US Semiconductors: State of the Union: debating open-source disruption, memory durability

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US Semiconductors: State of the Union: debating open-source disruption, memory durability

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US Semiconductors

State of the Union: debating open-source

disruption, memory durability

Industry Overview

Summer reset, Fall rally could provide enhanced oppty. 06 July 2026

After an 88% surge in Q2, the SOX has corrected 11% in Q3, consistent with its Equity

historically weakest seasonal period. We view the current pullback as a healthy reset, not United States

a structural change in AI demand. Near-term leadership may favor lower-beta names Semiconductors

such as NVDA, TXN, ADI, CDNS and SNPS, but history suggests periods of consolidation Vivek Arya

are often followed by renewed momentum as investors regain confidence in the next leg Research Analyst

of earnings and capex growth. Ongoing consolidation announcements (TXN/Silicon BofASvivek.arya@bofa.com

Labs, ON/Synaptics) could be another durable theme in the fragmented analog sector. Duksan Jang

Research Analyst

$1.5T Cloud Capex Keeps the AI Cycle Intact BofASduksan.jang@bofa.com

We expect global cloud and AI infrastructure capex to approach $1.5T by 2027, up Michael Mani

another 40-50% YoY, supported by continued token growth, agent adoption and supply- Research Analyst

BofAS

constrained infrastructure. Importantly, hyperscaler focus remains on maximizing michael.mani@bofa.com

utilization and growth rather than optimizing depreciation. As visibility into 2027 cloud Liam Pharr

capex improves through 2H26, we expect renewed leadership and momentum from Research Analyst

memory (MU), compute (AMD – analyst event Jul-26, INTC – analyst event late-26), liam.pharr@bofa.com

semicap (AMAT, LRCX, KLAC, TER), optics (MTSI) and networking (CRDO, MRVL).

China Models Raise Competition, Not Capex Risk