Semiconductors Lead, but the Chip Story Is Changing
Even as semiconductors continue to power the market higher, chip makers face a $1 trillion question.
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Although volume was light on Thursday, broad strength was evident, with semiconductors leading the charge. Technology strength benefited the Nasdaq 100 (QQQ), which jumped 1.6%. However, due to recent pullbacks, only about 125 names hit new 12-month highs.
There are two big issues driving the chip sector. The first is that Meta (META) will start manufacturing its own AI chip in September. The chip is code-named Iris. Broadcom (AVGO) is helping design it and TSMC (TSM) will manufacture it. Meta is buying RAM from Samsung, storage from SanDisk (SNDK) and fiber-optic equipment from Sumitomo. The goal is to boost Meta’s computing power to 14 gigawatts next year. META put in a big bullish engulfing bar and jumped 4.7% on the news.
Hyperscalers are finding ways to avoid the high prices charged by Micron (MU) and others. Rather than buy from suppliers, they will create their own supplies. Meta is now a chip designer, a chip buyer and, through Meta Compute, a seller of compute capacity.
The SK Hynix Listing
The other big chip news is the $28 billion Nasdaq ADR offering of SK Hynix, priced Thursday and more than seven times oversubscribed. The ticker is SKHY and it will start trading on Friday July 10. It is the second largest global share sale of 2026 behind SpaceX (SPCX).
Both stories have the same theme from slightly different angles. The buyers are finding ways to avoid the suppliers while the suppliers raise capital at peak valuations.
Will the SKHY offering follow the same path as SPCX? That is the trillion-dollar question. Both are mega-cap offerings with thin initial floats, enormous institutional demand and a fast track toward index inclusion. The same lockup and supply questions exist.
SK Hynix is seven times oversubscribed. At the same time, Samsung, Micron, SanDisk and Western Digital (WDC) all took double-digit hits over the past two weeks. That combination tells us the demand for the offering is a rearrangement of capital rather than new money coming into the group.
Can SKHY produce sustained upside momentum? SpaceX could not and hit a post IPO low on Wednesday.
Strategy
The SKHY offering is going to give us some chaotic action on Friday but I’m expecting elevated volatility rather than a strong uptrend. I’m comfortable with my high cash levels and will stay focused on technical setups outside the technology and chip sectors.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
