2 months ago
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Manali Pradhan, CFA, The Motley Fool
Sat, July 25, 2026 astatine 12:31 PM CDT 4 min read
Artificial quality chips request to process monolithic amounts of information rapidly -- and to entree it successful an optimal way, they request that information stored adjacent connected precocious bandwidth representation (HBM) chips.
For example, Nvidia's (NASDAQ: NVDA) caller Rubin GPU is designed to usage arsenic overmuch arsenic 288 gigabytes of HBM4, the 4th procreation of precocious bandwidth memory. That's astir 3 times the representation utilized successful Blackwell, its predecessor architecture. And rival Advanced Micro Devices' (NASDAQ: AMD) MI400 bid accelerators are designed to usage up to 432 gigabytes of HBM4.
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Because of these increasing needs, determination are shortages crossed the full representation market, and rectifying that volition necessitate concern crossed the semiconductor proviso chain. The iShares Semiconductor ETF (NASDAQ: SOXX) gives investors vulnerability to Micron Technology (NASDAQ: MU), the spot designers driving HBM demand, and the instrumentality suppliers helping manufacturers grow production.
Why the representation proviso remains choky
Increasing representation proviso volition necessitate the fewer large players successful that niche to physique ample and analyzable caller spot foundries -- and they are doing so. However, the gait of their enlargement is constrained by agelong operation times, shortages of skilled workers, permitting requirements, and the request for further vigor infrastructure. Micron absorption says it expects supplies of DRAM and NAND to stay choky beyond 2027.
For now, maturation successful accumulation of HBM tin tighten the broader representation market. Each caller HBM procreation requires much wafer proviso compared to accepted memory, putting further unit connected the proviso disposable for non-HBM. Expanding output requires representation producers to put successful much precocious manufacturing and packaging equipment.
These trends tin payment the components of the iShares Semiconductor ETF, which has astir 21.4% of its assets successful semiconductor manufacturing instrumentality makers specified arsenic Lam Research, Applied Materials, and KLA. Lam Research supplies etching and deposition tools utilized successful precocious representation production. Applied Materials provides instrumentality for DRAM manufacturing and HBM packaging. KLA's inspection tools assistance chipmakers observe defects and amended accumulation yields.
Capturing the broader representation accidental
The iShares Semiconductor ETF besides provides vulnerability to the companies producing representation and driving its demand. The money owns 30 stocks and charges a 0.34% disbursal ratio.
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