RISING TIDES
Observations from the IMC Research Process

Can You Actually Build That?

The next AI bottlenecks are emerging in the physical manufacturing stack required to build and connect increasingly complex chips.

• The Physical Ceiling. AI capex is cascading downstream through the semiconductor supply chain. Every dollar spent on advanced fabs, AI accelerators, and HBM drives follow-on demand for the niche materials, precision components, and specialty subsystems required to build these chips. As packaging intensity rises and architectures become more complex, these inputs are shifting from commodity line items to critical bottlenecks — a transition increasingly visible in both fundamentals and price action.
• The Stack Nobody Talks About. Beneath every advanced node and HBM stack is a materials layer just as intricate as the silicon above it. Photoresists enable EUV lithography. CMP slurries influence yield. High-purity process gases are consumed in enormous volumes with few viable substitutes. This is not just a GPU story — rising demand across memory, networking silicon, RF, and custom ASICs is broadening the reacceleration. Because these inputs are deeply process-qualified, switching costs are high and supplier relationships are sticky.
• Where the bottlenecks live. Qnity Electronics ($Q): DuPont spin-off; CMP pads, slurries, photoresists, and advanced packaging materials across the full fab stack. Materion ($MTRN): specialty alloys and deposition materials, including tantalum targets for leading-edge AI and HPC chips. AXT Inc. ($AXTI): compound semiconductor substrates for AI networking and photonics. ASE Technology ($ASX): one of the world’s largest outsourced semiconductor assembly and test providers, central to HBM, chiplet architectures and AI infrastructure scaling. BE Semiconductor ($BESI): hybrid bonding and die-attach equipment critical to next-generation packaging density and HBM scaling. Tokyo Ohka: advanced photoresists and process chemicals essential to EUV lithography and leading-edge node production.