behind CUDA in developer adoption rates. Bridging the software gap is more important than closing the hardware gap.

Broadcom (AVGO)

Broadcom specializes in designing custom AI accelerators (ASICs) for hyperscale cloud providers, which are chips optimized for specific workloads rather than general GPUs. The TPUs used throughout Google's AI product ecosystem are chips designed by Broadcom.

Key Financial Data:

• AI semiconductor revenue for FY 2026 is expected to exceed $30 billion

• Forward P/E ratio: approximately 41 times, the highest among major semiconductor companies

Core Issues of Interest to Investors:

• As hyperscale cloud providers expand AI deployment scales, custom chips optimized for specific workloads will become increasingly attractive. Broadcom's strong and stable relationships with Google and Meta place it in a leading position in the custom chip sector.

• The 41 times forward P/E ratio requires Broadcom to maintain strong execution. Any slowdown in custom chip orders from hyperscale cloud providers would have a significant impact at this valuation level.

SK Hynix

SK Hynix leads the HBM market with approximately 53% to 62% market share. Its HBM3e is the memory standard for Nvidia's Blackwell GPU, and HBM4 will be integrated into Nvidia's Rubin platform, for which Nvidia has secured most of the HBM4 supply.

Core Issues of Interest to Investors:

• HBM is a true bottleneck for AI chip deployment. Even if Nvidia delivers every GPU on time, without enough HBM, these GPUs cannot operate at full capacity, giving SK Hynix extraordinary pricing power in the current wave of AI infrastructure development.

• SK Hynix is listed on the Korean stock exchange and can be accessed through Korean brokerage accounts, select international brokerages, or indirectly through semiconductor ETFs.

• Memory has historically exhibited strong cyclicality. Although HBM has a certain natural barrier against oversupply due to special manufacturing process requirements, investors still need to understand the cyclical risks associated with the memory sector.

5. Semiconductor ETFs

SMH — VanEck Semiconductor ETF

The most widely used semiconductor ETF, with assets under management (AUM) of approximately $46 billion to $47 billion, holding 26 companies covering chip designers, foundries, equipment manufacturers, and memory producers. Major holdings: Nvidia approximately 19.4%, TSMC approximately 11.6%, Broadcom approximately 7.7%. Management fee rate: 0.35%. Widely regarded as the most efficient single tool to cover the entire supply chain of AI semiconductors.

SOXX — iShares Semiconductor ETF

The closest competitor to SMH, holds 30 companies, with long-term historical returns roughly on par with SMH. Management fee rate: 0.35%. As of 2025, five-year return approximately 140%.

SOXQ — VanEck PHLX Semiconductor ETF

Covers sectors roughly comparable to SMH and SOXX but with significantly lower management fee rates. Management fee rate: 0.19%, the lowest among major semiconductor ETFs, making it the optimal choice for cost-conscious investors seeking similar sector exposure.

Educational note: When comparing ETFs, attention should be given to the weighting construction method. SMH uses a capped market capitalization weighting approach to ensure Nvidia does not become overly concentrated. Understanding how ETFs are constructed helps grasp what one actually holds and how performance may vary during sector rotations.

6. Key Risk Warnings for 2026

AI Concentration Risk. The entire industry has put all its eggs in the AI basket. If spending on AI infrastructure slows due to underwhelming monetization, geopolitical shocks, or breakthroughs in efficiency, the impact on semiconductor revenue will be direct and immediate. Deloitte has clearly listed this as a core risk even against the backdrop of record industry revenues.

Geopolitical and Supply Chain Risks. TSMC produces approximately 90% of the world's most advanced chips in Taiwan. Any form of disruption to manufacturing operations in Taiwan would have a real impact on the entire global tech industry that is difficult to overstate. The decentralization layout in Arizona is progressing, but shifting the manufacturing focus truly away from Taiwan will take years.

Uncertainty of Export Control Policies. U.S. semiconductor export controls are influenced by political factors, presenting policy change risks. The current administration has maintained some controls while easing other restrictions, including rescinding AI diffusion rules from the Biden era. Future policy decisions may open new markets for U.S. chip companies or close existing channels.

Memory Cyclicality Risks. Driven by demand from AI, consumer memory prices increased by approximately four times between September and November 2025, with expectations for further rises of up to 50% by early 2026. Deloitte warns that expanding memory capacity may trigger oversupply and price collapse by late 2026 or 2027. Markets that have overshot in the upward cycle often overshoot in the downward cycle as well.

Valuation Risks. Nvidia's approximately 32 times and Broadcom's approximately 41 times forward P/E ratios embed exceedingly high growth expectations. A quarterly revenue miss, downward guidance revision, or market sentiment shift can trigger significant stock price declines even when core operations remain robust.

7. Key Catalysts to Watch

Trillion-Dollar Milestone. Semiconductor sales reached $298.5 billion in Q1 2026, making the annual target of $975 billion to $1 trillion realistic. Whether the momentum can be maintained in the second half or if AI spending slowdown leads to weakness at year-end is the core issue of greatest concern for the sector.

TSMC Arizona Plant Capacity Ramp-Up. The second Arizona factory is set to initiate 3nm chip production by the end of 2026. Yields and output will determine the pace at which the U.S. can reduce dependency on Taiwanese manufacturing; Apple's chip procurement agreement provides initial meaningful commercial validation.

Nvidia Vera Rubin Platform Deployment. The promise of a 10-fold reduction in inference costs is Nvidia's most significant product milestone. Successful deployment by hyperscale cloud providers will substantially extend Nvidia's data center revenue growth curve; any delays or performance issues pose severe negative catalysts.

AMD Market Share Progress. AMD's MI350 and MI400 products are expected to launch in 2026, testing whether improvements in its ROCm software are sufficient to attract large-scale deployments from hyperscale cloud providers, rather than being limited to the current pilot project phase.

Memory Pricing and HBM4 Supply. The integration of HBM4 with Nvidia's Rubin platform creates new demand pull. Tracking SK Hynix's HBM4 production yield and the progress of Samsung and Micron in HBM4 product certification will be key signals for evaluating memory price dynamics in 2027.

Research Framework for This Sector:

• Investors seeking the highest confidence exposure to AI chips will focus on Nvidia, accepting the risks embedded in current valuation levels and export control revenue constraints.

• Investors seeking exposure to AI infrastructure while reducing individual stock concentration risks will study SMH or SOXX for complete supply chain coverage.

• Investors who believe TSMC's geopolitical discount is too pronounced compared to its ongoing decentralization efforts may find its lower valuation multiples relative to growth rates worthy of deeper investigation.

• Investors looking for exposure to the most defensible parts of the supply chain will focus on ASML, as every new fab built anywhere creates demand for its equipment.

The demand is real, and the growth is extraordinary. The risks, including geopolitical concentration, AI demand dependency, memory cyclicality, and valuation, are equally real. Only investors who understand these four dimensions can evaluate this sector with the clarity and depth it requires.

BIT (formerly Matrixport) has seen its user assets under management (AUM) exceed $200 million since launching its U.S. stock business in February 2026. Driven by AI, the U.S. stock market continues to attract attention from global investors. Leveraging over seven years of institutional service experience and regulatory compliance, BIT successfully bridges the gap between digital assets and traditional finance, helping investors quickly seize investment opportunities.

Data as of May 2026. Data sources include: WSTS, global semiconductor market final data for 2025 and fall forecast from March 2026. SIA, global annual semiconductor sales for 2025, February 6, 2026. SIA, Q1 2026 global semiconductor sales data, May 4, 2026. Omdia, semiconductor market projected to surpass $830 billion in 2025, March 2026. Deloitte Insights, 2026 semiconductor industry outlook, February 2026. SEMI, 300mm wafer fab forecast report. Nvidia, SEC Form 8-K FY 2026 financial report, February 25, 2026. TSMC, Q1 2026 financial report and Q2 guidance, April 2026. LKS Brothers, Analysis of the China-Taiwan chip war 2026, May 2026. Lawfare, Congress enters the chip battlefield, March 2026. U.S. Congressional Research Service (CRS), U.S. Export Controls on China: Advanced Semiconductors. Chatham House, Analysis of AI Export Controls, April 2026. Counterpoint Research (cited in Dataconomy), TSMC foundry market share Q3 2025, December 2025. FinancialContent, In-depth analysis of TSMC, December 2025. Gartner, 2025 semiconductor manufacturers market share. TECHi, Analysis of Nvidia's Vera Rubin, April 2026.

Disclaimer: This material is for reference only and does not constitute investment advice or an offer. Investment involves risks, and security prices can fluctuate significantly. Investors may lose all or part of their principal, and past performance does not represent future performance.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。