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Introduction

The AI hardware segment is comprised of 7 distinct sub-segments (see Saturday's article here for an overview) of which the MunAiMarkets model Pure-Play Semiconductor Supplier Portfolio is the second sub-segment in the 4 stage semiconductor value chain. This Portfolio consists of the 5 largest companies that supply:

• essential equipment such as lithography machines, etching, test and packaging equipment, automation and inspection systems and
• production materials such as chemicals, gases, wafers and packaging.

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. 

The Pure-Play Semiconductor Suppliers Model Portfolio: UP 15.8% in June; UP 23.6% YTD

Below are the performances of the constituents in the portfolio in June (month ending June 27th), in descending order, and YTD, and the reasons for the changes in the stock prices of each:

1. Lam Research Corporation (LRCX): UP 20.3% in June; UP 34.6% YTD
   • Focus: is a global supplier of innovative wafer fabrication equipment which allows customers to build smaller and better performing devices. In fact, today, nearly every advanced chip is built with Lam technology.
   • Market Capitalization: $124B
   • Reasons For Price Change:
     • Excellent Q3 Earnings: Revenue was up 8% sequentially with strength across Foundry (48% of revenue), Memory (43%), and Logic (9%). Regional growth was also solid, with China contributing 31%, and Taiwan and Korea each at 24% conveying a sign of broad-based demand.
     • Analyst Upgrade and Price Target Hike: A brokerage firm raised its stock price target by 20% citing strong financials and upside from new product revenue and market share gains and maintained its "Buy" rating, both of which helped boost investor confidence and attract institutional flows.
     • Major Growth In Components of Business: Its Customer Support Business Group revenue is UP 20% YoY and growing 1.5x faster than the wafer fab equipment market and its new licensing deals via its Semiverse Solutions group has reinforcing Lam’s leadership in virtual chip development.
2. Entegris (ENTG): UP 19.8% in June; DOWN 16.8% YTD
   • Focus:  a leading supplier of advanced materials and process solutions for the semiconductor and other high-tech industries.
   • Market Capitalization: $12.5B
   • Reasons For Price Change: 
     • Rebound from Oversold Levels: As of the end of May the stock was down 31.2% YTD making it a prime target for bargain hunters, especially as technical indicators like market breadth patterns suggested a high probability of short-term upside.
     • Strong Fundamentals and Margin Stability: Despite the stock’s earlier slump, Entegris reported a 46% gross margin in its Q1 quarterly report signaling underlying strength, a net profit margin of 9.57% and its competitive P/E ratio (~35x) made it attractive relative to peers.
     • Strategic Shift In Management: The current CEO of 13 years is retiring with David Reeder stepping in with investors welcoming the move as a fresh chapter for the company, in hopes that Reeder can drive operational efficiency and long-term growth.
3. KLAC Corporation (KLAC): UP 17.6% in June; UP 41.2% YTD
   • Focus: provides advanced process control and process-enabling solutions for manufacturing wafers and reticles, integrated circuits, packaging and printed circuit boards.
   • Market Capitalization: $118B
   • Reasons For Price Change:
     • Strong Q3 Financials and Upbeat Outlook: Q3 2025 revenue beat expectations and analysts project Q4   revenue to be up nearly 20% YoY, reinforcing confidence in the company’s growth trajectory.
     • Analyst Upgrades and Price Target Hikes: Analysts raised price targets citing strong execution and upside from new product cycles and reiterated their "Buy" ratings.
     • Increase In AI and Foundry Equipment Demand: Foundries like TSMC and Intel are ramping up advanced node production, and KLA’s tools are essential for yield optimization and defect detection.
4. Applied Materials (AMAT): UP 16.9% in June; UP 12.7% YTD
   • Focus: offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of wafers; wafer processing technologies and solutions and semiconductor software solutions to accelerate yield learning rates and reduce production risk.
   • Market Capitalization: $147B
   • Reasons For Price Change:
     • Strong Financials and Margin Expansion: Despite headwinds from China, AMAT posted 7% year-over-year revenue growth in Q2 and gross margins hit 49.2%, the highest since 2000, driven by strength in DRAM and logic equipment sales.
     • Analyst Upgrades: Analysts upgraded AMAT from “Underweight” to “Equal Weight,” citing improved earnings visibility and AI tailwinds.
     • Institutional Support: institutional investors began rotating into capital equipment names with strong AI exposure.
     • AI Infrastructure Boom: As hyperscalers ramped up investment in AI data centers, demand for gate-all-around transistors, high-bandwidth memory, and advanced packaging—areas where AMAT excels—skyrocketed.
5. ASML Holding (ASML): UP 8.0% in June; UP 14.8% YTD
   • Focus: has a monopoly on EUV lithography essential to making physical chips out of silicon wafers. It has also transforming how microchips are made with a High NA, which stands for high numerical aperture, which is the world’s most advanced and expensive chipmaking machine.
   • Market Capitalization: $311B
   • Reasons For Price Change:
     • Strong Fundamentals and Margin Strength: ASML’s Q1 2025 revenue was in line with guidance, while gross margin exceeded expectations at 54%, reinforcing its financial strength.
     • AI Demand Surge: ASML’s extreme ultraviolet lithography systems are essential for producing cutting-edge chips used in AI applications and, as demand for AI infrastructure soared, investors bet big on ASML’s dominant position in the chipmaking supply chain.
     • CapEx Boom: Semiconductor foundries like TSMC and Intel announced major capital expenditure increases, which directly benefit ASML’s order backlog and revenue outlook.
     • Strategic Expansion: The company is investing in new facilities in the Netherlands, Arizona, and Taiwan to meet rising demand, signaling long-term confidence.

Conclusion

The MunAiMarkets Pure-Play Semiconductor Suppliers Model Portfolio was UP 15.8% in June and is now UP 23.6% YTD  

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