Overview Of The Semiconductor Capital Equipment Industry

The remaining 15% of the semi-cap industry CAPEX comprises the“back end” of chip production which includes testing wafers, cutting the wafers into chipsand packaging the chips. The primary 2 components of the back end where semi-cap companies also compete can best be described as test and packaging.

There are 3 categories of chip manufacturers that buy equipment: logic, memory, and foundry. Here is what each of these categories represents:

  • Logic represents companies manufacturing their own logic chips in their own factories.

  • Memory represents companies manufacturing their own memory chips in their own factories.

  • Foundries are companies with large fabs that produce multiple chips for multiple companies who do not want to manufacture their own. Taiwan Semiconductor Manufacturing Company is the largest foundry in the world.

Semi-cap companies reference these 3 types of customers in their financials and other investor materials.


I hope you found this overview of the semi-conductor capital equipment industry helpful. Semi-cap companies are the behind-the-scenes producers of the tools used to create the building blocks that underpin the new technologies of our modern era. They provide a unique outlet for investing in the technology sector. 

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Disclosure: KLA-Tencor is a holding in client portfolios. I have an economic interest in the performance of the stock. The above True Vine Letter is an excerpt from a recent more

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Barry Hochhauser 4 months ago Member's comment

This is great. I've often asked "what are these guys talking about?!"

Joshua Hall 4 months ago Author's comment


I knew I wasn't the only one!

Susan Miller 4 months ago Member's comment

You aren't!

Harry Goldstein 5 months ago Member's comment

Impressive stuff.

Joshua Hall 4 months ago Author's comment


Thanks for the kind word.