Semis Memo: Muscle Memory

Introduction

There is a lot going on in AI and the semiconductor supply chain. Almost too much, it seems at times.

The wild performance in the most prominent players has reinforced the supply/demand balance we described in the idea “Post-Traumatic Supply Disorder” from our 26 Trades for 2026. Memory, storage, semicap, advanced packaging – these sectors have performed incredibly well over the past month.

We’ve also been reminded of something we have known for a while.

“ While one has indeed so far been able to get away with an understanding that only goes GPU-deep in AI, I believe that will rapidly begin changing…

In the meantime, generalists are left to keep up with a rapidly advancing technological landscape in semiconductors that can easily leave you behind... The shame in that is that it often robs you of the ability to truly understand what’s behind the whole picture while ensuring you’re properly positioned – a picture which will only become increasingly important when these narratives take hold in the real world.”

• AI Phase Two, April 2025

In order to have caught the most asymmetric trades of the “AI Bubble”, you had to be paying attention to things that were a bit complex for a generalist. You also had to have a strong view on what would happen in the supply chain 6-12 months from now due to whatever was happening right now.

Some bad news: it is not going to get any easier from here. We can’t sit idly by while the expected returns from mainstream “layups” like Nvidia, Micron, SK Hynix, Broadcom etc. moderate.

That’s why we’ve hired some talented semiconductor analysts, so they can explain to us ignorant generalists what’s going on behind the Wall Street curtain (and we can then translate it back into thematic upside).

Our two newest team members, Zephyr and Jukan, add deep semiconductor knowledge to Citrini’s existing thematic and trading expertise. We’re going to combine our existing penchant for having strong, occasionally non-consensus views on…