Semiconductor ETFs are making history. Assets under management (AUM) in the semiconductor ETF, $SMH, are up to $70 billion, near its highest level since July. At the same time, AUM in the semiconductor ETF, $SOXX, are up to $46 billion, near its highest on record. This comes as $SMH's AUM has grown more than +500% since the start of 2024, while $SOXX's AUM has grown +360%. By comparison, AUM in the tech software ETF, $IGV, has risen +91% over the same period, to $13.5 billion. As a result, the two semiconductor ETFs now hold ~$116 billion in assets combined. The semiconductor trade is incredibly hot.

Semiconductor fwd P/E has been tracking inverse oil prices over the past year. Almost perfectly. ⬜️ $SOXX Fwd P/E Multiple 🟦 Inverse oil price Since the Hormuz shock in Feb: As oil prices drop, semiconductor valuations rise. As oil prices rise, semiconductor valuations drop.

Semiconductor equipment subsystem lead times: Deposition-equipment component lead times ~4 → up to 10 months. Laser-process Japanese parts up to 40 months, no premium pulls them forward. Packaging-tool components lead times up +~50%. Fab tool deliveries ~2×. Drag already flagged on Samsung Pyeongtaek and SK Yongin.

Semiconductor Supply Chain News Roundup, September 14 1. Samsung Electro-Mechanics submitted TGV module samples for its glass substrate to TSMC for reliability verification two to three months ago, but the evaluation schedule has reportedly been delayed by more than a month. As a result, the ordering schedule for some TGV related equipment that Samsung Electro-Mechanics had been preparing with its suppliers is understood to have been pushed back from the original plan. Samsung Electro-Mechanics had originally targeted glass substrate mass production around 2027, building a pilot line and running customer evaluations. Earlier this year it revised the target for full operation to 2028, but with reliability verification and mass production process stabilization taking longer than expected, equipment investment is also not proceeding as originally planned. 2. A senior executive at Samsung Electro-Mechanics recently conveyed to employees a policy of moderating the pace of investment in the glass substrate business for the time being. Rather than concentrating large scale investment on glass substrates, the direction is to prioritize investment in existing package substrate businesses such as FC-BGA and in high value added businesses with confirmed demand, such as MLCCs for AI and automotive applications. Looking at the current state of Samsung Electro-Mechanics' glass substrate work, yields in the initial process of forming holes in the glass through laser processing and etching have risen to 90% or above, but in the subsequent processes of metallizing and filling the holes with copper, yields reportedly drop to around 30%. After that, additional steps are still required, including chemical mechanical polishing (CMP), which flattens the substrate surface using chemical reactions and mechanical force, as well as cutting, and by that point yields become far too low. That said, some argue that this adjustment itself should not be read as a delay in the glass substrate business as such. The market has not yet opened in earnest, and the actual customers, global semiconductor companies, are still carrying out their own preparation and validation for glass substrate adoption. 3. SK hynix is moving to lock in its equipment supply chain. The approach is to share medium to long term demand forecasts earlier than before so that suppliers can secure in advance the equipment and key components needed for future investment. Previously, SK hynix shared investment plans with equipment makers covering about six months, or at most about a year. Going forward, it plans to present demand not only for next year but also for the year after, allowing suppliers to plan their production capacity and component procurement ahead of time. 4. SEMES, Samsung Electronics' semiconductor equipment subsidiary, is firming up the component supply chain for the hybrid bonder to be applied to next generation high bandwidth memory (HBM). Specifically, SEMES has signed a supply agreement with the Korean subsidiary of HIWIN, a Taiwanese motion control company, for the Single Axis Stage, a precision drive component to be used in the hybrid bonder, and is currently conducting tests. HIWIN's product is being validated against SEMES' hybrid bonder specifications, and testing is understood to be in its final stages. The single axis stage is a drive component that supports precise position control in the hybrid bonder. Because a hybrid bonder must align and bond chips at extremely fine pitches, it requires a high level of positional accuracy. SEMES is said to be conducting equipment testing after signing a supply contract with a customer for a D2W (Die to Wafer) hybrid bonder for HBM. The industry views that customer as its parent company, Samsung Electronics. 5. PCB orders for SOCAMM2 destined for major memory makers including Samsung Electronics and SK hynix are growing beyond the levels planned at the start of the year. The increase in orders for DDR5 RDIMM PCBs is especially pronounced. Compared with the order plans projected at the start of the year, the upward revision for RDIMM is understood to be even larger than that for SOCAMM2. An industry source cited by the press said, "For SOCAMM2, order volumes are growing beyond what we expected at the start of the year, and we expect them to increase further into the second half," adding, "RDIMM orders are rising even more steeply relative to the beginning of year plan than SOCAMM2." The source also noted, "Some customers have already begun discussing advance orders for next year's volumes."

Semiconductors $SMH are starting to trend lower relative to software $IGV for the first time since May 12, 2025. The longest ever streak above the 200 DMA for the ratio. After such extended streaks, semiconductors tended to struggle relative to software.