US Semiconductors and Semiconductor Equipment: Summer Sell-off; Fundamentals Intact; Prefer Semi Caps to Semis

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US Semiconductors and Semiconductor Equipment: Summer Sell-off; Fundamentals Intact; Prefer Semi Caps to Semis

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24 Jul 2026 06:00:00 ET │ 11 pages

US Semiconductors and Semiconductor

Equipment

Summer Sell-off; Fundamentals Intact; Prefer Semi Caps to Semis

CITI'S TAKE

We view the SOX pullback on surging oil prices, rising bond yields, and AI

spending concerns as a buying opportunity. Fundamentally, data center Atif MalikAC

remains the strongest end market (34% of semi TAM) and is on track to +1-415-951-1892

exceed the entire semiconductor TAM by 2030E. Recovery is underway in atif.malik@citi.com

Auto and Industrial (21%), while demand from PCs, handsets, and

consumer electronics (42%) continues to weaken due to memory cost Kelsey Chia, CFA

inflation and supply constraints (see Figure 2). We recap key highlights +1-415-951-1791

from earnings so far and note that consensus 2026E/2027E revenue kelsey.chia@citi.com

estimates for companies that reported increased 4%/7% on average, while Elizabeth Sun, CFA

EPS estimates rose 7%/8%. We prefer semi caps to semis on higher +1-212-816-3308

estimate revisions driven by capex increases. elizabeth.sun@citi.com

Adrienne Colby

INTC/TSMC/TSLA Capex Outlook All Very Positive for SCE - Intel highlighted +1-212-816-8975

meaningful foundry progress and raised 2026 capex guidance to over $20Bn from adrienne.colby@citi.com

~$18Bn previously, driven primarily by tools with 40% YoY growth. Intel is

aggressively locking in equipment orders, accelerating clean-room buildouts, and

securing key substrate and memory supply. With increased confidence in customer

demand across multiple end markets and a strong advanced packaging backlog,

Intel expects 2027 capex to be significantly higher than 2026, with most

investments directed toward U.S.