US Semiconductors and Semi Equipment "SemiBytes: Thoughts on Kimi K3, MU,..."

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US Semiconductors and Semi Equipment "SemiBytes: Thoughts on Kimi K3, MU,..."

Global Research

20 July 2026ab

US Semiconductors and Semi Equipment Equities

AmericasSemiBytes: Thoughts on Kimi K3, MU, Analog,

Cash Flow, Crowding Semiconductors

Timothy Arcuri

Analyst

timothy.arcuri@ubs.com

Preliminary thoughts on Kimi K3; Read-through to semis +1-415-352 5676

This past week, Moonshot AI released Kimi K3 - a model that is the largest open source Natalia Winkler, CFA

model in the world and outperforms some key US frontier models for certain workloads. Analyst

There are parallels to the release of DeepSeek R1 - which drove a similar correction in natalia.winkler@ubs.com

stocks - but K3 is more about scale as it is the largest open source model in the world at +1-415-352 4626

2.8T parameters and has a 1M token context window and always-on reasoning mode. Alex Kivali

Increased usage of open source models was evident at UBS' Private AI, Software and Analyst

Internet conference this past week (see our summary here). Overall, we would note that alex.kivali@ubs.com

the costs of an open source model are inherently going to be better than a frontier +1-212-713 3945

model because of the margins, but irrespective of this point, we feel this is much like the Gianmarco Vella

release of R1 and part of the normal course of technology businesses - cost scaling drives Associate Analyst

increased usage/demand (e.g Jevons Paradox) - and in this case, we would also reiterate gianmarco.vella@ubs.com

that NVDA is a big winner in the open source model debate with Nemotron. Another +1-415-352 4555

point to make here is that open source models are generally more memory intensive Aaryan Wadhwa

than frontier labs because context windows are longer and KV cache requirements are Associate Analyst