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Twenty-six (26) stocks make up the six (6) categories (and portfolios) in our model AI Semiconductor Stocks Portfolio. This article presents the performances of each sub-portfolio and of each of their constituents for the week ending December 5th.

The first 4 of the 6 sub-portfolios consists of those categories that account for the 4 specific steps in the manufacturing of semiconductors, namely:

1. the design of complex semiconductor chips using sophisticated electronic design automation (EDA) software, i.e. Our Model Pure-Play EDA Software Chip Design Stocks Portfolio;
2. the supply of equipment and material necessary to build and operate a semiconductor foundry, i.e., Our Model  Pure-Play Semiconductor Supplier Stocks Portfolio;
3. the foundries that fabricate the chips based on the designs provided by other semiconductor companies, i.e. Our Model Pure-Play Semiconductor Foundry Stocks Portfolio; and 
4. the companies that assemble chips into finished semiconductor components, test for defects, and provide the specialized packaging  necessary for shipping the chips around the world, i.e., Our Model Pure-Play Outsourced Semiconductor Assembly & Test Stocks Portfolio.

The other two categories are those major companies that:

1. design and sell hardware devices and semiconductor chips themselves while outsourcing their fabrication (i.e., are fabless) to a specialized manufacturer; i.e., Our Model Pure-Play Fabless Semiconductor Stocks Portfolio; and
2. do everything themselves in-house to control the entire production process from beginning to end i.e., Our  Model  Integrated Device Manufacturer Stocks Portfolio.

Our 6 Model AI Semiconductor Portfolio Category Performances

All 6 portfolios advanced last week (see below in descending order) by an average of 4.6% with only one (1) of the constituents, Broadcom, declining:

1. Our Model Pure-Play Outsourced Semiconductor Assembly & Test Stocks Portfolio: UP 11.9%
   • Constituents: 
     • Amkor Technology (AMKR) is positioned as a U.S.-friendly OSAT partner, benefiting from reshoring and CHIPS Act incentives; and 
     • ASE Technology (ASX) is more diversified, with EMS capabilities and a stronger presence in consumer electronics and networking.
2. Our Model Pure-Play EDA Software Chip Design Stocks Portfolio: UP 10.2%
   • Constituents: 
     • Cadence Design Systems (CDNS) concentrates on system-level integration, packaging, and simulation-heavy workflows; and 
     • Synopsys (SNPS) is a full-stack chip design, IP licensing, and software security provider.
3. Our Model Integrated Device Manufacturer (IDM) Stocks Portfolio: UP 7.8% 
   • Analog Devices (ADI) reported a 25% YoY jump in revenue driven by EV battery management systems and industrial automation; 
   • Infineon Technologies (IFNNY); NXP (NXPI), and STMicroelectronics (STM) are key suppliers for ADAS, powertrain electrification, and vehicle connectivity, and EV penetration and silicon content per vehicle continues to rise, lifting analog and embedded chip demand.
   • Intel's (INTC) foundry push and AI accelerator roadmap are gaining traction; 
   • Microchip Technology (MCHP) and Texas Instruments  (TXN) saw renewed demand in factory automation, smart grid, and medical devices; and
   • Micron Technology (MU) benefited from rising demand for HBM and DDR5 memory in AI workloads.
4. Our Model Pure-Play Semiconductor Supplier Stocks Portfolio: UP 3.7%
   • Constituents: 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.
     • Applied Materials (AMAT) is a major supplier of deposition; 
     • ASML Holding (ASML)  is a major supplier of lithography machines;
     • KLAC Corp. (KLAC) provides metrology; and 
     • Lam Research (LRCX) supplies etching equipment.
5. Our Model Pure-Play Semiconductor Foundry Stocks Portfolio: UP 2.9%
   • ​​​​​​​Constituents: 
     • GlobalFoundries (GFS) and United Microelectronics (UMC) focus on fabricating mature nodes (12nm–90nm and 28nm-90nm, respectively); 
     • Taiwan Semiconductor (TSM) specializes in fabricating leading-edge (3nm, 5nm, 7nm) nodes as well as mature nodes; and
     • Tower Semiconductor (TSEM) focuses on analog, RF, power, and mixed-signal nodes for the automotive, industrial, and medical markets.
6. Our Model Pure-Play Fabless Semiconductor Stocks Portfolio: UP 2.2%
   • ​​​​​​​​​​​​​​Constituents: Advanced Micro Devices (AMD); Broadcom (AVGO); Marvell (MRVL); Monolithic Power (MPWR); Nvidia  (NVDA); and Qualcomm (QCOM). All six companies are deeply embedded in the AI hardware stack - from GPUs and NPUs to networking ASICs and power management ICs.

​​​​​​​Summary

The above 6 sub-portfolios in our model AI Semiconductor Stocks Portfolio were UP 4.6%, on average, last week while the Nasdaq was only UP 1.0% and the S&P 500 by only 0.3% so it begs the question, "What bubble?"

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