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What is the Semiconductor Value Chain?

 The AI hardware sector consists of 8 distinct sub-segments of which 4 are directly involved in the semiconductor value chain that refers to the 4 stages involved in the production and distribution of semiconductor devices involving multiple companies, each with their own specialized roles.

The 4 stages in the creation of semiconductor wafers (chips) are:

1. software design (read Custom Design Software (EDA) Stocks Relatively Unchanged In May; Down Slightly YTD). Focus: involved exclusively (i.e. pure-play) in the custom design of complex semiconductor chips using sophisticated electronic design automation (EDA) software.

2. production equipment/material supplies (read Model Pure-Play Semiconductor Supplier Portfolio: UP 7.6% In May; UP 8.6% YTD); Focus: provide essential equipment for manufacturing chips such as lithography machines, and production materials such as chemicals and gases.

3. production - called foundries in industry jargon (The Pure-Play Semiconductor Foundries Model Portfolio: UP 13% in May; DOWN 7% YTD); Focus: concentrate all their efforts in the manufacturing (fabrication (or fab) in industry jargon) of chips based on the designs provided by other semiconductor companies.

4. preparation for shipping (The Pure-Play Outsourced Semiconductor Assembly and Test (OSAT) Model Portfolio: DOWN 7.7% in May; DOWN 23.4% YTD); Focus: assemble chips into finished semiconductor components, tests for defects and do the very specialized packaging of the chips for shipping.

What Is A Semiconductor?

A semiconductor (aka computer chip or wafer) is a material that has an electrical conductivity value falling between that of a conductor, such as copper, and an insulator, such as glass. In many cases their conducting properties are altered by introducing impurities (doping) into the crystal structure and when two differently doped regions exist in the same crystal, a semiconductor junction is created. Connecting the two materials causes creation of a depletion region near the boundary, as the free electrons fill the available holes, which, in turn, allows electric current to pass through the junction only in one direction. and is the basis of diodes, transistors, and most modern electronics. Silicon is a critical element for fabricating most  electronic circuits and is the most common semiconductor. After silicon, gallium arsenide is the second-most common semiconductor and is used in laser diodes, solar cells, microwave-frequency integrated circuits, and others.

The Pure-Play Outsourced Semiconductor Assembly and Test Model Portfolio: DOWN 7.7% in May; DOWN 23.4% YTD 

There are only 2 pure-play outsourced semiconductor assembly and test companies trading on U.S. stock exchanges and they are outlined below as to their stock performances in May, in descending order, and YTD, and any recent news, analysis and/or commentary on their current situation and future prospects, as follows:

• ASE Technology Holding Co. (ASX): DOWN 5.9% in May; DOWN 6.9% YTD
  • ASE Technology Holding Co., Ltd. Reports Its Unaudited Consolidated Financial Results for the First Quarter of 2025
  • ASE Announces Package Technology That Reduces Power Loss by 3x for Next-Generation AI and HPC Applications
• Amkor Technology Inc. (AMKR): DOWN 8.7% in May; DOWN 29.9% YTD
  • Amkor Technology Reports Financial Results for the First Quarter 2025
  • Amkor Technology Analysts Slash Their Forecasts After Q1 Earnings

Summary

The Portfolio is DOWN 7.7% MTD and is now DOWN 23.4% YTD.

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Model Pure-Play Semiconductor Supplier Portfolio: UP 7.6% In May; UP 8.6% YTD
Custom Design Software (EDA) Stocks Relatively Unchanged In May; Down Slightly YTD
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