An Introduction

There are 6 sub-segments in the AI hardware (semiconductor/computer chip/wafer) segment and they are tracked below as to their performances in July in 6 similarly focused model portfolios along with their constituents and the primary reasons contributing to the portfolio price changes.

What Is the Semiconductor Value Chain?

The first 4 stages (involved in the exclusive production and distribution of semiconductors) are referred to as the semiconductor value chain and below is how each stage (segment) performed in July, the constituents in each, and the primary catalyst(s) that contributed to the price change:

1. The Pure-Play EDA Software Chip Design Model Portfolio: UP 23.5% in July

• Focus: design of complex semiconductor chips using sophisticated electronic design automation (EDA) software.
• Constituents: Cadence Design Systems (CDNS); and Synopsys (SNPS).
• Primary Reason(s) for July Price Change: 
  • In May the U.S. imposed export restrictions on EDA software to China, disrupting revenue streams and shaking investor confidence but, in early July, a U.S.-China chip truce lifted those restrictions, allowing EDA firms to resume services to Chinese clients re-igniting growth prospects and triggering a sector-wide re-evaluation.

2. The Pure-Play Semiconductor Supplier Model Portfolio: DOWN 5.9% in July

• Focus: provide essential equipment for manufacturing chips such as lithography machines, etching, test and packaging equipment, automation and inspection systems and production materials such as chemicals, gases, wafers and packaging.
• Constituents: Applied Materials (AMAT); ASML Holding (ASML); Entegris (ENTG);  KLAC Corp. (KLAC); and Lam Research (LRCX).
• Primary Reason(s) for July Price Change:
  • ASML, a bellwether for the sector, issued a cautionary statement about uncertainty in its 2026 growth outlook due to potential U.S. tariffs and geopolitical tensions and this triggered a ripple effect across the industry, as ASML’s outlook is often seen as a proxy for broader semiconductor capex trends.

3. The Pure-Play Semiconductor Foundries Model Portfolio: UP 4.2% in July

• Focus: factories (called foundries in semiconductor jargon) concentrate all their efforts in the manufacture of chips based on the designs provided by other semiconductor companies.
• Constituents: GlobalFoundries (GFS); Taiwan Semiconductor (TSM); Tower Semiconductor  (TSEM); and United Microelectronics   (UMC).
• Primary Reason(s) for July Price Change: 
  • The rally was driven by a convergence of powerful industry trends -  growth in chiplet architectures, HBM memory integration, and 3D packaging plus explosive demand for AI chips, GPUs, and high-performance computing (HPC) solutions - and investor optimism.

4. The Pure-Play Outsourced Semiconductor Assembly and Test (OSAT) Model Portfolio: UP 1.0% in July

• Focus: assemble chips into finished semiconductor components, tests for defects and do the very specialized packaging of the chips for shipping.
• Constituents: Amkor Technology (AMKR) and ASE Technology (ASX).
• Primary Reason(s) for July Price Change: 
  • July was a tale of two OSATs: Amkor capitalized on AI momentum and strong execution, while ASE faced margin and geopolitical drag.

Summary

On average the 4 value chain segments were UP 2.6% in July.

In addition to the value chain segments the following 2 AI hardware segments performed as follows:

5. The Pure-Play Fabless Semiconductor Companies Model Portfolio: UP 2.8% in July

• Focus: manufacturers design and sell hardware devices and semiconductor chips themselves while outsourcing their fabrication (i.e. are fabless) to a specialized manufacturer.
• Constituents: Advanced Micro Devices (AMD);  Broadcom (AVGO); Marvell (MRVL); Monolithic Power   (MPWR);  Nvidia  (NVDA);  and Qualcomm (QCOM).
• Primary Reason(s) for July Price Change: 
  • ​​​​​​​July’s rally was powered by AI-driven demand, strong earnings, and strategic wins.by its constituents

6. The Integrated Device Manufacturer (IDM) Model Portfolio: DOWN 7.4% in July

• Focus: companies do everything themselves in house to control the entire production process.
• Constituents: Analog Devices (ADI); Infineon Technologies (IFNNY); Intel Corp. (INTC);  Microchip Technology (MCHP); Micron Technology (MU); NXP Semiconductors (NXPI);  STMicroelectronics (STM); and Texas Instruments (TXN).
• Primary Reason(s) for July Price Change: July’s performance reflected investor caution: ​​​​​​​
  • On one hand, 
    • IDMs benefited from strong demand for chips in EVs, autonomous systems, and industrial automation, especially analog ICs and MCUs.
  • On the other hand,
    • trade tensions and export controls - especially around China and advanced nodes - created volatility, and
    • specialized foundries like TSMC and fabless firms like Nvidia, outpaced IDMs in AI chip innovation, drawing away  investor attention,

Summary

On average, the above two segments were DOWN 1.1% in July.

Conclusion

The 27 constituents in the above 6 Model AI Hardware Stock Portfolios were UP 1.0% in July, on average. In comparison, the tradable iShares Semiconductor ETF (SOXX), with 35 constituents, was UP 0.5% in July.

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